Download Potential Liability for Employer-Sponsored Social

April 11, 2007
Potential Liability for Employer-Sponsored Social Events
by Jennifer Brown Shaw and Carolyn Burnette
Summer is almost here. Managers everywhere are busy thinking of creative ways to
boost employee morale. How about a picnic,
complete with clowns for the kids and threelegged sack races for the adults? What about
an after-work pizza party? Social functions
such as these indeed may bring smiles to
employees’ faces, Do Human Resources
Managers have cause to be concerned that a
company picnic may be no walk in the park
from a liability standpoint?
Risk managers who have not caught spring
fever may ask themselves tough questions
such as: What if the employees get “too
friendly” with each other at the picnic – can
the employer be held liable for sexual harassment? What if a worker drinks too much
beer at the pizza party, and injures someone
in a car accident on the way home – can the
employer be sued? And what if an employee
breaks a leg in that three-legged sack race
– would that be covered by workers’ compensation insurance?
The Basic Rules
In general, an employer may be liable for
employee conduct at a social event (both
negligent and intentional) whenever such
conduct is “within the course and scope of
employment.” In the context of social events,
the courts have explained conduct is “within
the course and scope of employment” if: (1)
the employer directly or impliedly endorses a
social event and might “conceivably” benefit
from the event; or (2) mandates or expects
employees attend such events.
When does a “benefit” attach to the employer? This question definitely calls for a
case-by-case analysis. However, one court
held that a company benefited from a social
event when service pins were presented at
the function, the company promoted its sales
program and continuity of employment at
the event and the event was held every year.
In another case, an employee returning home
from a summer picnic caused a fatal automobile accident. Although the heirs argued
that the employer benefited by increased
employee morale and should therefore be
liable for wrongful death , the court concluded
increased morale alone was insufficient to
establish liability. The court ruled that the
employer did not sufficiently benefit because
attendance was voluntary, there were no
awards presentations, no opportunity for
education, and the event bore no relationship to the attending employee’s continued
employment, performance evaluation or
promotional opportunities.
Employers need not “host” an event for liability to be imposed. For example, directing
sales staff to attend a golf event sponsored by
a customer could result in employer liability
if an attendee engages in an intentional or
negligent act that is actionable. The employer
stands to benefit from the goodwill generated
by the sales staff toward the customer
Equal Employment Opportunity Issues
Once a social event is found to be “within the
course and scope of employment,” employer
liability becomes a possibility. For example,
when an employee acts in a sexually inappropriate manner at a social event – even if
the conduct takes place at a beach, a park, a
casino or a resort, and not on the employer’s
premises – the employer may be held liable
for sexual harassment.
In addition, to some extent, employer vulnerability increases in such situations because
the employer is responsible for the conduct
of non-employees who may co-mingle with
workers at the employer sanctioned event.
For this reason, management must be diligent in detecting and appropriately responding to inappropriate behavior at work-related
functions.
Employers also should recognize that certain
social activities can become evidence of
discrimination. For example, a “males only”
football game, which is intentionally structured to avoid any unwanted touching, could
be perceived as creating advancement barriers
to women – particularly in a male-dominated
work force. Obviously, employers should
select “gender-neutral activities” that do not
raise these issues.
Potential Workers’ Compensation Issues
Can an employee who breaks her leg during
the Thursday night employer-sponsored
bowling league collect workers’ compensation benefits? Typically, workers’ compensation insurance does not cover injuries arising
out of voluntary participation in off-duty
recreational, social, or athletic activity that
is not part of an employee’s work-related
duties. Here again, however, if the activity
is a “reasonable expectation of employment,” recovery may be allowed. A “reasonable expectation of employment” has been
interpreted to mean the employee subjectively
believed the employer required participation
in the activity and the employee’s belief was
objectively reasonable.
To reduce potential liability for workers’ compensation claims arising from social activities,
employers should avoid sponsoring physical
activities that are inherently high risk. For example, hosting a ski trip or a horseback riding
event comes with more potential exposure
than hosting a trip to the local art museum.
Employers also should consider requiring
employees who participate in physical activities to sign a waiver containing the following
elements:
Of course, whether the employee’s participation was in fact voluntary ultimately will
depend on factual circumstances rather
than any language contained in the wavier.
However, a waiver can provide evidence that
the employee and employer understood the
activity to be voluntary and not an expectation of employment.
Tips for Employers
for a limit on alcoholic drinks, if possible.
For example, hand out drink tickets and
ensure only those with tickets may receive
drinks.
• Employers should choose activities that
appeal to a broad range of employees to
avoid anyone feeling “left out” or targeted.
• Avoid event locations that are naturally
provocative, such as casinos, bars and
beaches.
• employee participation is voluntary and
not required by the employer.
Employers should keep the following tips in
mind regarding work-related social events:
• no work-related activities will be conducted in connection with the social
event.
• Ensure all event notices clearly specify
that events and activities are not mandatory.
• Convey to employees prior to the event
the employer’s expectation that employees will treat each other with respect
during the event.
• time spent on the activity will not be
paid time, and will not be considered
“hours worked.”
• Plan events away from the employer’s
premises and on weekends if possible.
Doing so may support an argument that
the events were strictly social and not
work-related.
• Immediately investigate any claim of
inappropriate conduct that arises related
to the event. Apply applicable employer
policies and procedures, and take prompt
corrective action as necessary.
• When economically possible, include
family members in the event. Doing so
may support an argument that the event
is not business-related.
It is no secret that employer-sponsored
events can positively affect an organization’s
bottom line. Recruitment, retention and
employee morale generally are better when
employees are having fun. Employers who
recognize the potential risks, and take appropriate steps to minimize their liability, can
host these events without undue concern.
• no “collateral benefit” (e.g., increased
opportunity for promotion, incremental
sales incentives or leads, etc.) will result
to any employee who participates in an
activity, and no employee will be disciplined for not participating in an activity.
• a release of any claims against the
employer for injuries incurred while
participating in the activity.
• a statement that participating in the
activity involves an assumed risk of
personal injury.
• Including vendors, customers or other
business affiliates in an event may support an argument that the event is business related.
• Hold events at locations that do not serve
alcohol. If alcohol is available (whether
paid for by the employer or not), arrange
Reprinted by permission of The Daily Journal.
[email protected]
Jennifer Brown Shaw is a partner
at Shaw Valenza LLP. Her practice
includes providing regular advice
and counsel to private and
public sector employers. She also
develops and presents seminars
on legal issues in the workplace
for management and non-supervisory employees.
300 Montgomery Street, Suite 788
San Francisco, California 94104
Tel: (415) 983-5960
Fax: (415) 983-5963
www.shawvalenza.com
520 Capitol Mall, Suite 630
Sacramento, California 95814
Tel: (916) 326-5150
Fax: (916) 497-0708