Employers: Is Your Company Social Putting You at Risk?
The arrival of summer marks the end of another school year and the anticipation of beach vacations, backyard cookouts, and pool parties. This time of year also brings the annual company festival with the boss manning the BBQ pit, the interoffice corn hole tournament; and the balloon-making clown for the kids. Not to rob such an event of its pure joy and frivolity, but for those of us in the business, we should pause to consider the possible workers’ compensation ramifications of such annual company rituals.
Is an Employer Liable for an Employee Who is Injured at the Company Picnic?
In North Carolina, if an employee is injured at a company sponsored event such as the office picnic, the threshold question is whether the injury arose out of the employment (i.e., whether there is some causal connection between the accident and the performance of work for the employer). The Supreme Court in Perry v. American Bakeries Co., 262 N.C. 272, 275, 136 S.E.2d 643, 646 (1964) established a guiding principle for analyzing injuries that occur during the company social gathering:
“Where, as a matter of good will, an employer at his own expense provides an occasion for recreation or an outing for his employees and invites them to participate, but does not require them to do so, and an employee is injured while engaged in the activities incident thereto, such injury does not arise out of the employment.”
Next, the North Carolina Court of Appeals in Chilton v. Bowman Gray School of Medicine, 45 N.C.App. 13, 15, 262 S.E.2d 347, 348 (1980) highlighted a series of questions to aid in determining whether such injuries arose out of the employment:
(1) Did the employer in fact sponsor the event?
(2) To what extent was attendance really voluntary?
(3) Was there some degree of encouragement to attend evidenced by such factors as:
a. taking a record of attendance;
b. paying for the time spent;
c. requiring the employee to work if he did not attend; or
d. maintaining a known custom of attending?
(4) Did the employer finance the occasion to a substantial extent?
(5) Did the employees regard it as an employment benefit to which they were entitled as of right?
(6) Did the employer benefit from the event, not merely in a vague way through better morale and good will, but through such tangible advantages as having an opportunity to make speeches and awards?
How these questions were answered then determined whether an employee’s injuries sustained at a company social gathering arose out of the employment.
Finally, the North Carolina Supreme Court re-entered the fray with Frost v. Salter Path Fire & Rescue, 361 N.C. 181, 187, 639 S.E.2d 429, 434 (2007), stating these 6 questions weren’t necessarily controlling and were merely helpful guideposts in the inquiry in the determination of whether an employee’s injuries at a social event arose out of the employment. The Court seemed to focus primarily on whether the employer made attendance truly mandatory and whether participation in the social event was compatible and consistent with the duties and functions inherent in the work required of the employee.
What if Alcohol is Served?
Does serving alcohol at such events impact the analysis? Not directly. Whether alcohol is or is not served at such a company event does not change the elements of the analysis above. The employee must first prove the injuries arose out of the employment. Where the issue becomes relevant is if the employee was impaired or intoxicated at the time of the accident.
In North Carolina, an employer has an affirmative defense against an employee’s claim for workers’ compensation benefits if
(1) the employer can prove the employee was legally impaired or intoxicated at the time of the accident and
(2) the impairment or intoxication was a proximate cause of the accident. N.C. Gen. Stat. 97-12.
However, the employer CANNOT make this defense if it is proven the employer provided the intoxicant. So, if the employer chooses to serve alcohol at its social event, it risks losing the ability to raise the intoxication defense to an otherwise compensable workers’ compensation claim.
How does your company picnic measure up with these standards? If you have questions, you can contact me directly at email@example.com. Happy Summer!