Strictly Business

Tuesday, Sep 10 2013 04:00 PM

ROBIN PAGGI: Rethink serving alcohol at company events

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    Californian contributing columnist Robin Paggi.

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BY ROBIN PAGGI Contributing columnist

You want to reward your employees for doing a good job, so you decide to have a party for them. You read in an article somewhere that you need to be careful about serving alcohol at company parties, so you give employees two drink tickets and serve only beer and wine.

One of your employees drinks some whiskey before the party, smuggles a flask of whiskey into the party and drinks it there, has the bartender refill his flask, goes home, then goes out again and gets into a car accident. Can you be liable for the employee's accident? A recent ruling by the California Court of Appeal says the answer is "yes."

According to court documents at www.courts.ca.gov, Michael Landri was employed as a bartender at the Marriott Del Mar Hotel when he attended the hotel's annual holiday party. Landri drank a beer and a shot of whiskey at his house before the party, and then took a mostly-filled flask of whiskey to the party. Even though only beer and wine was supposed to be served, the bartender on duty brought in a bottle of whiskey from the hotel's liquor supply, and Landri filled his flask at least one more time before he left for home.

After arriving safely at his home, Landri decided to drive an intoxicated coworker home. While doing so, he hit another vehicle (while driving more than 100 miles per hour) killing its driver, Dr. Jared Purton. Landri pleaded guilty to gross vehicular manslaughter while under the influence of alcohol (he had a .16 blood alcohol level) and received a six-year prison sentence. End of story, right? Wrong.

Dr. Purton's parents filed a wrongful-death action against Landri, the hotel and others. They alleged that the hotel "held the party for its benefit, including to improve relations between employees, improve relations between it and employees, and increase the continuity of employment by providing a fringe benefit."

Further, although Landri became "extremely" intoxicated at the party, he was allowed to leave the hotel and drive home. The hotel argued it was not liable because "the accident did not occur within the scope of Landri's employment." The trial court agreed; however, the appellate court did not.

According to the Court of Appeal:

* The party and drinking of alcoholic beverages benefitted the hotel by improving employee morale and furthering employer-employee relations.

* The drinking of alcoholic beverages by employees was a customary incident to the employment relationship.

* Evidence that hotel managers consumed hard alcohol with employees at the party and that a hotel manager served hard alcohol to employees suggests that employees had the employer's implied permission to consume hard alcohol at the party.

Additionally, an employee testified that "historically there has been a lot of drinking and not a lot of control at these types of (employee) parties."

Thus, the court concluded that, "a reasonable trier of fact could conclude that Landri was acting within the scope of his employment while ingesting alcoholic beverages at the party." Furthermore, the court found that the ingesting of alcoholic beverages at the party caused the accident; therefore, the fact that the accident happened after Landri left the party, arrived home, and then drove after that didn't matter ("we focus on the act on which vicarious liability is based and not on when the act results in injury"). The case has been remanded for further proceedings.

The court said the hotel created the risk of harm by allowing an employee to become intoxicated and that it could have lessened this risk by:

* Having a policy prohibiting smuggled alcohol,

* Enforcing its drink ticket policy,

* Serving drinks for only a limited time,

* Serving food, or

* Forbidding alcohol altogether.

Employers wanting to avoid a similar fate would be wise to follow the court's suggestions.

-- Robin Paggi is the training coordinator at Worklogic HR Legal Solutions. Reach her at rpaggi@worklogiclegal.com. These are her opinions, not necessarily those of The Californian.

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