Ground Rules

How to sponsor a company sports team without losing your jersey.
Magazine Contributor
7 min read

This story appears in the September 1998 issue of Entrepreneur. Subscribe »

There's your company name, emblazoned on the back of the bowling shirts your employees proudly wear in their league. You're convinced that sponsoring the team not only gets your name out in the community, but also increases camaraderie and builds company spirit in ways that carry over to the workday. What happens, though, if your office manager drops a bowling ball on her foot? Is she eligible for workers' compensation? What if a fight erupts at a bowling tournament and a spectator gets hurt? Or what if alcohol flows at the after-game party and a drunken employee hits a pedestrian on the way home? Courts deal with these questions more often than you'd expect.

Whether the question concerns workers' comp for employees injured in a company-sponsored game or liability for the injuries of a third party, the basic question is the same: How closely is the company tied to the team or the sporting event? To determine that, the court often asks these questions: Are the games on the employer's premises? Are employees expected to play or asked to build relationships with customers on the playing field? In effect, is playing on the team part of the employees' jobs?

Consider two recent cases, both involving injuries to employees who were playing on company-sponsored softball teams. In New Hampshire, an employee learned during his job interview that he'd be expected to play on the company softball team. Softball was so much a part of the company's culture that the company paid nearly all its team's expenses, including uniforms, bats, gloves, weights and other equipment, plus air fare, hotel accommodations, meals, drinks and fees for tournaments around the country. When the employee injured his knee playing first base, he applied for workers' comp, claiming the injury stemmed from his job.

Although the company disputed the claim all the way to the Supreme Court of New Hampshire, the employee won compensation. The court noted the company's extensive involvement with the team. Work schedules were routinely adjusted to accommodate softball practices and games. When team members missed work for practices or games, the company never docked their pay--and it even paid overtime to co-workers who filled in. Playing softball was effectively part of the job.

In a South Carolina case, a worker was likewise injured playing softball for his company-sponsored team, but he was denied workers' comp. The court noted that the team was organized through employee initiative. All games and practices took place off the employer's premises, and team meetings were held during lunch breaks when workers were off the time clock. Although the company furnished uniforms, equipment and league dues, it never paid players or coaches. Although uniforms bore the company name and game scores were published in the local newspaper, that didn't provide enough direct benefit to the company to rule that the player was injured on the job.

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

Staying Away From Home Base

Theodore Cornblatt, a workers' compensation attorney in Baltimore, notes that the location of the game is important. "If the game is held on the employer's premises, such as a pick-up game during a coffee break, it's probably covered [by workers' comp,]" he says. In particular, if the employer knows that games have been taking place on the premises and hasn't objected, the injuries are typically covered.

Another critical factor concerns whether the employee was compensated for playing or directed to play by the employer. In Illinois, for instance, the workers' compensation statute specifically exempts volunteer recreation programs--unless the employer assigns or orders the employee to participate. "If a company doesn't want to be responsible under workers' compensation law, [it shouldn't] direct employees to go to company outings," says Chicago workers' compensation attorney Thomas Lichten.

In one such instance, a temporary employee in Oklahoma was assigned to a publishing company, where she worked for nine months. Her supervisors encouraged her to participate in the annual "Corporate Challenge," an athletic competition among local companies. A higher-ranking employee recruited her to play on the women's basketball team, and a co-worker signed her up for the tug-of-war. Rather than jeopardize her placement with the company, she agreed to participate. When her knee was injured in the tug-of-war game, she applied for workers' comp--and got it. Both the trial court and the Oklahoma Court of Appeals noted that the employer had induced her to participate.

Beyond Workers' Comp

For employers, the advantage of workers' comp is that it limits the compensation for employee injuries to medical expenses and disability, thereby protecting the employer from civil judgments. But workers' comp laws won't help if a third party gets injured as a result of a company sporting event. The standards, however, are similar. The employer's degree of participation and level of control determine whether the employer is liable.

"The most serious risks are [present when] alcohol is involved," says Peter Bennett, an employment law attorney in Portland, Maine. Suppose the company allows beer at a softball game, and a fight breaks out over a referee's call. "If the company's name is emblazoned on the uniform, the company becomes a target," Bennett says. The same is true if an employee who's had too much to drink causes an auto accident on the way home.

The trend in the past four years, according to Bennett, is for employers to prohibit alcohol at company-sponsored events. That's a good policy, he says, because without alcohol, there's little risk of civil liability. There are other scenarios, however, that may be risky. Suppose, says Bennett, a supervisor makes sexual advances toward a subordinate at a company-sponsored golf tournament. Even though it's not during working hours and not on company premises, the business could be liable for sexual harassment if a higher-ranking employee directed the subordinate worker to be there.

Or suppose Company A, wanting to get in the good graces of its major client, Company B, has its employees participate in a sports league in hopes of encouraging a business relationship with Company B. If an employee of Company A gets in a car accident on the way to the game, since the employee was going to the game for the employer's benefit, that's enough to trigger both workers' comp and third-party liability.

If you want to minimize the chance you'll be held liable for game-related injuries, follow these guidelines:

  • Avoid holding sporting events on your company's premises or on company time.
  • Make sure employees know their participation is strictly voluntary and that they're playing at their own risk. Consider having employees sign a waiver to that effect.
  • Limit company participation to publicity and paying the bills. Let team members handle such matters as scheduling and equipment purchases.
  • Don't let employees think they're being paid to play.

What's the bottom line? Be aware that there's no ironclad guarantee that you'll avoid liability, especially under workers' compensation laws. In particular, a court may not recognize a waiver. A bit of risk may be the price for the benefits of having a company team.

Next Step

Ignorance, says the U.S. Supreme Court, is no longer a valid excuse when it comes to sexual harassment. Get the facts about harassment at the U.S. Equal Employment Opportunity Commission's Web site: Especially useful are the pages headed "Small Business Information".

Contact Source

Peter Bennett, c/o Bennett, Bennett and Troiano, 121 Middle St., #300, Portland, ME 04101, (207) 773-4775.


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