Employers across the country are in the midst of planning, decorating, and reveling in good cheer as they prepare to enjoy — or perhaps already did enjoy — an office holiday party.
While most employment attorneys and human resources professionals appreciate the potential morale-building of office holiday parties — and do not want to be viewed as Scrooge-like objectors to festivities — they also bear in mind the potential legal issues such parties raise. Perhaps most obviously, alcohol, especially if provided without limitation, can lead to employee DUIs and tort claims, as well as reduced inhibitions that might engender harassment claims. Whether employees must be paid for attendance is another such issue, although not one that has received much attention. We summarize below a few wage-and-hour considerations relevant to this issue.
When must an employee be paid for attendance at an office holiday party?
As an initial matter, the obligation to pay employees for attendance at a holiday party applies only to nonexempt employees. Exempt employees do not need to be paid extra for time spent attending or in relation to a holiday party.
With respect to nonexempt employees, however, an employer’s obligation to pay will likely turn on when the holiday party is scheduled and whether the employee is required to attend. Holiday parties scheduled during the regular work day will virtually always be compensable. Even if scheduled after hours, a holiday party will still be compensable “work” for nonexempt employees required to attend. Conversely, it is clear that no compensation is owed for holiday-party attendance that is 100% voluntary and strictly for the benefit of employees. The grey legal area for compensability falls on the spectrum between attendance that is mandatory and 100% voluntary. For example, the facts behind a claim that attendance was strongly encouraged could lead a fact-finder to conclude that the implicit message was attend or face negative work consequences, thereby rendering attendance compensable “work.”
It is important to recognize also that, while attendance at a holiday party may be 100% voluntary for the majority of employees, those who are working the event or helping prepare for the event — even if the work is voluntary — must be paid. Neither the Department of Labor nor the courts recognize an exception for “volunteering” if the nonexempt employee is performing nonexempt functions.
So is the time compensable that is spent waiting between the end of a nonexempt employee’s shift and the beginning of the holiday party and/or in travel to the party? The answer is no if party attendance is voluntary and compensation for it is not required. However, if attendance is mandatory or functionally close enough, waiting and travel time might be compensable, especially if there is a relatively small gap of time between the end of the shift and the start of the party. (A larger gap in time during which nonexempt employees are relieved of all work and entirely free to go wherever and do whatever they desire would likely not be compensable). To avoid potential liability, employers can simply pay employees for the gap and/or travel time if they are already paying nonexempt employees for attendance at the party itself.
- Make attendance at the holiday party entirely voluntary and convey that message to employees with unwavering clarity.
- Consider scheduling the party during regular working hours when nonexempt employees are paid anyway.
- To the extent attendance is required, publish the hours of the party and enforce them.
- Neither ask nor permit nonexempt employees to prepare for and/or work at the party outside regular work hours.
We are not Scrooge-like enemies of office holiday parties. We appreciate (and personally enjoy) their positive effects. At the same time, we wish to caution employers about the potential legal consequences of a refusal to pay nonexempt employees for time spent in connection with such a party that is essentially a mandatory work event. The simplest ways to avoid this concern are to schedule the party during regular work hours or ensure that it is both entirely voluntary to attend and fun enough to encourage high attendance anyway. Happy Holidays!