It’s become a SafetyXChange tradition. Every year at this time, we publish my analysis of an important but not well understood aspect of workplace safety: an employer’s potential liability for traffic incidents involving employees who’ve gotten drunk at the company office party.

The Risk of Liability for Serving Alcohol

Like many employers, you’ll be hosting a party for your workforce this holiday season. Chances are, you’ll be serving liquor at that party. That’s fine. But before you do, make sure you understand what you’re getting yourself into.

Relax. We’re not going to give you a lecture about the dangers of drinking and driving. That would be like preaching to the choir. But what you might need is a clear explanation of the liability exposure employers incur when they serve alcohol to their employees, not just at holiday season but at any time of the year.

The Law of Host Liability

Many companies don’t realize that they can be liable for injuries caused by employees who drive drunk after an office party (or another company-sponsored event). Even companies that know the risk exists don’t fully understand the exact nature of their potential liability and how to manage it.

Certain persons who serve alcohol to guests can be liable for negligence if the guests get drunk and cause injuries to themselves or others. This is called “host liability” and it extends to employers who furnish alcohol to their employees. Where does this law come from? And what does it mean? Let’s answer these questions one at a time.

Employer host liability for the drunk driving of workers isn’t contained in any OSHA standards or other federal laws. Rather, it comes from state law. It’s based on statutes and court cases. Some states, including Florida and Texas, have taken the position that employers should exercise reasonable care to prevent injuries by intoxicated employees. If they don’t, they can be held liable.

Social host liability may be based on “dram shop” laws — or state statutes that prohibit the sale of alcohol to minors and hold distributors responsible for alcohol-related injuries. For the most part, these laws only apply to companies that are in the business of selling alcohol, such as bars or restaurants. But some states have interpreted the law as imposing a legal duty upon social hosts (including employers) to exercise reasonable care when serving alcohol to their guests. In these states, courts have held employers liable for serving alcohol to a minor or an employee who becomes intoxicated and injures himself or someone else.

Employer Pays Almost $1 Million after Drunk Employee Kills Child

A major case occurred in 1992, when an employer was held liable after an employee got drunk at a professional trade meeting attended by other company employees. As he was driving home, the employee ran a stop sign and crashed into another car, killing the driver’s son. The employee had had several drinks with the company’s president and other employees, all of which were deducted as business expenses. Everyone watched as the employee left the bar, slurring his words. But nobody stopped him. The jury ordered the employer to pay $80,000 to compensate the victim’s father and another $800,000 for punitive damages. On appeal, the Florida court upheld the verdict because the employer:

• Told employees to attend the meeting to benefit the business;
• Paid for all meeting expenses, including drinks;
• Reimbursed travel expenses to and from the meeting;
• Encouraged employees to entertain clients and buy them drinks at these types of meetings; and
• Let the employee leave by himself, despite evidence that he was too drunk to drive.

Holding the employer responsible for the employee’s drunken conduct might seem unfair. After all, the employee was a responsible adult capable of making his own decisions. But the court in this case said that the employer should be responsible because it had more control over the actions of its employees than other kinds of hosts typically have over their guests [Carroll Air Systems, Inc. v. Greenbaum, 629 So. 2d 914 (Fla. App. 1992)].

As the Carroll case shows, employers are especially vulnerable when they require their workers to attend a function or drink with clients. In 2002, the Supreme Court of Texas said that an employer who required employees to drink with clients could be responsible for injuries resulting from the employees’ intoxication.  In that case, an exotic dance club required dancers to drink with the club’s clients to boost their bar tabs [D. Houston, Inc. v. Love, 92 S.W.3d 450 (Tex. 2002)].

Conclusion

The best way to avoid liability is to refrain from serving alcohol to your employees. But for better or worse, many people consider alcohol a big part of the holiday tradition. So it’s not realistic to expect you to go completely dry. But if you do dish out liquor this holiday season, make sure you take steps to prevent your guests from driving drunk. Next week, in Part 2 of this Series, we’ll lay out a strategy to help you do that.