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 three-legged 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 äóñ 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 äóñ 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:

• employee participation is voluntary and not required by the employer.
• no work-related activities will be conducted in connection with the social event.
• time spent on the activity will not be paid time, and will not be considered “hours worked.”
• 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.

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

Employers should keep the following tips in mind regarding work-related social events:

• Ensure all event notices clearly specify that events and activities are not mandatory.
• 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.
• When economically possible, include family members in the event. Doing so may support an argument that the event is not business-related.
• 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 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.
• Convey to employees prior to the event the employer’s expectation that employees will treat each other with respect during the event.
• 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.

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.