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Holiday Parties and Employer Liability

Holiday Parties and Employer Liability

After two years of cancelled events, many employers are eager to host a holiday party for their employees and to celebrate with them. While parties are an excellent way to boost morale in the workplace, these events can present a host of issues when it comes to employer liability. This is particularly so when alcohol is being served or more generally where employees are placed in situations outside the normal day-to-day employment setting. 

By and large, employers are liable for workplace related injuries based on two theories of negligence: direct liability and vicarious liability. An employer is directly liable to an injured party if the negligent act occurred due to its own acts and omissions. On the other hand, an employer may be vicariously liable for the actions or omissions of their employees when those employees have caused injury to another party. 

Direct Liability

The 1996 case out of British Columbia called Jacobsen v. Nike Canada Ltd. illustrates an extreme example of the type of direct liability an employer may face where service of alcohol occurs at work. In this case, the plaintiff, who was 19 years old, worked as a warehouseman in the Nike factory. During his working hours of 8:30pm to 11:30pm, Nike provided him and other employees with beer to drink. One evening, the plaintiff and his co-workers drank beer on the job and then visited two nightclubs where they drank more beer. Later that night, the plaintiff drove himself home, careened off the highway into the ditch and was rendered a quadriplegic from his injuries. 

The plaintiff sued Nike alleging that Nike had not taken any positive steps to prevent him from driving his vehicle in circumstances where it knew or ought to have known that injury to him could result. The Court agreed, awarding the plaintiff $2,719,213.48 in damages with an apportionment of 75% to the employer and 25% to the employee. 

Nike had failed to meet its standard of care to the injured employee in the following ways: 

  • By providing a large quantity of alcohol in the workplace;
  • By not monitoring the consumption of the alcohol; and
  • By not preventing the employee from driving.

When hosting a social function at work, an employer will be advised to address all three concerns prior to holding the event. 

What steps can your business take to avoid a liability incident at an upcoming holiday party? 

  • Develop and enforce a workplace policy concerning alcohol and drug consumption at work and work-related social events (which includes a strict prohibition on driving after consuming drugs or alcohol);
  • Track consumption by stationing a supervisory employee, or hiring a bartender to control consumption, at the point of alcohol service;
  • Hand out a set number of drink tickets as an attempt to monitor consumption;
  • Provide non-alcoholic beverage options as well as food;
  • Ask employees and guests, as they exit the party, how much alcohol they have consumed. While Nike, in the above noted case, suggested the latter practice was not typically done, the Court suggested it was not “folly” or “ridiculous” to suggest such a precaution should be taken;
  • Institute a time when the party ends such that alcohol service is officially over; and
  • Provide taxi chits to departing party goers to prevent an individual from driving while intoxicated.

Cannabis consumption at holiday workplace parties can present its own unique challenges. In most cases, an employer will not be providing cannabis, and smoking will likely be prohibited in the event space, so it will be more difficult to monitor its consumption. However, issues can be compounded by unclear policies about whether cannabis consumption is allowed at workplace events. Nevertheless, in the case of cannabis, it is recommended that steps should be taken in the same manner as outlined above to monitor employees that may be impaired. 

Vicarious Liability

With respect to vicarious liability, holiday parties can pose potential issues for employers. Generally, the courts do not look to find employers liable for intentional acts committed by their employees, such as sexual harassment or assault. However, where the actions are sufficiently connected to the employer, liability can result. 

In a 2015 Ontario case, KL v. 1163957799 Quebec Inc. (cob Calypso Water Park Inc.), the employer, Calypso, had an end-of-season staff party at its waterpark. Food and alcohol was served and the attendees were free to use the park facilities. During the party, an employee was sexually assaulted by her work supervisor, while swimming together in a pool on site. The assault continued when he drove her home that same night. The employee, who was assaulted, sued Calypso for damages suffered as a result.

In deciding whether to impose vicarious liability on the employer for the assault conducted by one of its employees, the Court considered whether Calypso materially increased the risk that an unauthorized act such as a sexual assault would occur. The Court noted that a staff party is very much connected to the employer. Employers hold such events to generate goodwill and therefore an employer has a direct interest and derives a benefit from a staff party. Second, in throwing the party at the waterpark, Calypso enhanced the risk to employee as supervision would be difficult and employees could easily become isolated and vulnerable in such a large space. Third, Calypso allowed alcohol to be consumed at the party. The Court noted that hiring a bartender to control consumption would have reduced the risk of partygoers becoming inebriated and assaulting a fellow employee. As such, the application by the employer to have the claim against it struck as disclosing no cause of action was dismissed. 

Employer and Employee Relationship is Unique

Employers and employees are in a special relationship. Given this proximity, employers owe a duty to their employees to provide them with a safe working environment and that extends to an employer-sponsored party. Employers can also be vicariously liable for the intentional acts of their employees. 

With correct planning and overall diligence, workplace holiday parties can be safe and enjoyable for all attendees. The courts are not looking for a standard of perfection. Rather, the intent is to put the effort into planning and the implementation of procedures prior to the party. If an incident does occur, your company will be able to point to the steps that were taken in an attempt to ensure everyone’s safety.

Carscallen LLP’s employment expertise 

Whether you are planning business event (such as a holiday party) or otherwise addressing an issue that arose at a business event, Carscallen’s experienced team of Employment, Labour and Human Rights lawyers can assist you. Our lawyers specialize in practical, individualized advice to help you understand your rights, duties and responsibilities as an employer or an employee.

Our team of lawyers provide tailored, proactive advice to help successfully navigate every stage of the employment relationship. We have the legal expertise to help minimize problems and disputes before they happen, as well as the ability to resolve conflict quickly and constructively when it arises.

Contact any member of our Employment, Labour and Human Rights team with any questions you may have about employment agreements, or any other personal or business employment-related issues.

*This update is intended for general information only on the subject matter and is not to be taken as legal advice.

Posted: October 31, 2022

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