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. [Editor's Note: If you're from Canada, substitute the analysis in the "Canadian Perspective" below for the remaining paragraphs in this subsection and the entire subsection that follows.]

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.

THE CANADIAN PERSPECTIVE

This story is equally relevant to Canadian audiences. Employer host liability for the drunk driving of employees is an outgrowth of the employesr' obligation to protect its employees. But it's not contained in any of the provincial or territorial OHS statutes; nor is it in the regulations that implement those statutes.

The law comes from court cases. More precisely, host liability and its application to employers who serve alcohol to employees is part of negligence law.

3 Key Court Cases

It all started in 1974 when the Canadian Supreme Court decided a case called Jordan House Ltd. v. Menow, (1974) D.L.R. (3d) 105 (S.C.C.). A customer walked into a bar, drank too much and got run over by a car after stumbling into the street while walking home. The customer sued the bar for serving him to the point of intoxication and then letting him leave knowing that he couldn't properly care for himself.

The Court found the bar guilty of negligence. Bars, restaurants and other commercial establishments that serve alcohol have a duty to protect their patrons, it said. Essentially, the Court was saying that a bar can't just serve customers until they get drunk and then turn them loose on the streets.

The Menow case involved a commercial establishment. But in 1996, the BC Supreme Court applied host liability to an employer. A supervisor brought a cooler of beer to a crew erecting a trade show display on a hot day. A crew member got noticeably drunk and drove into a ditch on the way home. As a result, he became a quadriplegic. The Court found the company 75 percent responsible and ordered it to pay the victim $2.7 million in damages.

Holding the employer responsible for the victim's injuries might seem unfair. After all, the victim was a responsible adult capable of making his own decisions. But the Court said that the employer in this case was just like the bar in Menow. It supplied the beer; the supervisor also knew the victim was drunk but didn't try to stop him from driving home. Employers have an obligation to guard employees against unreasonable risks, the Court said, just as bars have a duty to protect their customers [Jacobsen v. Nike Canada Ltd., [1996] B.C.J. No. 363 (B.C.S.C.)].

The Nike principles apply equally to employers who host parties where liquor is served. In 2001, an Ontario company was held 25 percent responsible for injuries caused by an employee who got into an accident after drinking wine at the company Christmas party. Keeping an employee from driving home drunk after a party it hosts is part and parcel of the duty to ensure workers a safe workplace, according to the court [Hunt v. Sutton Group Incentive Realty Inc., (2001) 52 O.R. (3d) 425].

Note: The Ontario Court of Appeal later reversed the Hunt case on a technicality. The Court said the jury was subject to improper influences; but it didn't say that the case was wrong to impose a duty on the employer. Thus, the concept of host liability on the part of an employer remains the law until and unless a court or the legislature say otherwise.

MEMBER REPLY
Obstructing an OSHA Inspector

QUESTION

Dear Inspector O'Shay:

I'm slightly confused about your article last week about the vanishing cylinder. Why was it considered obstruction for the company to take the cylinder and protect it? Was it because the company did not allow Nick to take the cylinder in the first place? I see no problem with protecting the cylinder from getting lost or mishandled by other company personnel. It seems prudent the company would maintain the cylinder in a safe location until Nick could retrieve it.

Puzzled in Pomona

_________

ANSWER

Dear Puzzled:

Nick has authorized me to answer your question on his behalf. Safeguarding what has become a key piece of evidence is not just prudent but crucial. But that's not why the SPW officials got into trouble. The reason the SPW officials were guilty of obstruction is that they unilaterally took back the cylinder after an OSHA inspector had taken lawful possession of it.

The question of whether Nick had the right to seize the evidence in the first place is an interesting one. The story is premised on the fact that the seizure was legal. But the authority of OSHA inspectors to take possession of machine parts, documents and other evidentiary materials is subject to specific limitations. I will ask Nick to talk about this in one of his future Diary entries.

Glenn Demby
Editor-in-Chief
SafetyXChange

LAWYER JOKE

By Glenn Demby

QUESTION

Why is it that New Jersey has approximately 1,000 EPA-designated toxic waste sites and California has approximately 20,000 lawyers?

ANSWER

New Jersey had first choice.

******

THE FINE PRINT

NOTICE: The above joke does not necessarily reflect the views and beliefs of SafetyXChange, its members, affiliates, heirs, successors or assigns, or any other person, living or dead. SafetyXChange makes no representation or warranty as to the above joke's funniness nor does it condone the practice of telling lawyer jokes. Members are reminded that Glenn Demby is a lawyer and, as such, is duly authorized to repeat lawyer jokes without being deemed politically incorrect. However, SafetyXChange members and members of the general public are strongly cautioned against the telling of lawyer jokes, except insofar as said jokes are funnier than that told by Mr. Demby above.

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