From the December 2004 issue of Entrepreneur

It's December again, time to make final plans for the company holiday party. While you're planning, think about how much alcohol your employees are likely to drink-and what could happen if they drive home drunk.

This is a legal column, so I'll skip over the more serious problem, the human cost of a terrible accident. Beyond the grief lies the possibility that your business could be held liable for what happened that night.

A lawsuit over the aftermath of an office party would stand on one of two legal theories. Some states recognize "social host liability," which means that anyone who serves alcohol to someone who's had too much already and then allows the guest to drive away may be legally responsible for the accident that ensues.

Whether the law in your state recognizes social host liability, you could be liable under the doctrine of respondeat superior, which holds an employer liable for damage caused by employees when they're doing their jobs. It doesn't matter whether the employer was negligent if the employee was acting within the scope of his or her employment. That's why these cases turn on the facts: Was this party part of the job? Did it advance the employer's business purposes?

The classic example of what not to do involves a North Carolina manufacturer that sponsored a holiday party during work hours in 1982. Employees had to clock in by 8 a.m. to be paid for the day. There was spiked punch in the machine shop and free-flowing whiskey. After drinking, one worker drove away, ran a red light and killed two women. The victims' families sued the company. An appellate court ruled that the firm could be held responsible. The party was at the plant on company time and evidently designed to advance the company's business purposes.

Business owners are wising up. The anything-goes company party hardly improves things at the office, with drunken employees more likely to make advances on co-workers or say things they shouldn't. Some companies have no party at all or offer alcohol-free events. Those that do serve alcohol are being more careful.

In a case recently upheld by the U.S. Court of Appeals for the District of Columbia, the court ruled that the defendant, Intelsat, was not liable when a drunk contract worker left a holiday party, ran a red light and killed a pedestrian. The court ruled that the party was purely social because it was at a hotel in the evening, with no one being paid for attending and no expectation that any one employee be there. Since the worker wasn't within the scope of his employment, the employer wasn't liable.

Here are some tips to help prevent drunk driving after your holiday party:

  • If you serve alcohol, hire a bartender and inform him or her to stop serving guests if they're intoxicated.
  • Don't put bottles out or provide an open tap or servers circulating with drinks on trays.
  • Offer one or two free drink tickets. Guests will have to pay for more drinks, so they'll drink less.
  • Offer food, soft drinks and coffee.
  • Have someone keep an eye on the guests. Provide rides home for anyone who can't drive.
  • Find creative ways to engender holiday spirit without soaking employees in holiday spirits.

Jane Easter Bahls is a writer in Rock Island, Illinois, specializing in business and legal topics.