Picture this scenario: Your company is throwing a holiday party after a successful year. Festivities begin with a cocktail reception, followed by a lavish dinner at a nearby restaurant. Invitations were sent to employees, key clients and their spouses/significant others.

Unfortunately, at the reception, your employee Todd has a little too much to drink and inappropriately grabs a coworker’s wife. To make things worse, he’s already drunk when he drives to the dinner and on his way, he even sideswipes a delivery truck.


So, what are your company’s risks? Are you liable for Todd’s actions? If so, will the damages be covered by your current insurance policies? What could and should your company have done to avoid this disastrous display? Let’s look at some facts related to liquor liability for a host who provides alcohol.

The Basics Regarding Liquor Liability

Generally speaking, under liquor liability laws (in effect in most states), anyone who provides alcoholic beverages to someone who is intoxicated or under age is liable for any property damages or bodily injuries that result from the intoxication. That holds true whether those damages are accidental (e.g., an auto collision or a slip-and-fall) or intentional (e.g., a bar fight).

Liability is almost equally applied to “social hosts”: organizations or individuals who provide alcohol to others in their homes or at businesses functions but that don’t regularly sell alcoholic beverages as a profit-making venture. This would include companies that hold holiday parties or similar celebrations and events where alcohol is served. In our holiday party scenario, your company had a responsibility to be aware of Todd’s intoxicated state, cut off his drinking and not allow him to drive intoxicated.

Six Tips to Limit Risks

How can you serve alcohol at company functions without significantly adding to your liabilities? Here are a few tips to consider:

1. Appoint a party planning team.

Have at least one member of management serve as chair. Include training to recognize signs of intoxication. (Some states/provinces offer certification programs for training nonprofessional bartenders and servers.) Have planning team members serve as watchdogs during the party.

2. Leave it to the pros.

It’s typically best to hire a professional bartending service to pour alcohol from behind bar stations. Professional bartenders are trained to pour reasonable drinks, know the signs of intoxication, check ages on IDs, and cut off drinkers who are reaching their limit. Ask for a certificate of insurance to show that the bartending company is adequately insured for liquor liability. Also ask to be named an additional insured on its policy and seek an indemnity for your firm. Review any indemnification agreement to make sure it doesn’t transfer risk back to you.

3. Have the party offsite.

Rather than serving alcohol on company premises, have the party at a hotel, restaurant, tavern or other outside establishment. This transfers much (but not all) of the liability to the establishment. Avoid making employees drive to more than one venue, like our party scenario showed.

4. Provide transportation.

One of the greatest liquor liabilities for social hosts is an intoxicated employee causing significant property damage and/or physical injury in an auto accident. Offer all employees free transportation at the end of the party. This could be a taxi, a shuttle bus, a ride share like Uber or Lyft, or designated drivers from among non-drinking employees. Do not use company vehicles: Outside services are best for transferring risk. Insist that any employee showing signs of intoxication not get behind the wheel. Consider offering a guestroom for the night if the event is at a hotel.

5. Set the tone beforehand.

In all written and verbal party invitations and announcements, let employees know that responsible, moderate drinking is the rule. Consider offering a limited number of drink tickets to attendees. Emphasize to management that they should lead by example and not overindulge.

6. Offer tasty alternatives.

Have plenty of appetizers, high-protein snacks, and nonalcoholic drinks available from the very beginning of the party. Food consumption can counteract the effects of alcohol. Offer coffee, tea, desserts and bottled waters at the end of festivities and cease serving alcohol at least an hour before the official end of the event.

Risk Transfer Through Insurance

Some coverage gaps can by filled through an employment practices liability insurance (EPLI) policy. EPLI with third-party coverage is highly recommended for providing protection against damages and legal fees in the event of allegations of discrimination, sexual harassment and emotional distress. Contact USI for more information or more specific assistance.

This material is provided for informational purposes only. Before taking any action that could have legal or other important consequences, speak with a qualified professional who can provide guidance that considers your own unique circumstances, including state-specific employment laws. © 2018, Professional Liability Agents Network, Inc. All rights reserved.
The following material is provided for informational purposes only. Before taking any action that could have legalor other important consequences, speak with a qualified professional who can provide guidance that considers your own unique circumstances, including applicable employment laws.