The Price of Holiday Parties

A number of cases illustrate the type of offensive conduct at office parties that may contribute to a sexually hostile environment. For example, in Carver v. Waste Connections of Tenn., No. 3:04-CV-263, 2006 U.S. Dist. LEXIS 7881 (E.D. Tenn. Feb. 2, 2006), employees exchanged gifts of a sexual nature, including edible underwear and a blow-up doll, during a Christmas party held in a supervisor's home for the company's sales staff. The court found that the Christmas party incident 'contributed to the creation of a hostile work environment,' and denied in part the company's motion for summary judgment on the plaintiff's claim of a sexually hostile work environment.

Likewise, in Monthei v. Morton Bldgs., No. 4:01-CV-30510, 2003 WL 21212641 (S.D. Iowa March 26, 2003) a female employee was subjected to gender-specific derogatory remarks and obscenities by a coworker both inside the office and, in particular, at two annual company Christmas parties. In denying the company's post-trial motion for judgment as a matter of law on the employee's claims of a sexually hostile work environment, the court concluded that there was sufficient evidence to 'establish that the alleged harassment affected a term, condition, or privilege of employment.'

Although certain types of unwelcome conduct of a sexual nature at office parties, when considered alone or when coupled with other conduct at the office, may establish a sexually hostile work environment, isolated occurrences at office parties, though offensive, may not be sufficiently severe or pervasive to establish it. For example, in Trotta v. Mobil Oil Corp., 788 F. Supp. 1336 (SDNY 1992), the plaintiff's employer allowed sexually suggestive conduct to occur at mandatory business meetings and employer-sponsored social functions, such as the presence of female strippers, leather-clad women astride motorcycles, and the presentation of sexually suggestive gifts.

Despite the fact that the plaintiff found the conduct offensive, the court concluded that these incidents were 'neither sufficiently severe or pervasive to constitute a sexually hostile work environment for purposes of Title VII,' and dismissed the plaintiff's claims in their entirety, rendering judgment in favor of the employer. The court noted that these incidents were not directed at the plaintiff herself and spanned a period of seven and a half years, often separated by a year. See also Babcock v. Frank, 783 F.Supp. 800, 809 (S.D.N.Y. 1992) (gag gift of red lace underwear given to the plaintiff by a supervisor at an office Christmas party, though not amusing in retrospect, 'did not rise to the level of harassment'); Dehotman v. N.H. Dept. of Corrs., No. Civ. 04-CV-114-JD, 2005 WL 3801470 (D.N.H. June 3, 2005) (because both male and female employees were subjected to sexually suggestive conduct, court granted defendant's motion for summary judgment).

Minimizing the Risk

In order to minimize the risk of sexual harassment at holiday parties, employers may wish to institute a specific policy regarding employer-sponsored social events as a supplement to its sexual harassment policy. Employers may wish to be quite specific in citing examples of conduct that are unacceptable. Finally, employers may wish to consider allowing employees to bring a guest along to an employer-sponsored holiday party. Although such a guest policy may increase the cost of the party itself, employees can be expected to be on better behavior in the presence of their own or other coworkers' spouses or significant others.

Intoxicated Employees

Another unfortunate by-product of employer-sponsored parties is automobile accidents caused by intoxicated employees after the event(s). In various jurisdictions outside New York, doctrines involving negligence, respondeat superior and dram shop laws all have been used as support for claims against employers for injuries caused by intoxicated employees. Under current New York law, these doctrines have not been applied to hold employers liable. Know your own state's law!

In New York, for example, employers should nonetheless take appropriate precautions to avoid potential claims under the laws of adjacent states, which may be asserted by New York employees who may be injured following a New York social event. In tort cases involving parties from different states, for example, New Jersey courts conduct a flexible 'governmental interest' analysis in order to determine which state's law to apply. See, e.g., Kim v. Paccar Fin. Corp., 385 N.J. Super. 142, 896 A.2d 489, (N.J. Super. Ct. App. Div. 2006). This analysis is similar to the common law approach, which holds that the law of the place of injury applies to tort claims. See Restatement (Second) of the Conflict of Laws ' 146 (1971).

In New Jersey, under the doctrine of 'social host' liability, a social host who knowingly provides alcohol to a guest who is visibly intoxicated may be held responsible for any injuries caused by that guest. See Kelly v. Gwinnell, 96 N.J. 538, 476 A.2d 1219 (1984). New Jersey courts have imposed social host liability on business entities as well as private social hosts. In Davis v. Sam Goody, Inc., 195 N.J.Super. 423, 480 A.2d 212 (N.J. Super. Ct. App. Div. 1984), the plaintiff brought suit against a commercial host for injuries caused by an intoxicated guest. Reasoning that the control of alcohol, not the nature of the supplier, is the primary factor determining liability, the court reversed the lower court's grant of summary judgment for the defendant.

Moreover, the New Jersey Legis-lature has codified the doctrine of 'social host' liability in N.J. Stat. ' 2A: 15-5.5 (2006). This statute addresses the liability of a social host who negligently provides alcohol to a person who has attained the legal age to purchase and consume alcohol.

By contrast, in New York the doctrine of social host liability is limited to persons who serve alcohol to minors. Furthermore, New York courts have strictly interpreted claims under the so-called Dram-Shop law as applying only to commercial sellers of alcohol. See Joly v. Northway Motor Car Corp., 132 AD2d 790, 517 N.Y.S.2d 595 (3d Dept. 1987) (plaintiff denied recovery from employer of defendant for personal injuries sustained in a head-on collision with an intoxicated employee on his way home from a company Christmas party). See also D'Amico v. Christie, 71 NY2d 76, 518 N.E.2d 896, 524 N.Y.S.2d 1 (1987) (rejecting claim of social host liability, reasoning that while New York recognizes a duty of landowners to act reasonably to prevent injuries caused by intoxicated people on their property, that duty does not extend to accidents which occur beyond the boundaries of the property).

If, despite the risks, employers choose to sponsor holiday parties at which alcohol is served, they may choose to implement certain precautions to reduce the risk of accidents resulting from irresponsible consumption of alcohol. First, employers may wish to hold their parties at restaurants or other places where professional caterers serve alcohol whenever possible. They also may wish to confirm that the professional caterers carry liability insurance. If an event is to be held on an employer's premises, the employer should consider hiring a professional bartender to serve alcoholic beverages. Employers should also consider obtaining insurance coverage for the event, particularly dram shop or liquor law liability insurance. It's wise to instruct bartenders or wait staff not to serve drinks to anyone who is visibly intoxicated. The employer should not, if at all possible, make employees responsible for serving drinks to coworkers.

The employer may wish to devise some method to limit the amount of alcohol that will be served. This can be done either through a voucher system, or by limiting the time during which alcoholic beverages will be served. In any event, the employer should make a variety of nonalcoholic beverages and food available as an alternative to alcoholic beverages. The employer may wish to provide entertainment to discourage drinking from becoming the central focus of the event.

At events at which alcohol is served, and at any times when employees may be involved in business-related socializing, the employer should consider implementing some sort of transportation system that employees will feel comfortable using to get them to and from events. At all employee social events, the employer also should consider having employees designated as 'spotters,' to look out for coworkers who have drunk too much or are engaging in any other sort of inappropriate or unsafe activity.

Workers' Compensation

Under New York's Workers' Com-pensation Law, as one example, employees injured during an employer-sponsored social event may claim that they are entitled to workers' compensation benefits. Whether an employee's injury is deemed covered by the Workers' Compensation Law depends on whether the injury 'arose out of and in the course of the employee's job.' In applying this language to employer -sponsored parties, courts have not provided a bright-line rule, but rather have analyzed the peculiar facts and circumstances of each case.

For example, in Torres v. Triangle Handbag Mfg. Co., 13 AD2d 559, 211 N.Y.S.2d 992 (3d Dept. 1961), the Workers' Compensation Board and the Appellate Division held that an employee who was stabbed by a coworker as he was leaving an employer-sponsored Christmas party was injured in the course of his employment. The court was persuaded by the fact that the party was an annual event given by the employer held on the employer's premises at which alcohol was served. The Workers' Compensation Board and the court rejected the employer's argument that the injury did not arise out of the employee's employment since the stabbing was the result of a coworker's jealousy of the injured employee's dancing with a female coworker at the party, not due to any employment-related reason. In upholding the board's decision that the injury was compensable, the court noted that dancing and the drinking at the party, which were provided by the employer, 'initiated and stimulated the conflicting relationships which conflict shortly resulted in the injury.'

Other states depart from New York's rule that permits coverage for injuries at employer-sponsored social events. See, e.g., Sterling v. Mike Brown, Inc., 580 So2d 832 (Fla. Dist. Ct. App. 1991), rev. denied, 591 So.2d 184 (Fla. 1991) (denying workers' compensation benefits to employee injured at an office Christmas party, but noting that other jurisdictions, including New York, find such injuries compensable).

Even where the injury occurs after the party has ended, employees have claimed that their injuries should be covered under the Workers' Compen-sation Act because they were linked to attendance at the event. In Chorley v. Koerner Ford, Inc., 19 NY2d 242, 225 N.E.2d 737, 279 N.Y.S.2d 4 (1967), New York's highest court, the Court of Appeals, upheld a determination that an employee's death following strenuous dancing at a party given by an employer to celebrate the end of a sales contest was compensable under Workers' Compensation. After leaving the party, the employee drove home and died of a coronary occlusion later that night. Medical testimony established that the employee's exertion while dancing had a causal relationship to his death. The employer had sponsored the party in order to motivate employees, and attendance at the event, while not mandatory, was expected. Based on these facts, the Court of Appeals found that the party was part of the employee's job.

While the injuries of the workers in Torres and Chorley were found to be compensable under New York law, courts have found that automobile accidents generally are not compensable when they occur on the way to or from an employer-sponsored party. According to the Worker's Com-pensation Act, travel to and from work is not usually considered as arising out of an employee's job. See Panzica v. Ransom Oaks Div. of Caldwell Dev. Corp., 71 AD2d 733, 419 N.Y.S.2d 269 (3d Dept. 1979).

Minimizing the Risk of Liability

Employers may attempt to minimize their risk of liability under the Workers' Compensation Law by clearly informing their employees that holiday parties serve no specific business purpose and that attendance is not mandatory, although such a message may significantly undermine the party's purpose. Also, employers may want to hold the event off premises in an effort to reduce the likelihood that the holiday party appears to be an incident to the employees' job.

Conclusion

Four years ago, 64% of executives surveyed said that office holiday parties had fallen out of favor. By contrast, last year, in a survey of Fortune 1000 companies, 77% of managers and 71% of workers said they looked forward to the company office party. Katie M. Jackson, 'Mingle All the Way; Office Parties Are Back in Vogue As Simple Rules and a Few 'Point Persons' Preserve the Holiday Spirit,' The Boston Globe, Dec. 18, 2005, at G1. With the economy growing stronger, the number of office holiday parties is likely to continue in its upward trend. Accordingly, employers should focus now on the precautions they can take to minimize potential liability arising out of such holiday parties.

Jeffrey S. Klein and Nicholas J. Pappas are partners in the employment litigation practice group at New York's Weil, Gotshal & Manges. Jessica Marshall Glatt, an associate in the group, assisted in the preparation of this article, which first appeared in the New York Law Journal, a sister publication of this newsletter.

Now that the holiday season is over, employers may be facing fallout from their holiday parties. Although a review of recent cases asserting social host and workers' compensation liability reveals few reported decisions, there is likely no corresponding reduction in risk, and the increasing number of employers hosting holiday parties in recent years prompts an analysis of the challenges employers face in planning their annual holiday parties. It is not too soon to plan for next year's celebrations, while the experience from this year is fresh. This article discusses illustrative cases and suggests a number of concrete steps employers may wish to consider to reduce injuries and potential liabilities in planning their next holiday parties.

Sexual Harassment

The incidence of sexual innuendoes and jokes, as well as more overt sexually oriented acts, at employer-sponsored holiday parties has been well chronicled. One survey found that a number of women complained that some coworkers viewed office parties as a time when the rules of decent conduct are suspended. John T. Molloy, 'Caution: Office Parties,' The Houston Chronicle, Dec. 23, 1993, at 4.

A number of cases illustrate the type of offensive conduct at office parties that may contribute to a sexually hostile environment. For example, in Carver v. Waste Connections of Tenn., No. 3:04-CV-263, 2006 U.S. Dist. LEXIS 7881 (E.D. Tenn. Feb. 2, 2006), employees exchanged gifts of a sexual nature, including edible underwear and a blow-up doll, during a Christmas party held in a supervisor's home for the company's sales staff. The court found that the Christmas party incident 'contributed to the creation of a hostile work environment,' and denied in part the company's motion for summary judgment on the plaintiff's claim of a sexually hostile work environment.

Likewise, in Monthei v. Morton Bldgs., No. 4:01-CV-30510, 2003 WL 21212641 (S.D. Iowa March 26, 2003) a female employee was subjected to gender-specific derogatory remarks and obscenities by a coworker both inside the office and, in particular, at two annual company Christmas parties. In denying the company's post-trial motion for judgment as a matter of law on the employee's claims of a sexually hostile work environment, the court concluded that there was sufficient evidence to 'establish that the alleged harassment affected a term, condition, or privilege of employment.'

Although certain types of unwelcome conduct of a sexual nature at office parties, when considered alone or when coupled with other conduct at the office, may establish a sexually hostile work environment, isolated occurrences at office parties, though offensive, may not be sufficiently severe or pervasive to establish it. For example, in Trotta v. Mobil Oil Corp ., 788 F. Supp. 1336 (SDNY 1992), the plaintiff's employer allowed sexually suggestive conduct to occur at mandatory business meetings and employer-sponsored social functions, such as the presence of female strippers, leather-clad women astride motorcycles, and the presentation of sexually suggestive gifts.

Despite the fact that the plaintiff found the conduct offensive, the court concluded that these incidents were 'neither sufficiently severe or pervasive to constitute a sexually hostile work environment for purposes of Title VII,' and dismissed the plaintiff's claims in their entirety, rendering judgment in favor of the employer. The court noted that these incidents were not directed at the plaintiff herself and spanned a period of seven and a half years, often separated by a year. See also Babcock v. Frank , 783 F.Supp. 800, 809 (S.D.N.Y. 1992) (gag gift of red lace underwear given to the plaintiff by a supervisor at an office Christmas party, though not amusing in retrospect, 'did not rise to the level of harassment'); Dehotman v. N.H. Dept. of Corrs., No. Civ. 04-CV-114-JD, 2005 WL 3801470 (D.N.H. June 3, 2005) (because both male and female employees were subjected to sexually suggestive conduct, court granted defendant's motion for summary judgment).

Minimizing the Risk

In order to minimize the risk of sexual harassment at holiday parties, employers may wish to institute a specific policy regarding employer-sponsored social events as a supplement to its sexual harassment policy. Employers may wish to be quite specific in citing examples of conduct that are unacceptable. Finally, employers may wish to consider allowing employees to bring a guest along to an employer-sponsored holiday party. Although such a guest policy may increase the cost of the party itself, employees can be expected to be on better behavior in the presence of their own or other coworkers' spouses or significant others.

Intoxicated Employees

Another unfortunate by-product of employer-sponsored parties is automobile accidents caused by intoxicated employees after the event(s). In various jurisdictions outside New York, doctrines involving negligence, respondeat superior and dram shop laws all have been used as support for claims against employers for injuries caused by intoxicated employees. Under current New York law, these doctrines have not been applied to hold employers liable. Know your own state's law!

In New York, for example, employers should nonetheless take appropriate precautions to avoid potential claims under the laws of adjacent states, which may be asserted by New York employees who may be injured following a New York social event. In tort cases involving parties from different states, for example, New Jersey courts conduct a flexible 'governmental interest' analysis in order to determine which state's law to apply. See, e.g. , Kim v. Paccar Fin. Corp., 385 N.J. Super. 142, 896 A.2d 489, (N.J. Super. Ct. App. Div. 2006). This analysis is similar to the common law approach, which holds that the law of the place of injury applies to tort claims. See Restatement (Second) of the Conflict of Laws ' 146 (1971).

In New Jersey, under the doctrine of 'social host' liability, a social host who knowingly provides alcohol to a guest who is visibly intoxicated may be held responsible for any injuries caused by that guest. See Kelly v. Gwinnell , 96 N.J. 538, 476 A.2d 1219 (1984). New Jersey courts have imposed social host liability on business entities as well as private social hosts. In Davis v. Sam Goody, Inc., 195 N.J.Super. 423, 480 A.2d 212 (N.J. Super. Ct. App. Div. 1984), the plaintiff brought suit against a commercial host for injuries caused by an intoxicated guest. Reasoning that the control of alcohol, not the nature of the supplier, is the primary factor determining liability, the court reversed the lower court's grant of summary judgment for the defendant.

Moreover, the New Jersey Legis-lature has codified the doctrine of 'social host' liability in N.J. Stat. ' 2A: 15-5.5 (2006). This statute addresses the liability of a social host who negligently provides alcohol to a person who has attained the legal age to purchase and consume alcohol.

By contrast, in New York the doctrine of social host liability is limited to persons who serve alcohol to minors. Furthermore, New York courts have strictly interpreted claims under the so-called Dram-Shop law as applying only to commercial sellers of alcohol. See Joly v. Northway Motor Car Corp., 132 AD2d 790, 517 N.Y.S.2d 595 (3d Dept. 1987) (plaintiff denied recovery from employer of defendant for personal injuries sustained in a head-on collision with an intoxicated employee on his way home from a company Christmas party). See also D'Amico v. Christie , 71 NY2d 76, 518 N.E.2d 896, 524 N.Y.S.2d 1 (1987) (rejecting claim of social host liability, reasoning that while New York recognizes a duty of landowners to act reasonably to prevent injuries caused by intoxicated people on their property, that duty does not extend to accidents which occur beyond the boundaries of the property).

If, despite the risks, employers choose to sponsor holiday parties at which alcohol is served, they may choose to implement certain precautions to reduce the risk of accidents resulting from irresponsible consumption of alcohol. First, employers may wish to hold their parties at restaurants or other places where professional caterers serve alcohol whenever possible. They also may wish to confirm that the professional caterers carry liability insurance. If an event is to be held on an employer's premises, the employer should consider hiring a professional bartender to serve alcoholic beverages. Employers should also consider obtaining insurance coverage for the event, particularly dram shop or liquor law liability insurance. It's wise to instruct bartenders or wait staff not to serve drinks to anyone who is visibly intoxicated. The employer should not, if at all possible, make employees responsible for serving drinks to coworkers.

The employer may wish to devise some method to limit the amount of alcohol that will be served. This can be done either through a voucher system, or by limiting the time during which alcoholic beverages will be served. In any event, the employer should make a variety of nonalcoholic beverages and food available as an alternative to alcoholic beverages. The employer may wish to provide entertainment to discourage drinking from becoming the central focus of the event.

At events at which alcohol is served, and at any times when employees may be involved in business-related socializing, the employer should consider implementing some sort of transportation system that employees will feel comfortable using to get them to and from events. At all employee social events, the employer also should consider having employees designated as 'spotters,' to look out for coworkers who have drunk too much or are engaging in any other sort of inappropriate or unsafe activity.

Workers' Compensation

Under New York's Workers' Com-pensation Law, as one example, employees injured during an employer-sponsored social event may claim that they are entitled to workers' compensation benefits. Whether an employee's injury is deemed covered by the Workers' Compensation Law depends on whether the injury 'arose out of and in the course of the employee's job.' In applying this language to employer -sponsored parties, courts have not provided a bright-line rule, but rather have analyzed the peculiar facts and circumstances of each case.

For example, in Torres v. Triangle Handbag Mfg. Co. , 13 AD2d 559, 211 N.Y.S.2d 992 (3d Dept. 1961), the Workers' Compensation Board and the Appellate Division held that an employee who was stabbed by a coworker as he was leaving an employer-sponsored Christmas party was injured in the course of his employment. The court was persuaded by the fact that the party was an annual event given by the employer held on the employer's premises at which alcohol was served. The Workers' Compensation Board and the court rejected the employer's argument that the injury did not arise out of the employee's employment since the stabbing was the result of a coworker's jealousy of the injured employee's dancing with a female coworker at the party, not due to any employment-related reason. In upholding the board's decision that the injury was compensable, the court noted that dancing and the drinking at the party, which were provided by the employer, 'initiated and stimulated the conflicting relationships which conflict shortly resulted in the injury.'

Other states depart from New York's rule that permits coverage for injuries at employer-sponsored social events. See, e.g., Sterling v. Mike Brown, Inc ., 580 So2d 832 (Fla. Dist. Ct. App. 1991), rev. denied, 591 So.2d 184 (Fla. 1991) (denying workers' compensation benefits to employee injured at an office Christmas party, but noting that other jurisdictions, including New York, find such injuries compensable).

Even where the injury occurs after the party has ended, employees have claimed that their injuries should be covered under the Workers' Compen-sation Act because they were linked to attendance at the event. In Chorley v. Koerner Ford, Inc., 19 NY2d 242, 225 N.E.2d 737, 279 N.Y.S.2d 4 (1967), New York's highest court, the Court of Appeals, upheld a determination that an employee's death following strenuous dancing at a party given by an employer to celebrate the end of a sales contest was compensable under Workers' Compensation. After leaving the party, the employee drove home and died of a coronary occlusion later that night. Medical testimony established that the employee's exertion while dancing had a causal relationship to his death. The employer had sponsored the party in order to motivate employees, and attendance at the event, while not mandatory, was expected. Based on these facts, the Court of Appeals found that the party was part of the employee's job.

While the injuries of the workers in Torres and Chorley were found to be compensable under New York law, courts have found that automobile accidents generally are not compensable when they occur on the way to or from an employer-sponsored party. According to the Worker's Com-pensation Act, travel to and from work is not usually considered as arising out of an employee's job. See Panzica v. Ransom Oaks Div. of Caldwell Dev. Corp ., 71 AD2d 733, 419 N.Y.S.2d 269 (3d Dept. 1979).

Minimizing the Risk of Liability

Employers may attempt to minimize their risk of liability under the Workers' Compensation Law by clearly informing their employees that holiday parties serve no specific business purpose and that attendance is not mandatory, although such a message may significantly undermine the party's purpose. Also, employers may want to hold the event off premises in an effort to reduce the likelihood that the holiday party appears to be an incident to the employees' job.

Conclusion

Four years ago, 64% of executives surveyed said that office holiday parties had fallen out of favor. By contrast, last year, in a survey of Fortune 1000 companies, 77% of managers and 71% of workers said they looked forward to the company office party. Katie M. Jackson, 'Mingle All the Way; Office Parties Are Back in Vogue As Simple Rules and a Few 'Point Persons' Preserve the Holiday Spirit,' The Boston Globe, Dec. 18, 2005, at G1. With the economy growing stronger, the number of office holiday parties is likely to continue in its upward trend. Accordingly, employers should focus now on the precautions they can take to minimize potential liability arising out of such holiday parties.

Jeffrey S. Klein and Nicholas J. Pappas are partners in the employment litigation practice group at New York's Weil, Gotshal & Manges. Jessica Marshall Glatt, an associate in the group, assisted in the preparation of this article, which first appeared in the New York Law Journal, a sister publication of this newsletter.