As the holiday season approaches, many businesses and firms are beginning to plan their office parties. While the focus is on the many positive benefits during the planning stages, it is easy to forget about the potential liability that comes with furnishing alcohol to promote more holiday cheer. In particular, what happens if an intoxicated employee injures a third-party while driving home? Although the standard for employer liability under this scenario varies from state-to-state, a recent decision from the Appellate Court of Illinois should serve as a “wake up call” for all employers.
In Hicks v. Korean Airlines Co., No. 1-09-0542, 2010 WL 3834881 (Ill.App. 1 Dist. Sept. 29, 2010), the court concluded that Korean Airlines could be held vicariously liable for the negligent and intoxicated conduct of its employee that was involved in a deadly automobile accident following a dinner party. Like the vast majority of states, Illinois has a Dram Shop statute that provides a framework for determining whether a business that sells alcohol should be held liable. Because a “social host” is not liable under the statute or under Illinois common law, Korean Airlines argued that a “Pandora’s Box” would be opened if the court allowed plaintiff’s case to proceed based on a theory of vicarious liability. In rejecting this contention, the court concluded that employer liability “can arise from acts, omissions or, in the case of respondeat superior, the employer-employee relationship, so long as the employee’s negligence is within the scope of employment.” Accordingly, if the plaintiff can establish that the intoxicated worker was acting within her scope of employment at the time of the deadly accident, Korean Airlines will automatically be held liable for all damages.
Given the potential for uncapped liability, this case should serve as a “wake up call” for all employers. So, what can be done to limit potential exposure without taking all the holiday cheer out of a party? While there are no guaranteed methods of avoiding alcohol-related liability, there are some practical steps that an employer can take to limit potential exposure. For example, as part of the invitation, the employer can clearly communicate to all employees that attendance at the party is strictly voluntary and that the party is solely for the benefit and social pleasure of the employees. This message may also be reinforced through a more detailed memorandum with information about celebrating the holidays in a responsible manner. An employer may go as far as to obtain written confirmation from each employee that acknowledges the voluntary and social nature of the party. This acknowledgment may include a broader release to protect against other potential claims by employees. At the party, a multitude of common sense measures may be used to prevent intoxicated driving, including drink vouchers, cash bars, hiring professional bartenders, designated drivers and free transportation services. Finally, it is vital to obtain written confirmation from the insurance carrier that there is coverage in a sufficient amount to protect the employer from alcohol-related liability.
With some advanced planning, an employer should be able to provide holiday cheer to its employees while avoiding a holiday nightmare.