Attendance at the Holiday Party cannot and should not be mandatory.
Check your insurance policy
An important step in your party planning should be reviewing your business insurance policy. Confirm that your comprehensive general liability policy covers liabilities arising from the event. Contact your insurance agent for details.
Service of Drinks
If alcohol is being served, be sure a third party is serving it. Don't let employees pour their own drinks. If you decide to serve alcohol at your party, don't hold the party in your office. Have the party off premises and make sure the servers have a liquor license.
Have a drink limit or an alcohol-free party
It is advisable to limit the number of alcoholic drinks served to any one individual. Drink tickets are one way to do this. If there's no behavior-altering substance available to your employees, or if you limit their access to it, chances are employees will be calmer and more in control of their actions. In addition to averting injuries, limiting alcohol consumption could prevent other types of actionable activities, such as property damage and sexual and other harassment incidents. The presence of alcohol can make people do things they normally wouldn't, and after the party is over, claims for damages and charges of discrimination could be filed.
Use caution with cash bars
While having a cash bar instead of an open bar may limit drink consumption, be careful. Having your employees and guests pay for the alcohol they consume on your property does not automatically limit your liability if an alcohol-related accident should occur. Also, if you're charging for alcohol, you may need a liquor license and or other liability protections.
Be clear with your employees before the festivities begin
Make sure that your employees know your policy on substance abuse and anti-harassment and that this policy covers any work situation, including an office party. Post the policy in your employee handbook and on office bulletin boards, and send it out by email as a reminder before the party. Remind your employees of your policy on harassment, including but not limited to sexual harassment. There is no place at your party for mistletoe. Behavior that is inappropriate at the office is also inappropriate at your party. Further, don’t allow employees to use the party as an opportunity to advocate their faith or the faith of anyone else. Religious discrimination and religious harassment claims are among the fastest growing areas of discrimination claims.
Lead by example and exert your authority
Ask that one or more members of your management team stay "stone sober" to set an example for the rest of the employees. Employers should intervene when necessary and have the authority to tell their employees "you've had too much to drink... we'll get you a cab home."
Keep your employees from getting behind the wheel of a car if they've been drinking by providing alternative transportation, both to and from the party. One suggestion is having a free taxi service for any employee who requests it. This service must be "no questions asked" to ensure that it won't be held against the employee the next day.
Make sure your caterer is licensed and insured
You may be held responsible if a guest at your event becomes ill after eating food prepared by an unlicensed caterer. Licensed caterers are subject to health department inspections of their cooking facilities, without notice, which checks that the food they serve is prepared in sanitary conditions that are governed by law. In addition, licensed caterers are required to carry insurance, while unlicensed caterers are not.
Consider holding a “Family-Friendly” party
Take the focus off the typical "sit and drink" party by inviting your employees' spouses and children to the gathering. Plan activities for the children; perhaps hire a musician, magician or storyteller. This type of party recognizes the employees' family, not just employees.