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► Don't Give Employees A Legal Claim For The Holidays

It's the holiday season again. Holidays can be a great time to foster a sense of community and a positive corporate culture. But don't let your guard down on issues that carry potential liability.

Wage and Hour Claims Should Not Be on Your Gift List

If you hold a holiday party, nonexempt employees could potentially make claims that they should have been compensated (and maybe entitled to overtime) for attending the party. To avoid potential liability for such claims, (1) make attendance voluntary, (2) hold the party outside normal business hours, (3) don't engage in any business during the event, and (4) don't ask employees to perform tasks at the event. Having your holiday party off-site and not during working hours will minimize the risk of workers' compensation liability. Also, to further minimize liability, make sure the owner of the premises and food and drink providers are licensed and insured.

If you provide year-end bonuses, make sure you properly distinguish between discretionary and nondiscretionary bonuses. A nondiscretionary bonus, which is generally based on a predetermined formula, must be counted in a nonexempt employee's regular pay rate for the purpose of calculating overtime. If a gift isn't based on a set formula and the decision to provide it is made very close to when it is made, it is typically a discretionary gift, which isn't included in the regular pay rate for the purpose of overtime calculations. Also, don't give cash bonuses that aren't reported to the IRS to increase the amount the employees can keep. You will be creating liability for both the company and the employees. They should report the income to the IRS, and when they do, it could lead to an audit of the company.

Don't Let Sexual Harassment Claims Grow Out of Holiday Parties

If you have a holiday party, and especially if alcohol is served, make sure to remind employees of the appropriate standards of behavior. Permitting guests to attend may be a good idea because it often discourages employees from engaging in inappropriate behavior in front of their spouse or significant other.

Employee-to-employee gift exchanges should be sponsored by the company, or at least be clear that any type of adult-themed and other inappropriate gifts are prohibited. Don't sponsor events at parties that could lead to a sexually charged atmosphere. If there are any complaints of inappropriate sexual behavior, be sure to investigate right away and take prompt remedial action if necessary.

Other Holiday-Time Considerations

Charities: Many companies permit charities to solicit on their premises during the holiday season. Letting charities on your property, however, could result in your being required to let a union representative onto your property to solicit your employees to join a union. If you want to keep union organizers away, the best advice is not to let any charities solicit on your premises and have a uniformly enforced policy that solicitation by third parties on company premises is prohibited.

Decorations: If you decorate for the holidays, remember that not everyone celebrates Christmas. If any employees object to decorations in their work area, it's a good idea to respect their wishes. Private employers, however, have no obligation to take down holiday decorations because an employee objects. Public employers can decorate if the decorations don't focus on the religious aspects of a holiday.

Bottom Line

Have a great holiday season. Do take efforts to appreciate employees and create an atmosphere of good will. Don't become complacent, however—be proactive in managing situations that could lead to potential claims.

By William E. Altman. Mr. Altman is a regional managing partner with Fisher & Phillips LLP in Detroit. William is a labor, employment and benefits attorney focusing on advising and representing employers regarding anti-discrimination laws, whistle-blower and retaliation actions, ERISA actions, non-competition agreements, trade secrets, fiduciary duty actions, and class actions, and defends employers in state and federal courts and before state and federal agencies.


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