updated 11/17/2006 7:09:24 PM ET 2006-11-18T00:09:24

There are many good reasons for a small business owner to hold a holiday party for customers or employees. At the same time, owners should be aware of some of the possible pitfalls that can turn a festive event into a nightmare.

Many of the problems at parties are the result of someone having too much to drink. The most innocuous incidents might involve employees, customers or other guests spilling drinks or behaving a little outrageously and making fools of themselves. But, if someone is offended or physically hurt as a result of their poor behavior, it becomes the business owner’s problem.

Chris Boman, a partner in the Irvine, Calif., office of the law firm Fisher & Phillips, said small business owners need to set a professional tone for the party, before and during the event.

“It’s not just a party, it’s part of your job. This is still a work function,” Boman said.

Moreover, if an owner has managers or supervisors working for you, they need to know “they’re going to be your eyes and ears and act accordingly to set the standard for your subordinate employees.”

Jerry Hunter, an attorney with the law firm Bryan Cave in St. Louis, suggests a stern approach:

“If they do go to the expense to sponsor the holiday party, employers should go to extra effort to remind employees that they are expected to conduct themselves appropriately.”

Still, it often happens that people have too much to drink and there’s trouble — Boman listed sexual harassment, fist fights and “comments that someone wouldn’t normally make in the workplace” topping the list of issues that his firm’s clients have had to deal with.

But remember, it doesn’t have to be an employee who gets a company in trouble — if one of your customers or clients is the offender, you can still be liable.

There are ways to prevent people from drinking too much. You can have an alcohol-free party, of course. Boman suggested, “use a cash bar or ticket system,” where each employee gets a certain amount of tickets and one drink for each.

Still, you might need to do some policing — some employees might hand their unwanted tickets over to a colleague who will then end up drinking too much. If the party is at your company’s offices, Boman suggests using a professional bartender who’s trained to tell when guests have had too many and who’ll cut them off.

You also need to be prepared to tell employees yourself they’ve had too much to drink, and for your managers to do the same. You all need to be chaperones more than guests at the party.

Boman said inviting spouses and significant others will also help the festivities from lurching out of control.

Employees who act up aren’t the only problem — people who are drunk can crash their cars or fall down and hit their heads on the sidewalk. If an accident happens at or after the company party, the company owner can be liable; many states have laws that make the host of a party liable for injuries suffered in accidents due to intoxication.

Some companies have car services lined up to take employees home after a party — some will chauffeur those who clearly need help, while others will make sure that everyone gets home safely. Still others rely on designated drivers, or collect car keys from guests when they enter the party to ensure that no one drives if they’ve had too many drinks.

If the worst does happen, you can at least protect your company in advance by being certain there is adequate insurance coverage for everyone who might be liable. First, you should see if you already have your own liquor law liability insurance in your business insurance package; if not, buy it for the party.

An owner also needs to do some due diligence about the restaurant or club where the party will be held. Does the establishment have adequate insurance, including liquor law liability coverage for alcohol-related accidents?

You also need to check, if the party is on your premises, or say, the local Elks hall, and is catered, does the caterer have similar coverage? Hunter noted that in some states, it’s illegal for an unlicensed person to serve alcohol in a commercial establishment, so, if you hired a friend to tend bar in a setting other than your home or office, you could be breaking the law.

You also need to be sure you’re not breaking the laws against underage drinking — your client’s teenage son can’t have a beer, and neither can the 18-year-old intern who worked for you last summer.

A last bit of advice: If there’s an incident at the party, and you think your company might be liable, call your attorney right away. In the event of an accident, your insurance broker as well.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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