The Law at Work - Holiday parties; vacation policies
by Beth O'NealHoliday parties
Now that the holidays are over, I would like some advice about hosting a holiday party for my employees next year. This year's holiday party did not go so well (a couple of employees overindulged). Of greater concern is the fact that when the party was over, a couple of employees stayed behind to socialize and their drinks were charged to the company. In planning for next year, I am concerned about what I should or should not do (e.g., should I serve alcohol or should there be dancing, etc.?). What are my responsibilities?
Annual holiday celebrations are nice ways to thank your employees for their hard work during the year and encourage socializing among employees and families to develop camaraderie. However, because the party you are considering will be an employer-sponsored event, consider it an extension of the workplace in making your party planning decisions.
You may provide alcohol if you would like, but you will have more responsibility both prior to and during the event, if you do so. Make sure the provider of the alcohol has a valid liquor license and liquor liability insurance. Insist that the servers check the IDs of both employees and guests, who do not appear to be of legal age (21 in Massachusetts). You should also consider ways to minimize the possibility that anyone will over-indulge. For example, offer an open bar only during the cocktail hour or have the restaurant provide a few appropriate wine choices with the meal. Be sure to have plenty of non-alcoholic beverages available for those who choose not to drink. You should also consider shutting down the bar, perhaps when dinner is served (whether accompanied by wine or not).
Certainly by the time dessert is being served, you should limit beverages to coffee, tea and other non-alcoholic items. You should also be aware of whether anyone seems to be intoxicated and be prepared to call a cab or arrange for alternate transportation.
It is also recommended that you have a pre-arranged time when the party is officially and actually over. This means that you should not permit partygoers to remain behind after the party is over. If the party has been hosted at a facility that otherwise offers alcohol to the general public, just make sure that the location where your party was held is closed for the night and partygoers have otherwise moved to other public areas of the facility to continue their partying. Do not provide money or a credit card to these partygoers for the continued festivities.
Dancing is also fine, but it can be tricky to pick a DJ/band that will appeal to the majority of your employees and will create the appropriate atmosphere. If the party is to be attended by your employees only, you may want to consider skipping the dancing and go with background music. If employees are permitted to invite guests, dancing may be more appropriate, as most employees will have a built-in dance partner. As to whether you should be dancing, go ahead and enjoy yourself. Just remember you are still in a position of authority and must act accordingly by declining any slow dances with employees and maintaining your composure throughout the evening.
If you find the holidays are a hectic time for you and your business, you can still foster goodwill at other times of year. Consider having an annual summer outing or celebration at the end of your busy season when everyone can relax and celebrate a job well done.
Vacation policies
An employee of mine quit in February and then demanded that I pay her for four weeks of unused vacation. Although I provide employees with paid vacation, I expect them to use their vacation during the calendar year. She told me that if I did not pay her, she would report me to the Attorney General's office. Do I have to provide paid vacation time to my employees and, if so, do I have to pay my employees for unused vacation when they quit or are fired? And what does the Attorney General's office have to do with my vacation policy?
Many employers are unaware of the legal requirements surrounding paid vacations. As an initial matter, an employer does not have to provide an employee with paid vacation. However, most employers do so as a matter of competitive necessity. Where an employer does provide an employee with paid vacation, the employer should have a clear written policy addressing paid vacation. For example, an employer can provide for the gradual "earning" or "accrual" of vacation days based upon increments of time worked. If the employer provides 20 vacation days per year which is equivalent to four weeks, as you do, the policy could provide that the employee earns 1.6666 vacation days for each month worked. If you had had this type of a policy, when your employee quit, you would have owed her for no more than 3.332 days instead of four weeks. That is because in the absence of a system of earning or accrual, if an employer provides "X" days of vacation "per year" or "on the employee's anniversary date" or "every 12 months," the presumption will be that the employee is entitled to pay for all unused vacation upon termination.
The Attorney General's (“AG’s”) office does get involved with issues concerning the payment of unpaid vacation days on account of the Massachusetts law requiring the payment of wages to an employee, which includes payment for vacation or holidays due an employee under a written or oral employment agreement, and providing for enforcement by the AG’s office. The AG’s office has published a helpful Advisory on vacation policies, which is available at
www.ago.state.ma.us/filelibrary/VACDV.PDF. It acknowledges that employers are free to set requirements for vacation entitlements, which may include "capping" the accrual of vacation days (i.e., if an employee has 15 accrued and unused days, the employee cannot earn any more days) and imposing a "use it or lose it" rule to prohibit employees from accumulating vacation time from year to year. The advisory takes a firm position that accrued vacation is a form of wages and therefore employers may not evade the basic rule that employees are entitled to payment of all wages by imposing any sort of forfeiture rules such as those whereby an employee who quits without notice or who is fired for cause is not entitled to receive vacation pay upon termination. Employers should be aware that their violation of the law can have significant consequences. The law permits an employee to recover three times the amount of unpaid wages (e.g., accrued but unused vacation), together with the employee's attorney's fees and imposes personal liability upon the corporate employers, officers and business managers.
This column, which may be considered advertising under the ethical rules of certain jurisdictions, is intended as a general discussion of the topics covered, and does not constitute the rendering of legal advice or other professional advice by Masterman Culbert and Tully LLP or its attorneys. In compliance with U.S. treasury regulations governing tax practice, any U.S. federal tax advice contained in this publication is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties or in connection with the promoting, marketing or recommending to any individual of any transaction or matters addressed therein.
Send questions to law@capebusiness.net or The Law at Work, Cape Business, 704 Main St. (Route 6A), Dennis, MA 02631.
Originally published in the Jan/Feb 2007 issue of Cape Business.
Beth O'Neal Beth O’Neal, Esq., is a partner in the Boston law firm of Masterman, Culbert & Tully LLP. 
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