Skip the Mistletoe: Avoiding Legal Headaches During the Holidays

Date: November 14, 2014

Keep these tips in mind to avoid any trouble this holiday season.

As the holiday season approaches, employers can chase away holiday fears (or lawsuits) to ensure a business full of cheer. 


Many states require employers to exercise reasonable care to prevent injuries by intoxicated employees leaving holiday parties. To avoid liability issues, an employer should lessen the role that alcohol will play during the festivities: 


  • Make sure the party is voluntary.

  • Use professional bartenders, and instruct them not to serve anyone who appears intoxicated.

  • Distribute drink tickets to limit the number of drinks.

  • Serve heavy foods throughout the night.

  • Ask trusted managers and supervisors to watch for people who have had too much to drink.

  • Make sure employees have alternate transportation home, such as a designated driver or a taxi.

  • Remind employees about company policies on conduct and substance abuse before the party. 


Holiday parties can create an environment that leads to sexual harassment claims. Harassment suits can result from voluntary events held outside the office and outside normal work hours. To avoid them: 


  • Remind employees about your harassment policies before the party.

  • Create an anti-harassment policy and have it reviewed by an attorney.

  • Don’t hang mistletoe.

  • Inform all employees that they must report sexual harassment that they experience or witness.

  • Remind employees that a holiday party is a work-related activity, so rules for appropriate work behavior apply. 

Holiday Gifts

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. A good rule of thumb is to limit gifts to $25 to $35, not exceeding $100 in value. The gift may never take the form of cash or a cash equivalent (coupons, gift certificates, gift cards) to qualify for the exception. 


Holiday Decorations

An employer should accommodate individual employee beliefs by avoiding the endorsement or the support of any one religious observance in holiday decorations. However, employees should be allowed to include decorations with stronger religious themes in their own personal workspace.

Holiday Vacation

There is no federal law that requires an employer to provide time off, paid or otherwise, to employees during the holidays. Make sure annual holiday rules (e.g., whether time must be approved in advance) are clearly stated and enforced. 

Karen R. Harned is the executive director of the NFIB Small Business Legal Center, This article is intended to provide general information for reference only and should not be considered legal counsel. 

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