Start-Up Launchpad Blog

The High Price of Fun - Beer, Brats and Big Trouble - October 12, 2011

Jo Ellen Whitney

Jo Ellen Whitney, employment and health lawWe've just finished summer and one or two of you have probably sponsored a company picnic complete with volleyball, hotdogs and a keg or two of beer. Some of you might be planning in-house bonding activities, teamwork exercises or travel to a game. If you like to get an early start, maybe you are planning the office Christmas party. The only problem is that employer-sponsored fun can have a very high price of liability and that liability comes in a variety of shapes and forms. 

Where there is booze, there are "accidents". The first, and perhaps biggest, question that you have to ask yourself is will there be alcohol? Any time you provide alcohol, whether it's the keg at the company picnic, beer in the fridge for a kickback Friday or a sponsored wine tasting event, you run the risk significant liability if one of your employees drinks too much and an injury occurs. An employee that drank too much is never going to bump into a tree that's already dead and walk away without a scratch. Invariably, that employee runs the company car over a priceless piece of artwork subsequently crashing into a busload of children and then injures himself getting out of the car so you have liability on three integrated fronts. 

While I am not arguing for an all dry event or dry events on every occasion, you do need to minimize your liability risk when alcohol will be served. The easiest way to minimize that risk is to contract with a license supplier for the alcohol, such as a licensed bartender or provider. By doing so, the dram shop liability is placed squarely on those people who hold the license, as well as the appropriate insurance for alcohol-related issues. If you have a circumstance where you can't utilize a licensed facility, you need to think carefully about when and how you limit the drinking. Do you provide people with drink tickets and create your very own barter system? Do you simply cut people off at two depending upon the nature, type and length of the event?  What about minors? Children should never be served and there is strict liability attached to the provision of alcohol to minors. Even if the employee is getting a beer and then handing it off to a 16-year-old son, you, as the employer, can be held liable for the provision of alcohol.

Alcohol isn't the only issue.There are other problems unique to company-sponsored social events. If somebody is injured while they are at a company event, is or isn't it workers' compensation issue? You need to make sure there is a clear statement that attendance is not mandatory and that the event is not considered to be work time. If attendance is mandatory, such as a team bonding exercise, if somebody gets hurt, it's going to be a worker's compensation issue. Additionally, if attendance is mandatory, you  need to pay hourly employees for the time they spend at the event. Even if they are playing frisbee and drinking beer, they still need to be paid.

There are two Iowa cases that make mitigation of social liability particularly difficult. The first of these is Sweeney v. City of Bettendorf and Bettendorf Parks and Recreation. In this case, the Iowa Supreme court determined that the Parks and Recreation Program was liable for the child, Tara Sweeney, being injured at a local baseball game. The baseball team and park was not held liable as a standard rule continued to apply that being hit by a ball is an anticipated risk of attending a baseball game.  However, the Parks and Recreation Department, which was supervising the child at the time she attended the baseball game, was held liable for not providing greater supervision. The waiver, which had been signed by the parent, was determined to be insufficient to release the Parks and Recreation Department on the basis that it had not adequately addressed the possibility of a negligence claim in connection with the fieldtrip. It did not contain "clear and unequovical language that would notify a casual reader" that the parent signing the release was waiving all future claims, including claims of negligence against the city. This case appears to indicate any permission slip signed must specifically state that the waiver would relate to any and all claims including acts of negligence or negligent supervision. 

The second case which relates to this matter is Tanela Galloway v. State of Iowa. In this instance the Supreme Court basically invalidates preinjury waivers for children when signed by a parent, stating that public policy precludes a waiver of this nature and type. This places programs that allow for the participation of children in a difficult situation as the parents cannot fully waive all claims involving potential injury to the child. This is a significant additional liability imposed on programs where children may be involved.  However, if you are a child-centered program, such as Upward Bound the group in this case, you will have insurance and other programs which will address negligence issues.  If you are a causal participant, such as organizing a water-ski trip for the kids at the annual company picnic, you have significantly greater risks, as well as the potential of lack of insurance coverage relating to these matters. 

As your mom told you, it's all great fun until somebody loses an eye. So you need to think about the liability issues involved in sponsoring various social and public events for your employees and their families before they head out the door.