Like clockwork, the holidays are upon us and fast approaching.  This year, unlike any other, has been quite the roller coaster due to the upending COVID-19 pandemic.  With the holidays come joy and the spirit of giving, along with holiday parties employers host and rewards for employees for their dedication and hard work throughout the year.  Many employers look to this holiday season to reinvigorate their employees, especially given all that has occurred over this year.  In addition to the added precautions due to COVID-19, employers must be mindful of some common employment law pitfalls during the holiday season.

Office Parties (or COVID friendly equivalent)

Although company holiday parties often have a positive impact on office morale, these events may cause litigation and unnecessary office gossip.  Specifically, during this hectic year, many regularly-scheduled activities that would have happened in-person have not taken place due to the COVID-19 pandemic.  As current cases continue to spike, it is important to follow local, state, and CDC guidelines when planning any sort of in-person holiday event.  Regardless of the time and location of the event, company parties may be considered within the scope of employment and, therefore, subject employers to liability, even when the attendance is optional. Here are just a few tips:

• Discrimination
  • Avoid religiously themed events in order to respect the diverse beliefs of the attending individuals.
  • Provide non-alcoholic drinks (e.g., for those with certain religious beliefs and/or medical conditions).
  • Consider dietary requirements (e.g., do not serve a pork dish without providing a kosher option).
  • Ensure that employees with disabilities may access the party’s location and activities.
  • Only give appropriate and neutral gifts to employees—gift cards are the safest bet.
• Sexual Harassment
  • Reduce the risk of improper fraternization by hosting an alcohol-free event, removing hard liquor from the menu, limiting the number of beverages each employee may consume, or providing access to a cash bar as opposed to an open bar.
  • Instruct supervisors and managers to maintain professional standards during the event to serve as examples for their subordinates and avoid any activities that may lead to physical contact or inappropriate conversation.
  • If anyone complains of or reports inappropriate behavior, take the complaint seriously. Document, investigate promptly, and take remedial action if necessary.
• Independent Contractor Status
  • Companies that utilize independent contractors and temporary employees should take proactive measures to avoid creating evidence that an employer-employee relationship exists. For example, employers may not want to give independent contractors the same gifts they give employees because the DOL, IRS, or other agencies might use this evidence against an employer.
  • Employers may choose to prohibit temporary employees and independent contractors from attending holiday functions.
  • In the case of temporary workers from a staffing agency, if such exclusion is too harsh, the company may negotiate with the independent staffing agency that provided the temporary workers to have the staffing agency provide some benefit or involvement in the function to solidify the staffing agency’s role as the true employer. For example, the staffing agency may be required to pay a small fee to subsidize the temporary workers’ attendance, send invitations through the agency, or have an agency representative on-site at the event.
• Physical Injury
  • If the party is held off-premises, employers should perform a reasonable inspection of the property before the event to ensure no harmful or dangerous conditions exist. Employers may be liable for dangerous conditions that cause injury to attendees.
  • Instruct caterers and bartenders not to serve an excessive amount of alcohol to any one individual. Many states have laws that impose a duty upon hosts to ensure that guests are not over-served.
  • Arrange for taxi services or encourage the use of Uber or Lyft so that employees who drink in excess will get home safely.
• Wage & Hour
  • If an employer would rather not pay hourly wages to have employees attend a function, then attendance should not be required.
  • If attendance at the holiday party is required, employees may be entitled to regular or even overtime compensation for the time spent at the holiday event.
  • In the event attendance at the holiday party is voluntary, employers should advertise it as such in any e-mail or invitation to avoid potential liability under the Fair Labor Standards Act (“FLSA”) or applicable state or local wage and hour law.

Religious Considerations

Many employers participate in various holiday activities throughout the season, including decorating the office and gift exchanges. If you intend on participating in the holiday season throughout the office, it is important as an employer to consider the religious implications.  As a public sector employer, if you decorate, use winter, non-religious decorations such as trees, snow, candy canes, and holly; however, this is generally considered the best practice for all employers.

During this season, it is important to be on alert for any requests from employees for accommodations for their sincerely-held religious beliefs.  Employers are legally obligated to accommodate their employees’ sincerely-held religious beliefs unless such an accommodation would impose an undue burden upon the employer. Importantly, employers are generally obligated to provide a religious accommodation only if the employee makes the employer aware of the need for such an accommodation and informs the employer that the accommodation is being requested due to a conflict between religion and work.  Employers should take employee requests for religious accommodations seriously and should consider such requests on a case-by-case basis. In addition, employers should consider using the holiday season as an opportunity to review their current religious accommodation policies or develop new policies for handling religious accommodation requests moving forward.

Bonuses

During the holidays, many employers get in the spirit by giving employees bonus payments.  In order to comply with state and federal wage laws, here are a few basic guidelines to keep in mind this time of year.  They apply to non-exempt employees only:

• If nondiscretionary bonuses, gifts, prizes, awards and/or incentive payments are based on the quality, quantity, or efficiency of production or hours worked, then the value of such payments must be calculated into the employee’s average hourly rate for the purpose of overtime pay. This means that any overtime worked in the pay period during which the bonus was received would need to be recalculated to adjust for the value of the nondiscretionary bonuses, gifts, prizes, awards or incentive pay.
• If the prize is merchandise, the amount to be allocated is the actual cost to the employer.
• Employers may only exclude a bonus from the regular hourly rate if the bonus was discretionary. A bonus is truly discretionary if the allocation and amount of the bonus are left to the employer’s sole discretion and the payment was not made pursuant to any prior contract, agreement, or promise that would lead the employee to expect the payment.

Charitable Activities: For Volunteers Only

The holidays are known for not only giving gifts, but also giving time. Employers and employees alike may be interested in volunteering in philanthropic pursuits. The FLSA permits employees to donate their time for humanitarian, religious, charitable, or other public-service reasons. However, such services must be conducted on a voluntary basis without the contemplation of pay.  Employees may not volunteer services to for-profit private sector employers.  Additionally, non-profit employers should be cautious if employees volunteer their time for the employer so as to not run afoul of wage and hour law.

Public sector employees may not volunteer services to another public sector employer without additional compensation where the employee is performing the same work for which he or she is employed. Similarly, the Department of Labor mandates compensation to public sector employees who provide services for a charity at the employer’s request, under the employer’s direction or control, or during the employee’s regular work hours.

If you have any questions regarding the issues raised in this client alert, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.