How to Avoid Legal Liability in Your Company’s Holiday Stocking

By Jeanette Coleman, SPHR & SHRM-SCP on Dec 23, 2020
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small business employees working while wearing santa hats

It’s the time of year to be making lists and checking them twice. While you’re at it, be sure to check your list of holiday activities to make sure your small business won’t end up with the legal equivalent of coal in your stocking. Here’s a checklist to make sure the holiday season remains full of good cheer for you and your employees.

Decoration expressions

A celebratory atmosphere in your workplace may be a welcome relief from the heaviness of 2020. Decorations can enhance the spirit of warmth and fun during the holiday season, but they can create problems if they favor one set of religious beliefs over another.

The U.S. Supreme Court has determined – and the Equal Employment Opportunity Commission has acknowledged – that decorated trees and wreaths are considered secular symbols, as are candy canes, tinsel, reindeer, strings of lights and winter scenes. You therefore may hang wreaths, put a decorated tree in your foyer or display other non-religious decorations without running a risk of legal liability, even if an employee expresses an objection.

To the extent you choose to limit holiday decorations in the workplace, the limitation must be uniformly applied to all employees and their individual religions.

Further, avoid decorations like mistletoe that could be misconstrued as accepting – or even encouraging – sexual harassment in your workplace.

Religious accommodations

Title VII of the Civil Rights Act requires employers to reasonably accommodate an employee’s religious observances, practices and beliefs, as long as it can do so without undue hardship on business operations. If an employee requests a religious accommodation connected to the holiday season – or at any time, really – and you deny it, it must be very clear that allowing the accommodation would demand more-than-typical administrative costs, reduce productivity, create safety issues, encroach on other employees’ job rights or benefits, burden fellow employees with the accommodated employee’s work or put your business in conflict with other laws or regulations.

Religious accommodations may include allowing religious expressions at work, broadening policies for dress and grooming or permitting your workplace to be used for prayer or other religious purposes.

Often, employees’ requested accommodations during the holidays are quite reasonable. Appeals for vacation time, unpaid time off or switching shifts so the employee can attend religious services are common. Because they typically create little to no hardship on the business, it’s best to try to accommodate them.

Gift exchanges

While it’s fine to allow gift exchanges between employees, you must make it clear that a sense of good taste and appropriateness must prevail. Under Title VII, you are required to maintain a harassment-free workplace. Gifts and cards with sexually graphic, bullying or discriminatory content can be hurtful and offensive – even humiliating, particularly if the gift is presented when co-workers, customers or family members are looking on.

company holiday party ideas during covid

Holiday parties

If you’re hosting a (socially distanced, of course) holiday party, make sure Grinchy legal consequences don’t get an invitation. Here’s how:

  • Describe your event as a holiday party, year-end gathering, New Year’s party, annual celebration or as some other non-religious event.
  • Tell employees their attendance at the event is voluntary and there will be no consequences for those who choose not to be there. Making attendance mandatory can create a requirement to pay nonexempt employees who are there.
  • Fill your party playlist with non-religious songs.
  • Remind employees that holiday festivities are no excuse for violating company policies. That means telling them you won’t tolerate inappropriate behavior at the party, including sexual harassment, discrimination or drunkenness. If your business doesn’t already have written harassment and discrimination policies, now is a good time to create and publish them.
  • Consider inviting spouses, significant others, family members and trusted clients to the event. Doing so subtly changes the party’s tone, discouraging inappropriate behavior and, if necessary, giving employees who may have imbibed too much another option for getting home safely. Remember, however, that employers can be liable for harassment or other bad behaviors of those at the event, whether or not the culprits are company employees.
  • If possible, don’t serve alcohol. Consider holding a daytime, weekday event, where employees will be less likely to expect alcohol to be served and more likely to keep their behaviors in check. Even if you serve alcohol at a weekday event, employees may better monitor their own drinking, knowing they have to work the next day.
  • Talk to your insurance carrier to make sure your general liability policy covers your holiday party. Ask whether your policy excludes alcohol consumption. Some do. Whether your policy falls in that category is something you should know before deciding to serve alcohol.
  • If you do choose to offer alcohol, consider limiting the types you serve – for example, making wine and beer, but not hard liquor, available. Restrict consumption by offering a cash bar, providing drink tickets and/or hiring professional bartenders who will keep an eye out for employees who seem to have exceeded their limits. Close the bar at least an hour before the party ends, making only coffee, water and soft drinks available from there on.
  • Assign designated managers to be “on duty.” Their role is to stay sober and monitor employees’ intoxication levels. This step can both deter excessive drinking and help prevent liability to the company if someone overindulges. These managers also should be instructed not to attend any “after parties.”
  • If you’re serving alcohol, always serve food and have plenty of non-alcoholic beverages available.
  • Arrange designated drivers or Uber rides to make sure everyone at the party has a way to get home safely. Consider offering incentives to employees who are willing to serve as designated drivers.

If sexual harassment, discrimination or drunkenness happen at your event – no matter who’s involved – take it seriously and address it right away. Taking prompt action shows your company won’t tolerate such behavior and helps prevent further negative incidents. Quickly, consistently and effectively dealing with such behaviors also can help mitigate holiday party-related liability if a legal issue arises.


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