The holiday season is quickly approaching and employers may be planning to host a company party. Employers host company parties in order to bring employees together and create a cohesive company. However, employers who serve alcohol at these parties must be very careful and absolutely aware of their legal obligations when hosting one of these events on or outside company premises or at the home of the business owner/manager.

Due to the nature of the employer-employee relationship, courts have clearly stated that the standard of care on an employer is higher than that on a tavern owner or a social host. In addition to the general duty to maintain a safe workplace, employers who provide alcohol at a company hosted party are obligated to:

1. Monitor the amount of alcohol consumed by employees; and

2. Take positive steps to prevent an employee from driving home after drinking.

Employers have a serious duty to safeguard their employees; this duty includes insisting employees turn over their car keys if they plan to consume alcohol at a company hosted party, paying for a cab to take an employee home safely after a company hosted party; calling the police if an employee insists on driving when he or she has consumed alcohol at a company hosted party, calling a contact to come and take the employee home, or physically stopping the employee from hurting himself or herself and others.

Where employees drink large amounts of alcohol, drive, and subsequently get into a car accident causing significant injuries to the employees or others, employers may be found vicariously liable for the actions of their employees. Courts show no mercy when making awards for damages in these types of cases; despite the fact that plaintiffs are found to be partly responsible for their own fate, employers have been ordered to pay plaintiffs large sums of money for their portion of responsibility.

What does vicarious liability mean?

Vicarious liability is the term used when organizations are ultimately responsible for an event or property, and are held legally liable for the actions and negligence of their employees and volunteers. Organizations could be vicariously liable for negligent, intentional or unintentional actions of those operating on their behalf. In other words, the employees' negligent actions will be considered the actions of the organization, and consequently, the organization will be held personally liable if these actions are performed while the employee is in the course of employment. This vicarious liability can even extend to intentional acts of civil wrongs (torts) done by employees or agents of an organization that cause harm to a third party. Such intentional torts include such actions as harassment, assault and battery.

Case law related to liability of employers for accidents resulting from workplace alcohol consumption by their employees

In Jacobsen v. Nike Canada Ltd., 1996 CanLII 3429 (BC S.C.), Jacobsen, a 19-year old warehouse employee at Nike Canada Ltd., and some co-workers worked off-site assembling a trade show display. One of the two supervisors gave the workers free beer. Jacobsen drank at least eight beers before he went off duty, and subsequently went to two clubs and drank more beer. On his way home, he drove his car into a ditch, causing injuries that resulted in quadriplegia. Jacobsen sued Nike and was awarded almost $3 million. Although Jacobsen was 25% liable, he won a substantial amount of money. The court stated that the standard of care on an employer was higher than that imposed on a tavern owner or social host and Nike failed to meet the standard by providing alcohol, failing to monitor its consumption, and not preventing Jacobsen from driving.

In addition, in Hunt v. Sutton Realty Incentive Group Inc. (Ontario Superior Court, 2001), Hunt, a part-time receptionist, went to the company's holiday party and became intoxicated. She then left the party with other people and went to a pub and had two more drinks. On her way home, Hunt got into a car accident and suffered permanent injuries. The court found that the pub and the employer were jointly 25% liable to Hunt for $281,000; Hunt was found to be 75% liable for the damages. The court stated in this case that the employer owed a duty to safeguard Hunt from harm by taking steps to prevent her from driving. It was not enough to just offer to pay for a cab.

In 2002, the Court of Appeal sent the Hunt case back to a jury to decide on liability and damage on the bases that the Appeal Court found substantive errors in law in the trial judge's judgment. The substantive issue considered in this appeal that warrant a new trial is the extent of the duty of care owed by an employer to an employee driving home after an office Christmas party and the main procedural issue is the exercise of the trial judge's discretion in discharging the jury upon grounds of complexity and publicity. This means the whole case will need to be decided all over again or, more likely, settled quietly. Hunt v. Sutton Group Incentive Realty Inc. (August 14, 2002).

Furthermore, in John v. Flynn (June 28, 2001), an employer was found partly responsible for failing to prevent an intoxicated employee from driving home, even though the employer clearly did not supply any alcohol to the employee. The employee in question had a long history of alcohol abuse, for which he had recently received three months' treatment arranged by his employer. His continued employment was contingent upon him never drinking on the job (the employee had signed a last chance agreement.)

The company also had a policy prohibiting drinking during office hours. However, the employee continued to secretly consume alcohol in his car, in the employer's parking lot, during office hours. One day, after secretly drinking on the job, the employee drove home, had something to eat, and then left home for a friend's house. The employee caused a major accident in which he seriously injured another driver. The company was sued for damages. The employer was found 30% liable for the injuries suffered by the other driver because it had failed to monitor the employee's drinking or the parking lot where he was known to consume alcohol, and also for failing to stop the employee from driving under the influence of alcohol. According to the court, the employer should have sent the employee home in a cab, or taken his car keys or confiscated his car, or placed him in the care of a union representative or other responsible person.

This case was later appealed, and the decision was overturned. The Court in overturning the first judgment in favour of the employer stated that when the employer was informed that the employee had a drinking problem and asked for help, it did not impose a new or special duty on the employer to monitor that specific employee for his sake. The monitoring and obligations are for the workplace as a whole. The employer was put on notice that this employee had a problem and took all the measures possible to help and accommodate the employee. It was the employee's responsibility to take advantage of this help and carry out the terms of accommodation and the last chance agreement. It was the employee's responsibility and later on, his failure to live up to the conditions of his last chance agreement that caused the breach in the employment relationship.

Also, there is a clear duty of care on an employer to provide a safe work environment for its employees but that duty does not extend beyond the workplace. It is extreme and a novel idea to expect an employer to determine and monitor if it is safe for its employees to drive home. The Court was wrong to determine that “the employer had a duty of care to protect the employee from the consequences of his alcoholism, and that the duty of care extended beyond the workplace and beyond the employee himself, encompassing all those that the employee might encounter on the highway at anytime after leaving the workplace.” Particularly when the employee drove himself home without any mishaps. The fact that the employer knew of the employee's drinking problem, had set up accommodation and was aware that some drinking was occurring on its premises was not sufficient enough to extend the duty of care to all members of the public who may come into contact with its employees outside of the workplace.

The reversal of these two cases (Hunt and Flynn) does not mean that the duty of care owed by an employer to its employees, or for that matter, by a host during a work related event to his or her guests is materially changed. Moreover, recent legal decisions have broadened the scope of an employer's responsibility for monitoring employee behaviour, both within and outside of the workplace, where alcohol consumption is involved. Employers, who choose to make alcohol available to employees, must take steps to avoid foreseeable risk of injury that arises when intoxicated employees choose to drink and drive. If they fail to do so, the court will hold them to the highest standard of care. Employers, who host company-sponsored events where alcohol is served, can limit the legal risks and reduce potential liabilities by taking certain precautions.

The conclusions that can be drawn from recent cases are:

• any claim by an employee against an employer for loss arising from the provision of alcohol will be based entirely on the law of master and servant and the duty of care that an employer owes to its employees.
• an employer is responsible for ensuring that an employee who drinks does not drive home and for providing an alternate mode of transportation.
• an employer must be in a position to monitor the consumption of alcohol by the employee and to know, from the amount of alcohol consumed, whether he or she is in a position to operate a motor vehicle.
• if an employer is aware of alcohol consumed on its premises, then its duty is to ensure that the employee makes it safely home.

There are other issues that arise when employers host parties:

• employers should protect employees from injuries during the party by ensuring that the premises are safe;
• employers should protect employees from getting injured by other intoxicated employees by restraining or removing rowdy employees;
• employers should protect employees from doing something dangerous at a party by removing the employee, stopping the party, calling for help, or physically restraining the employee; and
• employers should protect employees from hurting themselves while being transported on a company bus.

What can employers do in order to protect their employees and avoid liability during parties?

It is recommended that employers should take the following actions to limit the legal risks and reduce potential liabilities:

When Planning:

• prepare written policies governing alcohol use at all company events and activities inside and outside of the workplace;
• remind employees before each company-sponsored event that all company policies on employee behaviour remain in full force at all such events. Encourage moderation by reminding employees that the event is also a business function;
• do not sponsor, organize, supervise, or allow on your property any inherently dangerous events or activities such as drinking contests, under-aged drinking, or all-you-can-drink events;
• provide alcohol only after physical events are completed;
• have event staff monitor for signs of intoxication;
• take steps to avoid issues with those who have had prior problems with alcohol at events;
• do not make the drinking the focus of the event; and
• send a memo reminding employees that attendance is voluntary, not to drink in excess, and never to drink and drive;
• have appropriate liability insurance in place;
• invite spouses or partners since it has a moderating effect on employee conduct;
• have a plan in advance for guests who become intoxicated in terms of getting home safely.

When Drafting Policies Involving Alcohol, Create Policies About:

• alcohol consumption prior to or during the work day;
• employees who arrive or are found at work under the influence of alcohol and their safe transportation home;
• alcohol consumption on company property, including parking lots;
• the provision of alcohol during business meetings or entertaining;
• the claiming of alcohol as a business expense;
• alcohol consumption prior to driving any company vehicle; and
• ensuring drivers of a company vehicle have a valid licence and are legally entitled to drive.

When Managing:

• inspect the premises on which any company event will be held to ensure that it complies with the relevant building and safety codes, and is reasonably safe for those who will be drinking;
• ensure that security arrangements are adequate given the size of the event, location, the participants, and any previous problems;
• if there will be younger people, implement identification procedures to ensure drinkers are of age;
• ask employees to place their keys in a basket as they arrive;
• ensure that the servers have some experience and training in terms of identifying the signs of intoxication, understanding their obligations; and
• ensure that servers and event staff refrain from drinking during the event.

When Serving:

• do not serve, provide, or make alcohol available to any person who is or may be under the legal drinking age;
• make food and non-alcoholic beverages available;
• serve drinks rather than having an open self-serve bar;
• do not encourage intoxication by serving strong drinks, double shots, or high alcohol content beer;
• limit the number of drinks that can be purchased at one time;
• do not make the price of a drink too low; and
• stop serving alcohol long before the event ends, and do not announce “last call”.

When Supervising:

• do not provide alcohol to a person who is or may be intoxicated;
• give servers authority to refuse to serve to under-aged, intoxicated, or rowdy guests;
• refrain from drinking at events for which you are responsible;
• train staff to focus on the guests' appearance and behaviour; and
• be prepared to have a word with or call the police in respect of intoxicated or rowdy guests, and arrange for these guests to be taken home safely.

Christina Catenacci, B.A., LL.B., is assistant editor for HRinfodesk and the content editor for The Human Resources Advisor (HRA), Ontario, Western and Atlantic editions published by First Reference Inc.

Published with permission on HRinfodesk---Canadian Payroll and Employment Law News and Developments
HRinfodesk is an information and news service that is published by First Reference, which includes employment law news for every jurisdiction in Canada, a Library of Articles, FAQs, a Calendar of Events, Important Dates and an HR Internet Directory for expanded research. Our search tools will help you to quickly find results by jurisdiction, topic, date, keyword and article number. For the latest employment law news and a ten day trial, click here.

First Reference is a publisher of Canadian employment law, finance and accounting reference manuals that are comprehensive, updated and practical. Publications include The Human Resources Advisor, Human Resources PolicyPro, Finance & Accounting PolicyPro and the HRinfodesk online information and news service (Bulletin and website). For more information or to purchase one of our publications, go to http://www.firstreference.com/.

This article offers general comments on legal developments of concern to businesses. Every effort has been made to ensure the accuracy and timeliness of this information. These publications are written for informational purposes only and should NOT be relied upon as legal advice or opinions. The reader should always obtain legal advice from a qualified lawyer or other qualified professional, which will be responsive to the case or circumstance of the individual. Please note that the content provided in this article or any content contained in or made available through any third party website linked to from this article and/or HRinfodesk, is provided 'as is' without representations or warranties of any kind. All representations and warranties in respect of Content or Third Party