When Good Parties Go Bad: Liability For Employers 


December 2009 - (Lang Michener Alert and Lexology )

Co-Author, Lang Michener Alert and Lexology
Many employers and their staff look forward to their company's annual holiday party. However, unless sufficient safeguards are in place, the social event of the year can turn into the lawsuit of the century for the employer. If you are planning to host a social gathering at which alcohol is served, you need to be aware that you may be exposing yourself to significant financial liability for the actions of an impaired guest from harm caused by drinking and driving. The liability can arise both from the actions of your employees while attending your company's function and long after they have departed. In recent years, the courts appeared to be moving in the direction of making social hosts fully responsible for the actions of their guests on the grounds that they 'started the ball rolling' with the first drink. This has been tempered somewhat, but not completely, by our highest court's 2006 ruling in the Childs v. Desmoreaux case. 

Social Host Liability

In Childs , the Supreme Court of Canada held that "a social host at a party where alcohol is served is not under a duty of care to members of the public who may be injured by a guest's actions, unless the host's conduct implicates him or her in the creation or exacerbation of the risk ." This case arose from a car accident that occurred in January 1999 after a New Years Eve party hosted by the defendants, Courrier and Zimmerman. After leaving the party their intoxicated guest, Desormeaux, drove off and collided with another vehicle, killing one passenger and seriously injuring three others, one of whom was Childs. Childs was rendered a paraplegic. 

The Supreme Court of Canada noted that the liability of social hosts to third parties was an unsettled area of the law. It is well established in Canada that bars, pubs, restaurants and other commercial alcohol providers owe a legal duty to take positive steps to protect the public from the drunken driving of their patrons. However, it is not as clear for social hosts. 

In negligence law, it is rare for someone to be liable for a failure to act. When there is no overt action on the part of the defendant, the relationship between the parties must be examined to see if it gives rise to a "special link or proximity" which would justify the imposition of a positive duty of care. In Childs , the court explained that "where a defendant assumes a public role, or benefits from offering a service to the public at large, special duties arise. The duty of a commercial host who serves alcohol to guests to act to prevent foreseeable harm to third party users of the highway falls into this category." 

In Canada, the test of whether one person owes a duty of care to another takes into account the relationship between the parties and whether there is a sufficiently close relationship to justify the imposition of a duty of care. This involves first looking at whether the harm caused was reasonably foreseeable. If this test is met the court will go on to address any policy considerations that may negate or limit the scope of the duty. In Childs,the court held that the harm caused to Childs was not foreseeable as the trial judge did not find that the hosts knew or ought to have known their guest was too drunk to drive. 

Is an employer a "Social Host" or a "Commercial Host"? 

What about where the event is sponsored by an employer? The liability of an employer hosting a holiday party is somewhere between that of a social and commercial host. Employers have wide ranging legal duties to ensure that the workplace is safe for their employees. What happens when the employer hosts an event which is both a social event and a work event? Alcohol served in the workplace in the context of a firm sponsored event is risky business. In Hunt v. Sutton Group Incentive Realty Inc., an Ontario judge ruled on the duty of care owed by an employer to an employee who drove home drunk after an office Christmas party. Hunt, a secretary and receptionist, attended an office party for clients and staff at the premises of her employer. Guests served themselves from an open bar and no one was in charge of monitoring alcohol consumption. Hunt was in attendance as both an employee and a guest. She consumed alcohol at the party, and later cleaned up the office after the party ended. She then left work, went to a pub and continued drinking. Hunt drove home several hours later in a snowstorm, seriously injuring herself when she drove into oncoming traffic. She was convicted of impaired driving with a blood alcohol level of 0.149/100 ml blood. Hunt successfully launched a legal claim against her employer. The court held that the employer and the pub were jointly 25% responsible for the harm done to the employee which resulted in a judgment against them of nearly $300,000. The employee was 75% responsible for the harm. The case was overturned on appeal for procedural reasons relating to the trial judge's decision to discharge the jury during trial. However, the Appeal Court did not distance itself from the legal principle that employers can be held responsible for an employee's injuries in this type of situation. 

In a 1996 British Columbia decision, Nike Canada was held 75% responsible for injuries to an employee who consumed a large quantity of beer supplied by his employer during working hours. The employee later drove home and was in a single vehicle accident which rendered him a quadriplegic. The court held that Nike was primarily responsible for the employee's injuries even though the employee stopped at a bar after leaving work and continued to consume alcohol. Nike was found to have breached the duty of care it owed to its employee. 

What does this mean? The Supreme Court of Canada has said that social hosts generally do not owe a duty to the public to take positive steps to prevent intoxicated guests from driving. One might expect even "social" hosts to be responsible for the harm done by their guests if the hosts themselves are reckless or aggressively ply their guests with drink. However, the duty of an employer to an employee is higher and closer to that of a "commercial" host. The foreseeability of harm aspect of the test remains the same, but it will certainly be easier for a court to find that there is a sufficiently close relationship between employer and employee to justify the imposition of a duty of care.

How to reduce your company's liability

Whatever the circumstances, one would do well to recognize that where innocent people are harmed, the courts have a natural tendency to seek to hold someone accountable. If the person most directly responsible for causing harm is unable to pay, be aware that the focus will shift to the host and that, with the benefit of hindsight, it might be possible to conclude that the host's conduct created or contributed to the risk. Measures an employer should consider for the annual holiday party include: 
  • Hold parties at non-work locations;
  • Use professionally staffed "no host" bars instead of "open" bars and provide a selection of non-alcoholic beverages;
  • Provide a limited number of drink tickets for employees where alcohol is provided by the employer; Promote responsible alcohol consumption and remind employees about their personal responsibility not to drink and drive;
  • Provide taxi chits or bus tickets and discourage employees from driving their vehicles to the party; and
  • Lead by example with responsible and sober management.
Regardless of what your legal duty might be, common sense dictates that, if you are going to host a party where alcohol is consumed, you should take steps to ensure your guests drink responsibly. If an employee does end up becoming intoxicated despite all of your efforts consider taking the following steps: 
  • Offer a safe ride home;
  • Take away the employee's car keys;
  • Call a taxi for the employee and take reasonable steps to ensure they take it; and
  • If the employee refuses your assistance and attempts to drive home, call the police.

Have a safe holiday season and make your party one to remember for good reasons.