12/ 06/ 2006
by Kim Phan, NFIB Legal Foundation
As the year draws to a close, and the holiday season fast approaches, employers can chase away any holiday fears and ensure a business full of happy holiday cheer by avoiding a few common legal pitfalls. By taking some simple precautions, employers can ring in the New Year without worrying about any post-holiday headaches (or lawsuits).
Holiday parties
As social hosts, employers are being required by an increasing number of states to exercise reasonable care to prevent injuries by intoxicated employees leaving holiday parties. Generally, in order to avoid many of these liability issues, an employer should lessen the role that alcohol will play during the festivities.
Here are some useful tips for holiday party planning: hold the event off company premises; make sure that the party is completely voluntary; hire bartenders and distribute drink tickets; serve heavy foods throughout the night; appoint supervisors/monitors from among your employees; provide either hotel accommodations or transportation; and remind employees about any company policies on conduct, substance abuse or sexual harassment that apply to the party. Post any additional policies that will apply to the party in advance, using every possible communication vehicle, such as displaying the policy on break room bulletin boards, office e-mail and inside paycheck envelopes to make sure employees know what will be expected of them during the party.
Another possible legal pitfall to be faced at holiday parties is the problem of employee injuries. State workers' compensation laws generally only cover injuries of an employee arising out of or in the course of employment. Since employer-sponsored holiday parties are typically voluntary in nature, employers could be faced with negligence suits by any employees injured during the festivities. However, exclusivity provisions in some employment contracts and state laws usually protect employers against this type of suit by stating clearly that workers' compensation is the sole and exclusive remedy for employee injuries.
Holiday gifts
Any gifts given to employees are construed as supplemental wages subject to both payroll and income taxes. However, employers can give a holiday gift, which may be excluded from payroll and income taxes if the gift is de minimis or so small an amount as to make accounting for it unreasonable or administratively impractical. The nominal value that would fall under the exclusion has not been specifically defined, but a good rule of thumb is to limit gifts to about $25 to $35. No matter how much the amount of the gift, however, the gift may never take the form of cash or a cash equivalent to qualify for the exception. Cash equivalents include coupons, gift certificates and gift cards. For example, an employer may give a holiday turkey as a gift to an employee, but the employer may not give the employee a gift certificate to purchase that same turkey without reporting that gift as wages.
Holiday decorations
A happy business is a safe business during the holidays. Encourage employees to use stepladders when putting up any decorations and not to attempt to substitute other office furniture, such as a swivel chair, for these tasks. Do not allow tinsel to be hung from computers or other sources of heat and never allow any decorations to cover emergency exit signs. Christmas trees can be a serious hazard if not properly located. Make sure they are secure and won't be knocked over by people passing by or pulling cables. Finally, be wary of any mistletoe in order to avoid even the possibility of sexual harassment.
An employer should accommodate individual employee beliefs by avoiding the endorsement or the support of any one religious observance in holiday decorations. If a reasonable amount of holiday decorating is permitted in general office spaces, then individual employees should also be allowed to include decorations with stronger religious themes in their own personal space.
Holiday vacation
There is no federal law that requires an employer to provide time off, paid or otherwise, to employees during the holidays. Scheduling business hours when there are a large number of requests for time off can be difficult, but employers should remain open to discussing accommodations and considering alternatives that do not unduly disrupt company business. Employment contracts often contain common provisions stating annual holiday rules, such as whether time must be approved in advance depending on the needs of the business. If no such specific terms cover such matters at your company, then try to adapt company policy to the normal custom and practice of your particular industry. Do not implement any changes in the vacation policy during the holidays unless you have notified and consulted with your employees first, since many of them may rely on the preexisting policy when making their holiday plans.
