It’s that time of year again! The holidays are right around the corner, and businesses are gearing up for parties and events—which always brings plenty of questions and concerns. We’re here to help!

We thought it would be a great time to remind everyone of some common issues that tend to pop up during this (somewhat crazy) time of year—a quick annual refresher to keep everyone on the right track.

Below are some of the most common questions and compliance concerns that come up this time of year—along with a few tips to help you stay merry and maintain peace of mind.

Holiday Party/Event Attendance: Paid or Unpaid Time

Perhaps you’re celebrating the holidays to be social (and jolly), but compensation may need to be provided in some cases.

Exempt employees will get their usual salary, so compensation happens automatically for them.

For non-exempt employees, here are four questions to ask yourself:

1. Are they helping organize or manage the party/event? This includes anyone you designate to monitor the event (see the alcohol tips below).
2. Does the event occur during any portion of normal work hours?
3. Is attendance required, or would an employee be judged negatively for non-attendance?
4. Will work concerns be part of the party? For example, presenting end-of-year summaries or forecasting next year, employee recognition presentations, or other matters of concern to the business.
   
   

If the answer to any of those is “yes,” then any non-exempt employees attending the event need to be paid for their attendance. Keep in mind that paid event time counts toward hours worked, so it can create overtime for the day or week, depending on your states overtime rules.

Determining compensation for these events is really fact-specific. Each employer has a unique scenario, and one small adjustment to a planned party/event can mean the difference between being paid or unpaid, so seeking guidance on this, in advance, can make all the difference and prevent problems.

When in doubt, document your decision-making process and the reasoning behind it—especially if you decide the event time will be unpaid.

Company-Sponsored Events: Liability and Alcohol

Even if your holiday party is held after hours or off-site, it’s still considered a company-sponsored event. That means the employer could, in some cases, be held responsible for employee conduct, accidents, or other issues that arise. Before the party, double-check that your liability insurance and workers’ compensation coverage extend to company events, and remind employees that professional expectations still apply.

Serving alcohol raises your risk exposure—both from a safety and liability standpoint. State laws on an employer’s or host’s liability for alcohol-related incidents vary widely, which makes coverage verification even more important. Holding the event at a venue with licensed bartenders, rather than serving alcohol yourself, can also help reduce some of that risk.

Obviously, not serving alcohol would likely solve the problem, but many employers still opt for cocktails. If you plan to serve alcohol at this year’s party, consider limiting the risks with the following tactics:

• Require employees to pay for drinks, or consider a drink-ticket system in which each employee is entitled to two drinks on the house and no more.
• Choose when to have alcohol available, either pre-dinner or during dinner only. Close the bar at least one hour before the party ends.
• Limit alcohol to beer and wine rather than hard liquor, due to lower ABV.
• Invite families and/or clients and vendors. The presence of employees’ family members or other work-related colleagues can encourage employees to be on their best behavior.
• Designate a person(s) to monitor employees’ behavior. Items to look for include: how much employees drink and whether they have a safe ride home; employee interactions, especially those who become “too friendly” with each other or if tempers rise; and any other activities that may be dangerous to themselves and others. If the person you designate is non-exempt, this is paid work time.
• Cover all transportation bases by arranging for a taxi or car service for employees to get to and from the event.
• Prepare for the possibility of pre-partying. Impose a rule that employees who arrive buzzed or drunk will not be admitted to the party, and a pre-designated driver (e.g., an employee or a taxi) will take the intoxicated employee home.
  
  

Remind employees about your alcohol and substance abuse policy and the rules of behavior, public intoxication, fighting, harassment, etc., that will be enforced at the party. These reminders can be done via emails or memos a few days before the party.

Holiday Parties: Marijuana and THC Concerns

Many states have legalized recreational marijuana, and hemp-derived THC products are sold even in many states where marijuana isn’t legal. You may think it could be okay to bring some fun holiday edibles to the party. Like alcohol, this could backfire and is not recommended.

The first consideration is your drug policy. If your policy prohibits employees from being under the influence at work or work events, supplying THC products sends a confusing message about the standards you expect employees to follow. 

The second consideration is that dosing with THC is tricky—particularly with edibles. One holiday cookie could affect one person very differently than another. Because the effects can take time to appear, some people may eat too much too soon, causing a much stronger reaction than intended. Do you want to be responsible for causing some kind of major issue?

Like alcohol, people leaving the party under the influence are dangerous and could cause accidents to themselves or others. If this were to happen after their employer supplied the edibles, it could lead to serious liability.

Of course, substance use isn’t the only challenge employers face during holiday gatherings—maintaining appropriate conduct and professionalism is equally important.

Respectful Conduct Reminder

Holiday gatherings can blur the lines between personal and professional behavior, especially when alcohol is involved. It’s a good idea to remind everyone that all company policies—especially your harassment and conduct rules—still apply at work-related events, whether held on or off site. Supervisors and managers should model appropriate behavior and watch for situations that could cross professional boundaries. Reinforcing respectful conduct ahead of time can help ensure your event stays both enjoyable and problem-free.

Social Media and Photo Sharing

In today’s digital age, it’s easy for photos or videos from workplace events to appear online within minutes. Consider reminding employees that your social media and confidentiality policies apply to company-sponsored events, too, and encourage them to be thoughtful about what they post and considerate of coworkers who may prefer not to appear in photos.

Keep these reminders framed as courtesy rather than a ban. Under federal labor law, employees generally have the right to discuss their working conditions with each other, including online, and an overly broad rule against posting about coworkers or work events could create problems.

Holiday Gifts and Bonuses

Many employers show their appreciation this time of year with gifts or bonuses. A few rules to keep in mind:

• Cash and gift cards are taxable wages. They should be run through payroll with the appropriate withholding.
• Small, occasional non-cash gifts, like a holiday ham, a fruit basket, or a company-logo item, are generally considered de minimis and are not taxable.
• Non-discretionary bonuses affect overtime. A bonus that is promised or announced in advance, or tied to performance, attendance, or production, must be included in a non-exempt employee’s regular rate of pay when calculating overtime. That may mean recalculating overtime for the period the bonus covers. A truly discretionary bonus—where both the decision and the amount are solely up to the employer and not promised in advance—doesn’t have to be included.
  
  

Religious Accommodations

As you plan holiday gatherings, remember that not everyone celebrates the same holidays—or any holidays at all. To make everyone feel welcome, consider hosting a “year-end celebration” rather than a specific “Christmas party,” and keep decorations and themes general and inclusive. Celebrating your team’s accomplishments in a way that respects all backgrounds fosters a stronger sense of belonging.

Under most federal and state laws, employers must reasonably accommodate employees’ religious beliefs unless doing so would cause an undue hardship, which is difficult to establish and prove. Not providing an accommodation can create liability for the employer. Here are some potential accommodations:

• Allowing observance of a different holiday. For example, taking a day off for Hanukkah.
• Allowing an employee to not attend a holiday party/function without consequences.
• Modification of non-essential job duties. For example, not asking them to decorate for a holiday they don’t observe.
  
  

Accommodations must also be free from retaliation. That means employers cannot otherwise adversely affect the employment conditions of employees simply because they asked for and received a religious accommodation.

Paid Holidays/Office Closures

Christmas and New Year’s Day are very common paid holidays, and some employers also include Christmas Eve and New Year’s Eve. Any holidays your office provides are paid according to the eligibility requirements outlined in your established policy.

Many businesses close entirely for a week or two during this time. Any applicable paid holidays still apply during the closure. For non-exempt employees, any days not covered by a paid holiday benefit can be handled in one of three ways:

1. Pay their wages anyway;
2. Take the time unpaid; or
3. Allow employees to use other paid time off benefits (vacation/PTO/personal time).
   
   

Exempt employees are different. If an exempt employee performs any work during a workweek, they are generally owed their full weekly salary, even if the office is closed the rest of that week. You can usually require exempt employees to use available PTO for closure days, but if they don’t have enough PTO, you can’t reduce their salary. A closure that covers a full workweek, with no work performed, doesn’t require salary for that week.

Keep in mind that employees who don’t receive pay during office closures—lasting a week or two—could file for and possibly receive unemployment insurance benefits. There are many nuances to how this works, but it is the employees’ right to file for benefits, and employers are prohibited from restricting this or otherwise retaliating, discriminating, or punishing employees for doing so.

Remote and Hybrid Teams

For organizations with remote or hybrid employees, don’t forget to include them in the festivities. Virtual holiday events, mailed treats, or digital gift cards can help everyone feel connected (remember, gift cards are taxable wages). If your virtual gathering happens during regular work hours, non-exempt employees may still need to be paid for that time. The goal is to keep your team engaged, appreciated, and included—wherever they’re working from.

Conclusion

The holidays should be a time to celebrate your team’s hard work—not to navigate unexpected HR headaches. With a little advance planning, clear communication, and thoughtful attention to inclusivity and compliance, you can make sure your holiday season stays festive, fair, and fun. Like your shopping list—start early, stay organized, and enjoy the rewards!