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Serving Alcohol at Holiday Parties

Nov 21, 2014
W. P. Dolle, LLC
Insurance and Risk Management since 1872
201 East Fifth St, Suite 1000 Cincinnati, OH 45202 (513)421-6515

Assessing and Avoiding the Liability Risks of Alcohol at Parties


The Risk of Liability for Serving Alcohol

Like many employers, you'll be hosting a party for your workforce this holiday season. Chances are, you'll be serving liquor at that party. That's fine. But before you do, make sure you understand what you're getting yourself into. Here is an explanation of the liability exposure employers incur when they serve alcohol to their employees, not just at holiday season but at any time of the year.

The Law of Host Liability

Many companies don't realize that they can be liable for injuries caused by employees who drive drunk after an office party (or another company-sponsored event). Even companies that know the risk exists don't fully understand the exact nature of their potential liability and how to manage it.
Certain persons who serve alcohol to guests can be liable for negligence if the guests get drunk and cause injuries to themselves or others. This is called "host liability" and it extends to employers who furnish alcohol to their employees. Where does this law come from? And what does it mean? Let's answer these questions one at a time.
Employer host liability for the drunk driving of workers isn't contained in any OSHA standards or other federal laws. Rather, it comes from state law. It's based on statutes and court cases. Some states, including Florida and Texas, have taken the position that employers should exercise reasonable care to prevent injuries by intoxicated employees. If they don't, they can be held liable.

Social host liability may be based on "dram shop" laws -- or state statutes that prohibit the sale of alcohol to minors and hold distributors responsible for alcohol-related injuries. For the most part, these laws only apply to companies that are in the business of selling alcohol, such as bars or restaurants. But some states have interpreted the law as imposing a legal duty upon social hosts (including employers) to exercise reasonable care when serving alcohol to their guests. In these states, courts have held employers liable for serving alcohol to a minor or an employee who becomes intoxicated and injures himself or someone else.

Employer Pays Almost $1 Million after Drunk Employee Kills Child

A major case occurred in 1992, when an employer was held liable after an employee got drunk at a professional trade meeting attended by other company employees. As he was driving home, the employee ran a stop sign and crashed into another car, killing the driver's son. The employee had had several drinks with the company's president and other employees, all of which were deducted as business expenses. Everyone watched as the employee left the bar, slurring his words. But nobody stopped him. The jury ordered the employer to pay $80,000 to compensate the victim's father and another $800,000 for punitive damages. On appeal, the Florida court upheld the verdict because the employer:
  • Told employees to attend the meeting to benefit the business;
  • Paid for all meeting expenses, including drinks;
  • Reimbursed travel expenses to and from the meeting;
  • Encouraged employees to entertain clients and buy them drinks at these types of meetings; and
  • Let the employee leave by himself, despite evidence that he was too drunk to drive.
Holding the employer responsible for the employee's drunken conduct might seem unfair. After all, the employee was a responsible adult capable of making his own decisions. But the court in this case said that the employer should be responsible because it had more control over the actions of its employees than other kinds of hosts typically have over their guests Carroll Air Systems, Inc. v. Greenbaum, 629 So. 2d 914 (Fla. App. 1992).

As the Carroll case shows, employers are especially vulnerable when they require their workers to attend a function or drink with clients. In 2002, the Supreme Court of Texas said that an employer who required employees to drink with clients could be responsible for injuries resulting from the employees' intoxication. In that case, an exotic dance club required dancers to drink with the club's clients to boost their bar tabs D. Houston, Inc. v. Love, 92 S.W.3d 450 (Tex. 2002)].

3 Tips for Limiting Liability

There are three things that employers can do to limit liability for losses that employees and other guests inflict as a result of getting drunk at a company event where alcohol is served.

1. Monitor Alcohol Consumption

Keep track of how many drinks each of your guests has. Monitoring the number of cocktails consumed will be much simpler if you have a closed bar as opposed to one that's open, unlimited and unsupervised.

What to Do: Before the party, designate one or more persons to serve as drinks monitor, advises lawyer and alcohol liability consultant Shelley Timms. One possibility is to designate your own people as monitors. Caution them not to drink during the party. "Monitors need to be sober to do their job," Timms explains. Another possibility is to hire professional bartenders who are trained to keep an eye on how much customers drink.
In either case, issuing drink tickets to each guest enables you to not only track but control consumption. The same is true of a cash bar. This is Timms's preferred solution. "The problem with tickets is that the guests who don't drink give their tickets to the guests who do," she cautions.

2. Determine Whether Guests Are Intoxicated

The second thing a host must do is try to figure out if a guest is intoxicated. No, you don't have to administer blood tests and breathalyzers. According to court decisions, you need to make "reasonable assumptions" about whether a guest is impaired based on how many drinks he's had.

What to Do: The person monitoring how much a guest has drunk should probably make the call on intoxication. You'll also need to tell your monitors what "intoxication" means. You don't have to make up a definition. Just use the legal limits for impaired driving. In most states and provinces, individuals can be charged with a crime if they drive with a Blood Alcohol Content (BAC) over .08 or .10 percent.

But here's where things get tricky. To make "reasonable assumptions" about intoxication, monitors need to estimate a guest's BAC level by observing how many drinks he's had. That's asking a lot, especially when you consider that individuals get impaired at different rates. It depends not just on the number of drinks they've had but on their gender and weight (among other things).

3. Prevent Intoxicated Guests from Driving

If you know or have reasonable grounds to suspect that a worker or guest is impaired, you must make an effort to prevent him from getting behind the wheel. This is fine when the guest cooperates. But what happens if he puts up a fight? How far does an employer have to go to keep an intoxicated guest from driving?

In the Houston case cited above, the dancer's manager asked if she was OK to drive home. But the court said that wasn't enough. The employer should have gone further, either by taking her keys, calling a cab or requiring her to stay until she sobered up.

What to Do: Use carrots such as appointing designated drivers, giving out taxi vouchers and even reserving hotel rooms where drunk guests can go to "sleep it off." But be prepared to use the stick, too. The sticks would include:
  • Adopting a zero tolerance policy for drinking and driving;
  • Sending workers a note a day or two before the policy reminding them that they should behave responsibly during the event;
  • Collecting the names and phone numbers of workers' spouses or, if they're unmarried, other person who can pick them up if they get drunk;
  • Making guests turn in their car keys if they plan to drink;
  • Appointing a monitor to watch the parking lot in case an intoxicated guest tries to sneak out;
  • If necessary, disciplining intoxicated workers who don't cooperate; and
  • If all else fails, calling the police.
Tip: One of the things employers do to try and limit their liability is have workers sign a waiver promising not to hold the company responsible if they get drunk at the party and get hurt driving home. Such a waiver isn't worth much. Courts aren't likely to enforce them especially if the waiver is signed after the worker has started drinking. "The alcohol washes away the worker's capacity to enter into a binding waiver," explains one lawyer. Moreover, the waiver doesn't bind third parties that the worker might injure.

Conclusion

Of course, there is a much simpler way to manage host liability risks: Don't serve alcohol at your holiday party (or at picnics or other company affairs during the year). In fact, lots of companies have decided to keep their parties dry. But alcohol remains a staple at most holiday parties. Your company has every right to make the decision to serve alcohol. But, you should ensure that your company understands the legal risks it assumes when it exercises that right and that it takes the appropriate steps to manage those risks.

9 Ways to Curb Alcohol Liability Risks

If you're planning to serve drinks at your holiday party, here are some of the steps you can take to prevent drunk driving accidents, recommended by alcohol liability consultant Shelly Timms:
  1. Make guests pay for their drinks and don't allow workers to buy drinks for clients
  2. Limit the number of drinks each guest can consume
  3. Offer a wide selection of non-alcoholic drinks
  4. Serve food--it absorbs alcohol, especially if it's sugary, and may cut down on the drinking
  5. Don't serve salty foods—it makes people thirsty
  6. Close the bar at least an hour before the party ends
  7. If guests are drunk, don't serve them any more drinks
  8. Hire a professional bartender to run the bar
  9. Provide rides home for anyone unable to drive
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