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Who's liable for injuries to a company athletic team?

Sponsoring employee athletic teams builds camaraderie, name recognition and company pride. It can also lead to injuries, workers' compensation claims and even lawsuits over liability.

Consider a Missouri case decided last November. A St. Louis restaurant chain sponsored a series of athletic competitions among the chain's locations. During a basketball game, one employee banged his knee against a wall and needed surgery. His workers' compensation claim was initially denied, but the Missouri Labor and Industrial Relations Commission eventually ruled in favor of the employee.

The question in cases like this is whether playing the game was essentially part of the job. Are employees required or strongly urged to play? Did the company provide alcohol, which may impair judgment and increase the likelihood of injury?

In the Missouri case, the appeals board ruled that the employee was not engaged in a voluntary activity. He felt obligated to play to please his boss. Further, the game served a business purpose for the employer in the chance to publicize awarding the trophy.

If you want to sponsor a team, avoid holding events on company premises or on company time. Ensure employees know participation is voluntary and they're playing at their own risk. Don't serve alcohol. And don't let employees think they're being paid to play.

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

This story appears in the May 2005 issue of Entrepreneur. Subscribe »