Most years our firm sponsors an annual weekend retreat, a holiday party, and several other social activities for the Henderson Franklin team. These events are typically loosely structured and serve to improve upon cohesion and camaraderie among a group whose individuals often operate independently. Many employers do the same, engineering team-building activities which run the gamut from planning elaborate out-of-state trips to sponsoring company sports teams or holding company picnics. All are good gestures, and each tends to serve the intended purpose of boosting morale.
What you must consider, however, is the potential for injury at these activities, and whether the employer may be liable for such an injury. Playing sports or cutting loose on a retreat can certainly be great for morale, but it can also provide ample opportunity for injury. This is particularly true when alcohol consumption is involved, as is often the case at these social activities.
If an event is considered to be within an employee's course of employment, it is also covered by workers' compensation. Accordingly, here are five planning considerations when evaluating potential workers' compensation liability at your next company-related social activity:
(1) Is attendance voluntary? If so, the likelihood of liability is lessened, whereas if attendance is required or the employee feels it is necessary or expected, then liability is almost assured.
(2) How much control does the company exert? The more the company participates in the event -- whether in payment, planning, supervising, or other means -- the greater the liability.
(3) Does the company benefit from the event? Publicity is the most common benefit derived, but regardless of what it is, the greater the benefit, the greater the company stands to be found liable for an injury incurred during its participation.
(4) Is the event held on company property? If the answer is yes, and particularly if held during normal business hours, the company is more likely to be found liable.
(5) Is there a policy explaining who bears liability? Although not determinative, having a written policy delegating responsibility of injury to the employee lessens its chance for company liability. Like any company policy, if you have a signed acknowledgement of the policy from the employee before the event, your position is further strengthened.
So, the next time you plan a company social activity, keep these considerations in mind, if you wish to mitigate your potential for workers' compensation liability.
While you're at it, take the time to review with your employees your company's harassment policies, especially if alcohol will be consumed at the social activity. Specifically, make sure your employees know they are subject to the company harassment policies not only at the office, but also at company social functions, even if they are not on company grounds. Because as much as these great events can offer to the employee and the company, even a single alcohol-induced harassment claim can take it all away (and then some).