For employers, the holiday season often includes hosting annual parties, catering office luncheons, or distributing end-of-year gifts and bonuses. However, with these good tidings and cheers comes potential liabilities.

Office Parties

With respect to holiday parties and office gatherings, employers should take steps to minimize potential liability:

• Attendance Should Be Voluntary: Make it clear that attendance is optional. If attendance is mandatory, employers must compensate hourly employees for their time, as required by the Fair Labor Standards Act (“FLSA”) or applicable state law. Written invitations or event notices should explicitly state that participation is voluntary.
• Prevent Harassment: Inappropriate behavior at holiday events, especially those held off-site, can contribute to a hostile work environment. Supervisors and managers should model professional behavior, limit alcohol consumption, and monitor for any conduct that may make employees uncomfortable.
• Designate HR Support: Assign a Human Resources representative to attend the event, monitor issues, and address any complaints or concerns before they escalate.
• Promote Inclusivity:
  • Avoid religious themes to respect diverse beliefs.
  • Ensure venues and activities are accessible to employees with disabilities.
  • Provide dietary and beverage options to accommodate various needs (e.g., kosher, vegan, and non-alcoholic options).
  • Offer neutral, appropriate gifts such as gift cards.
• Handle Complaints Seriously: If inappropriate behavior is reported, investigate promptly and take corrective action in line with company policies. Employees who report misconduct should be protected from retaliation.

Preventing Physical Injury

Holiday parties involve the possibility of injury, particularly when alcohol is involved. Employers should consider:

• Workers’ Compensation Liability: In many states, injuries at company events are covered under workers’ compensation laws, which may limit the employee’s ability to seek additional damages.
• Premises and Alcohol Liability: Employers could be liable for injuries resulting from unsafe conditions or alcohol-related incidents. Many states have “dram shop” laws that impose a duty upon hosts to ensure that guests are not overserved alcohol.
• Risk Mitigation Strategies:
  • Provide transportation or ride-sharing options for employees who consume alcohol.
  • Limit alcohol consumption by offering drink tickets or a cash bar. Serving only beer and wine, rather than hard liquor, can also reduce risks.
  • Offer non-alcoholic beverages to accommodate all employees and encourage responsible drinking.

Independent Contractors and Temporary Employees

Companies that utilize independent contractors and temporary employees should be mindful of how they are treated during the holiday season and take proactive measures to avoid creating evidence that an employer-employee relationship exists.

• Options to reduce risk include:
  • Prohibiting independent contractors from attending the event.
  • If including temporary employees, involve the staffing agency in organizing the event, such as by sharing costs, sending invitations through the agency, or having an agency representative present.

Bonuses and Overtime

Many employers get in the holiday spirit by giving non-exempt employees prizes, awards, nondiscretionary bonuses, and incentive payments.

• Non-Discretionary Bonuses: If bonuses are based on quality, performance, productivity, or hours worked, they must be included in the employee’s regular hourly rate for overtime calculations.
• Discretionary Bonuses: Bonuses that are entirely at the employer’s discretion and not promised in advance can be excluded from overtime calculations.

Volunteering for Charitable Activities

Employers and employees alike may be interested in volunteering in philanthropic pursuits during the holiday season, and the Fair Labor Standards Act permits individuals to donate their time as non-employees for humanitarian, religious, charitable, or other public-service reasons. Volunteering for a charitable activity must be conducted by an employee on a purely voluntary basis without the contemplation of pay.

• Private Sector: Employees may volunteer for nonprofit organizations but cannot volunteer for their own employer without compensation.
• Public Sector: Employees may not volunteer for their public employer in roles similar to their paid job without additional compensation.

Family and Medical Leave Act (“FMLA”) and Holidays

What if a company holiday coincides with leave an employee takes under the FMLA? The amount of the employee’s FMLA leave entitlement is not affected by a holiday that falls during their workweek if the employee works for part of that week and takes FMLA leave for part of that week, unless they were scheduled to work on that holiday. Therefore, if the employee was not expected or scheduled to work on the holiday, the amount of FMLA leave taken (which would not include the holiday) divided by the complete workweek (which would include the holiday) would represent the portion of the workweek of FMLA leave used.

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