The holiday season is in full swing, with corporate parties happening nightly to celebrate the year and give kudos to hardworking employees. The venues, food and entertainment have been chosen. Now it’s time to think about alcohol, and how to best handle this because of the liability exposure involved for all businesses (it is also referred to as Host Liquor in some policies).
The United States Department of Labor states that holding an office holiday party with improper use of alcohol can make employers vulnerable to liability under tort, Workers’ Compensation, or other laws. Additionally, liquor liability laws were intended originally to apply to taverns, bars, and other establishments selling and serving alcohol. However, the liability laws have expanded over time to include “social hosts” (such as those holding a holiday party in their home or business) in some states giving them some exposure to the risk of liability for serving alcohol.
Here are several tips to provide to your insureds as they plan their holiday parties:
- Before hosting a party, check with your insurance broker about what type of liability insurance coverage the business carries and any limitations it might have, including if the policy covers third-party liquor liability. When business owners host a holiday party and serve alcohol as part of the festivities, liquor liability can be covered by their Commercial General Liability (CGL) policy.
- Remind employees via email about the company’s code of conduct and substance abuse policy prior to the party. Advise employees to behave responsibly. Include a statement on the party invitation and/or circulate a written reminder to all concerned on the responsibilities to drink only in moderation and to avoid driving after drinking. Emphasize to management that they must lead by example.
- If alcohol is going to be available at the party, it’s recommended that the party be hosted at a hotel, restaurant or bar with a liquor license, rather than at the office. This transfers the liability risk to the venue, which may require a certificate of insurance from the employer/customer. In this case, the employer hosting the party may want to consider getting a special event policy to address the added risk.
- Use professional bartenders and instruct them not to serve anyone who appears intoxicated, and also not serve alcohol to any employees under the age of 21.
- Ask management to look out for people who have had too much to drink and are unable to drive or need assistance getting home. Provide alternative transportation, such as an Uber, Lyft or taxi, for anyone suspected of drinking too much.
- Make sure the amount of alcohol being served is managed. For example, distribute drink tickets to limit the number of free drinks; offer non-alcoholic options such as water, soda, sports drinks and coffee and tea, and serve food throughout the party to keep guests full and help reduce their alcohol intake; close the bar and stop serving drinks 90 minutes before the end of the party; or even consider not paying for alcoholic drinks—guests will drink less if they have to pay for the drinks themselves.
Business owners should talk with their insurance advisor about their liability insurance coverage and any exclusions, conditions, or limitations to their policies for this kind of risk.