Company Holiday Party Considerations – Pay, Safety, Inclusivity

HR Question

Thinking about your company holiday party? Here’s what you need to know about pay, policies, and inclusivity.

HR Answer

The holiday season is just around the corner, bringing with it a variety of parties and events that celebrate this festive time. These gatherings are also opportunities to express gratitude to employees, recognize their hard work, and strengthen team bonds. In today’s job market, where retaining employees is crucial, holiday events can add some cheer to a stressful time, demonstrate an organization’s appreciation and commitment, and engage staff members—sometimes including their families. However, several important factors must be taken into account when sponsoring such events to ensure positive outcomes and mitigate potential risks.

Compensation – Voluntary vs. Mandatory Event and FLSA Status

In general, employers are not required to pay employees if the company holiday party is considered voluntary and takes place outside of regular working hours. Holiday parties scheduled during the regular workday should be compensated. If the employer requires all employees to attend an event outside of regular working hours, then it may be considered work time, and employees should be compensated for attendance.

 Be sure to follow applicable Federal and State FLSA requirements, as well as any internal policies that you have established for hours worked.

• If an employee is exempt, their salary covers all work obligations.
• Non-exempt employees need to be paid to attend in the following situations:
  • If attendance is mandatory, non-exempt employees should be paid for time spent at the event.
  • If the event is held outside the regular work location, non-exempt employees should be paid for the extra time and travel to and from the party.
  • If the holiday party includes work-related activities, such as a meeting and/or team-building exercises, non-exempt employees should be compensated.
  • If a non-exempt employee is working at the event, including set-up, clean-up, serving, and/or representing the company (i.e., wearing a mascot costume), they should be paid, even if they are working voluntarily.

Compensation – Potential Overtime and Collective Bargaining Requirements

Keep in mind, non-exempt employees who are paid for the time may be eligible for overtime if the hours extend beyond 40 hours during the work week.  Also, some employment contracts or collective bargaining agreements may have provisions that require employers to pay employees for attending certain events, including holiday parties. Be sure to keep those agreements in mind when scheduling or factoring in potential costs for a holiday party.

Risk Management

As always, whenever there’s alcohol involved, it’s important to keep some of the legal considerations in mind. For example, do you have a plan for handling alcohol? Will there be drink tickets or a cash bar? Do you plan to enforce a drink limit? Do you plan to offer transportation options (rideshare vouchers for example)? Have you considered how to handle marijuana use at the event? These are good questions to consider to determine ways to limit the organization’s liability for this event.

In addition, you may wish to consider liability waivers for certain activities and ensure harassment prevention policies apply during these events. Depending upon the event, you may want to require participants to sign liability waivers to minimize risk and make sure individuals are informed of any potential risks involved. These actions are a proactive approach that fosters a safe, respectful environment where all attendees feel valued and protected.

Inclusivity and Accessibility

Ensure the event is inclusive. Take proactive steps to recognize and respect the diverse backgrounds of all employees. Consider:

• Cultural and religious differences
• Dietary restrictions—including vegetarian, vegan, gluten-free, and allergen-free choices—so everyone feels welcome and accommodated
• Disability accommodations—make accessibility a priority by selecting a venue that meets ADA standards, providing ramps, accessible restrooms, and seating arrangements that accommodate mobility devices.

Open a dialogue with employees prior to the event, inviting them to share any specific accommodations or preferences, to further demonstrate your commitment to inclusivity and create an environment where all attendees are able to fully participate and enjoy the celebration.

The purpose of a holiday party is to offer a chance to celebrate, unwind, and build team spirit—not to require attendance from those who may prefer not to participate. It is essential for employers to communicate all relevant information regarding the event clearly. This includes specifying in advance whether attendance is voluntary and clarifying any policies regarding employee compensation for participating. Additionally, sharing details related to guest invitations, event guidelines, compensation arrangements, and expectations is important to ensure transparency and foster a positive environment.

Thank you to Becky Foster, Senior HR Business Strategist, for contributing to this HR Question of the Week.

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