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Party on … in moderation

Want to ensure a safe, successful, and lawsuit-free office holiday party this year? Follow these tips.

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For many workplaces, the office holiday party is not quite the extravagant, boozy affair that it used to be. Of course, that doesn’t mean the modern office holiday soiree is free from worry, both for workers and their employers.

Especially this year, in light of the #MeToo movement and so much public awareness of misconduct by colleagues and people in power, companies need to pay closer attention than ever to enforcing policies — and good old common sense — when treating their employees to an end-of-year bash.

Employees, too, need to remember that unwinding with co-workers at the holiday party isn’t a green light to lose all inhibitions. Unless, that is, they’re also comfortable with the possibility of losing their jobs.

Company, protect thyself

Ashlie Johnson, an HR consultant and owner of Madison-based Brooke Human Resource Solutions, has some basic advice for companies as office holiday party season gets into full swing.

“While it’s important for employees to be on their best behavior, it is also up to the employer to set expectations and ensure that the holiday party is a safe and comfortable environment for their staff. Before you ever send out an invite, make sure your HR policies are up to date. Employees should understand that the company’s sexual harassment and retaliation policies are in effect 24/7 — this includes company social events.”

Johnson notes before holding an event, it is always wise for employers to look into their employment liability coverage/commercial general liability policy, too, and any limitations it may have, such as whether your policy covers third-party liquor liability.

In addition to a CGL policy, businesses should also consider purchasing an Employment Practices Liability Insurance (EPLI) policy. “An EPLI policy will protect a business if they find themselves facing a case of discrimination, sexual harassment, emotional distress, or other workplace-related issue,” notes Johnson. “When an employer purchases this coverage, they should make sure it includes ‘third-party’ coverage.”

Third-party coverage refers to claims made by non-employees — usually clients, guests or customers — who allege that an employee engaged in wrongful conduct such as sexual harassment or discrimination. This can be important coverage, for example, if someone in management has had too much to drink and makes an inappropriate overture to a client or customer. Without a specific policy endorsement for third-party claims, EPLI policy forms do not cover these types of exposures. In addition to overtly inappropriate behavior, if someone puts a video clip or picture on YouTube or Facebook that could result in reputational harm, it is also covered under an EPLI policy.

According to Johnson, a few things that an employer can do beyond just maintain insurance is to be proactive. She suggests using professional bartenders and instructing them not to serve anyone who appears to be intoxicated or under the age of 21. “Host your party at a hotel, restaurant, or bar with a liquor license instead of the office, as the venue will need a certificate of insurance, and this could reduce your liability. And be sure that your employees know the expectations and be quick to respond to any issue that may arise.”

Johnson also offers the following tips for employers as they endeavor to host a holiday party even the Scroogiest employee can enjoy:

  • While it would be nice if everyone could attend the holiday party, don’t make it a requirement. Mandatory attendance can cause issues of wage confusion and employers may be opening the business to unforeseen wage-and-hour related complaints. Be clear to your staff from the beginning, and make it easy for them to understand expectations. Include items such as dress code and what to expect in terms of food and entertainment. Even sending an informal agenda along with the invite will help employees know when to be there and what to expect.
  • Employers should make every effort to ensure that their party is inclusive. While many of your staff may celebrate Christmas, calling it a holiday, New Year, or winter party, and using nondenominational décor, music, and activities will ensure that everyone feels welcome and accepted.
  • If employers want their employees to have fun at the event, don’t use the holiday party as an opportunity to make announcements or talk about the business plan for the upcoming year. This is also an opportunity for management to network. CEOs and other executives should take this opportunity to get to know their staff. Employees report much stronger feelings of engagement in, and loyalty to, an organization where the leaders take time and show an interest in their staff, regardless of position.

It’s also very important that employers restrict drinking at the holiday party, notes Johnson. While it may be generous to have an open bar, it can be a huge liability for an employer. Plus, drunkenly dancing on tables isn’t a good look on anyone.

“Create a ticket system, providing employees with only one or two drinks at the employer’s expense,” offers Johnson. “This limits the employer’s liability and will also save money on drinks.

“Think about offering free transportation to employees in the event that someone does overindulge,” she adds. “It’s better to be safe than sorry, and providing a ride eliminates any chance of someone driving under the influence.”

Another way to manage the risk of employees overindulging is to hold the company party during the day. Work holiday parties are typically held on the weekend and in the evening. Be creative and consider having a brunch party or an afternoon event. This may also help with attendance, as employees will likely not have to choose between the holiday party and the many other seasonal events that are usually going on this time of year.

A few other considerations to be taken into account during the planning phase of the party, according to Johnson:

  • Consider the demographics of your group. Having an “oldies” band at a party that is mostly millennials may not go over well. It’s also important to consider your staff’s socioeconomic situation. Making your holiday party a black-tie affair when you have employees who work in manufacturing or labor industries may not be received well, and could also make your employees uncomfortable. While any party is well-intentioned, misunderstanding your staff can make management seem out of touch and could cause your employees to feel disengaged.
  • Location, location, location. Employees have many obligations and constraints in their lives; attending the holiday party should not add to those stresses. Be sure to hold your party somewhere local and convenient, so your staff can easily attend.
  • Engage your employees ahead of time. In the months leading up to the party, have your employees vote on their favorite party theme, or perhaps submit their own ideas. Bringing the employees into the planning shows that the company values their input and can also be a fun way to engage staff and get them more invested in attending.

Many employers also hold prize drawings for staff at the holiday party, Johnson notes. This is a great way to encourage employees to attend and to also say thank you; however, the employer must be sure to consider the tax implications prior to providing staff with gifts or prizes.

Section 1.132-6(e)(1) of the U.S. Department of the Treasury’s regulations provides examples of de minimis fringe benefits that are excludable from an employee’s gross income, and Section 1.132-6(e)(2) provides examples of fringe benefits that are not excludable as de minimis fringes. “Traditional birthday and holiday gifts of property (not cash) with a low fair market value” and “occasional cocktail parties, group meals or picnics for employees and their guests” are among the examples of de minimis fringe benefits in the regulations.

The employer should engage with their finance department to determine if the prizes and gifts they plan to give meet the standards or if they need to account for these gifts as earnings for the employee, advises Johnson.

(Continued)

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