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Company holiday parties can be a great way to boost morale and celebrate the year’s achievements.

But, if they go wrong, they can lead to damaging, costly lawsuits.

Chris Williams, employment practices liability product manager at Travelers, said in an interview with PropertyCasualty360.com that post-holiday party claims are not uncommon.

“Employers host these parties with the best of intentions, but sometimes they create some exposure,” he said. “We see some challenging claims coming out of these parties every year.”

Alcohol consumption can lead to inappropriate dancing, touching or kissing co-workers without permission, arguments, driving under the influence and other challenges. Once back at the workplace, employees might file claims for any damage done.

Those claims can be costly. Employers can expect to pay around $150,000 just for their own defense, Williams said. If they lose, they’re also responsible for the claimant’s attorney fees.

Once one party brings a claim in the workplace, it can sometimes raise other employees’ awareness of their rights, leading to more claims, Williams said.

Claims have a time cost as well. Employers have to gather witnesses and evidence from the event. Morale and productivity can also take a hit.

“It can create a pretty stressful work environment all around when things like this arise,” Williams said. “And that can take everyone’s focus off the business.”

Employment practices liability insurance can help, and companies can also take steps to limit their risk exposure, Williams said.

Employers might consider the following tips:

  • Move the timing. Moving the party to the middle of the afternoon on a weekday, instead of a Friday or Saturday night, can encourage better behavior.
  • Limit alcohol. Employers can provide drink tickets for the event to limit the number of beverages employees consume.
  • Plan a party alternative. Some companies opt to do a group charity event at the holidays — like volunteering at a food bank — instead of having a holiday party.
  • Model appropriate behavior. Company leadership can encourage good behavior by remaining professional at company functions year-round and communicating expectations for employees to do the same. “Employees should have a good understanding that this is not a frat party,” he said. “It’s still a work function, where you’re expected to behave appropriately.”
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