Senior Claims Consultant at HNI
The sun is shining, the birds are signing, and Memorial Day is around the corner – finally! After a long winter, it’s no surprise that many companies are ready to celebrate with a picnic or some other corporate shindig.
Before you start whipping out the gingham tablecloths, however, be sure to consider the potential exposures that may arise. Workers compensation claims, impaired driving accidents, and sexual harassment are just a few of the challenges that need to be considered when planning a company event.
Sorry to be a Debbie Downer here (I swear I’m really fun at parties), but the time to plan for managing a risk is before you need to. Not after Jim from accounting strains his wrist in a freak water balloon fight accident.
What the Courts Look at in Determining your Liability
Relevant laws and policy language aren’t black and white with regards to corporate events. For example, if an employee face plants during a particularly heated game of bags (corn hole, T-toss, or whatever you call it) are they entitled to work comp benefits?
The first thought of most people is “no way!” When a court takes a look at it, they’re going to examine whether or not the event in question is considered within the course of a person’s employment. The court would ask:
- Was participation in the event mandated [either overtly required or implied]?
- Does the company derive any direct benefit from the participation of the employee in question?
- Is the event hosted on company premises?
- At what time of day was the event held?
The case law generally suggests that if a company event is a) purely voluntary, b) held at an offsite location, and c) takes place outside of regular business hours, an injury occurring during the event could not be considered conduct within the course and scope of a person’s employment.
This is a pretty logical stance for the courts to take. If an employee volunteers to participate freely and outside of the workplace, the company should not be held liable for any injury.
The Grey Area with Company Sponsored Social Outings
If your event doesn’t meet all three of the criteria mentioned, there may be some room to challenge whether an injury can be considered within the scope of employment (and thus compensable under your work comp policy).
Many companies, for example, want to hold their picnic or big event during the work day to encourage participation. If this is the case, consider the penalty for NOT participating. Would an employee lose a day of pay or have to utilize their PTO benefits?
If the answer is yes, then these consequences imply that you expect participation in the event. The courts would no longer view the outing as voluntary, and you may have just opened the door to a work comp claim.
But all is not lost - if you still want to hold your event during the work day and avoid exposure, just ensure you make it unequivocally clear that attendance is purely optional. If employees choose to not participate, you must allow them to work their normal work day and be paid just like any other day of the year.
Generally speaking, it’s a risk management best practice not to require attendance at any company-sponsored event outside of work. (Besides, if you have to force people to go, it’s probably not going to be that great of a party.) State law can vary, but this practice will help your company mitigate its risk.
Planning this Year’s Event
For the record, I’m not suggesting you cancel the company picnic. I like corn on the cob and good barbeque as much as anyone and often help plan these types of events when we hold them at HNI.
But to ensure that the pickles are the only thing sour about your company outing, think ahead and take extra precautions to consider your risk. It will help keep the event safe and fun for all employees, and if something happens, you will be in a much better position to address it.