Thursday, June 8, 2017

Liability Risks Associated With Employer-provided Alcohol

What’s the common denominator in these 4 workplace incidents?  Each one was reported to us by a concerned client, and each one consumed the client’s time, efforts and resources.
- An employee has significant performance problems.  His supervisor takes him out for dinner, drinks, and a heart-to-heart discussion about those problems.  The discussion becomes heated, insults are traded, and the evening ends with a physical fight in the parking lot.  
- An employer hosts a lavish holiday party with an open bar.  After several hours of drinking and dancing, a manager and one of his subordinates leave the party, go to their office, and have a sexual encounter.  The manager insists the encounter was consensual, but the subordinate claims it was not consensual and says she was sexually harassed and assaulted.
- An employer has a regular Friday afternoon “kegger” social gathering in the break room. At one such gathering, a group of employees gets into a lively discussion of gender and feminism.  To make a point, an employee repeatedly uses a sexually explicit language.  Several listeners are offended and complain to HR.
- At an employee picnic where beer and wine are provided by the employer, two employees get into a political discussion that escalates into a shouting match.  The next day, the employees say they can’t work together anymore and insist that one or the other of them must be transferred.  
Alcohol is the common thread, of course—alcohol provided by the employer or, in the first example, bought by a manager.  
There are a number of alcohol-related issues that employers have to deal with, such as alcoholism as a disability under the ADA and comparable state laws,  drug and alcohol testing requirements, and lawful consumable products laws like Minnesota’s and New York’s. Those are important, but today’s focus is on the legal risks associated with employer-sanctioned use (and abuse) of alcohol in the workplace or at work events.
Alcohol lowers inhibitions.  Employees affected by alcohol are less likely to control what they say and do. A 2004 Cornell University study found that the incidence of harassment experienced by women more than doubled for each additional alcoholic drink consumed by their male coworkers during or around working hours.  Nevertheless, it’s not unusual for alcohol to be provided in the workplace, and particularly at workplace social events. 59% of HR professionals surveyed by SHRM said their company served alcoholic drinks at holiday parties.  A survey performed by Bloomberg BNA found that 69% of employers holding an office party in 2016 planned to serve alcohol. As reported in this article, a 2010 Adecco poll found that 40% of respondents had seen or suffered a major indiscretion at a work-sponsored holiday event; a quarter admit to drinking too much; and 14% of respondents knew someone who had been fired because of behavior at an office party. Beyond statistics and studies, most HR professionals and many in-house lawyers have experience dealing with alcohol-fueled workplace behavior, and—as illustrated by the four examples above—lawyers who counsel employers regularly hear about such conflicts.
Workplace conflicts can create employer liability in a number of ways, including through harassment complaints and claims of negligence.  Harassment complaints are usually brought under anti-discrimination laws.  In addition, employers have a duty under federal law to provide a workplace free from “recognized hazards.” Washington state has a regulation that prohibits alcohol in the workplace, although there are exceptions, such as for social events after work. Such statutes, as well as common law causes of action for negligence, provide remedies to employees who are harmed by other employees. 
It’s not only employees who can sue employers, however.  Many states have “dram shop” laws that apply to employers who serve alcohol.  Texas dram shop law permits a cause of action against a “person” (which includes a corporate entity) who serves alcohol to an obviously intoxicated individual who then causes injury.  New York dram shop law permits actions against a person who procures alcohol for an individual who goes on to cause injury while intoxicated.  Minnesota dram shop and social host liquor liability laws create liability when someone provides alcohol to persons under 21.  In California it’s a misdemeanor for a vendor or host to serve an obviously intoxicated person.  In a case called Purton v. Marriott International, decided in 2013, an employer was found liable for the actions of an employee who struck and killed someone while under the influence of alcohol served at a company party.  In 2016, a jury awarded more than $1.5 million in damages to a plaintiff injured when an intoxicated employee of a California restaurant struck him with his car. The jury found the restaurant was negligent and responsible for the actions of the employee when the restaurant permitted and even encouraged employees to drink after their shifts.
So the risks from within and outside the workplace are real.  Employers should carefully consider whether or not to provide alcohol to employees, and whether or not to allow or encourage the consumption of alcohol in work settings.  If the decision is to provide alcohol, or allow or encourage its use in the workplace, there are still ways to minimize the accompanying risk:
  • Limit the amount of alcohol—particularly free alcohol—provided. Limit its effect by providing food and non-alcoholic drinks.
  • Affirmatively discourage over-consumption by employees. 
  • Make sure that upper management models good behavior by limiting consumption and controlling behavior. 
  • Offer cab rides or hotel rooms to inebriated employees after social events.  Encourage the use of designated drivers. 
  • Monitor social events and interactions in the workplace when alcohol is consumed, and intervene to prevent inappropriate or risky behavior. 
  • Promptly investigate complaints about inappropriate behavior at work-related social events, and be prepared to discipline employees who behave inappropriately. 
Posted by Judy Langevin