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The Oregon Supreme Court recently gave employers a significant warning when it comes to after-hours social events. In a unanimous opinion, the state鈥檚 high court ruled that employers can be liable for damages stemming from negligently forcing their employees to enjoy a drink or two 鈥� or many 鈥� even at off-the-clock informal gatherings. The decision, which narrows the available 鈥渟ocial host鈥� statutory defense that many employers had relied upon, might make officials think twice before letting supervisors take workers out for happy hour.

Happy hour ends in tragedy

Ashley Schutz worked as a receptionist for Portland-based O鈥橞rien Constructors for some of 2008. During her three months of service, she claims that she declined four or five invitations from her supervisor, Keeley O鈥橞rien 鈥� who also happened to be the owner鈥檚 son 鈥� to join him and other co-workers for drinks after work. But eventually she gave in, believing that she needed to say yes and join O鈥橞rien if she wanted to advance in the company.

So on Dec. 12, 2008, she left work early to join her supervisor and several co-workers at a nearby Mexican restaurant and bar. Schutz claims that O鈥橞rien encouraged her and the co-workers to drink heavily, teasing one of the employees who attempted to leave the bar after downing 鈥渙nly鈥� two beers. After four hours of drinking, Schutz left the bar at about 9 p.m. and started to drive home.

Unfortunately, Schutz was extremely intoxicated. She mistakenly drove onto an exit ramp to I-5 north and crashed head-on into another vehicle. When she was later tested, her blood-alcohol level was .24 percent 鈥� three times the state legal limit. But that wasn鈥檛 the worst news of the night. Schutz was severely injured in the accident; she broke over a dozen bones, including two of her vertebrae, and became a quadriplegic. (If there is any silver lining to this story, it鈥檚 that the driver of the other car suffered only minor injuries.)

Schutz filed a lawsuit against the restaurant, her supervisor and her employer. The court quickly dismissed the restaurant from the case because of Oregon鈥檚 鈥渟ocial host鈥� statute. In response to a case where a man sued a Coos Bay restaurant for serving him so many drinks that he became inebriated and injured himself in a fall down a staircase, the Legislature passed a law in 2001 that bars patrons who voluntarily drink alcohol from suing the social host that served them the liquor. Both O鈥橞rien Constructors and Keeley O鈥橞rien also asked the court to dismiss the case against them for the same reasons, but they did not escape liability.

Employers can still be on the hook

On March 14, 2019, the Oregon Supreme Court ruled in Schutz鈥檚 favor and decided that the social host statute did not protect employers from cases stemming from allegations that they negligently contributed to such injuries. It pointed to the fact that the employer and supervisor in this case may have committed negligent acts leading up to the actual serving of alcohol.

For example, they may have acted unreasonably in organizing the drinking event in the first place, pressuring her to attend despite her earlier refusals, and creating the impression that her success at the organization was dependent upon her supervisor鈥檚 approval (which, in turn, necessitated her to join in a night of excessive drinking). It concluded that the social host statute protects only those that serve alcohol for their actions serving alcohol. All other actions are now wide open for legal attack.

Significance for Oregon employers

The decision is a sobering one for Oregon employers. It raises the possibility that one could be liable for damages resulting from an employee voluntarily participating in after-hours social events and deciding to overconsume alcohol. Officials should immediately train their supervisors about the dangers that this case could create for the organization as well as best practices to employ for events where employees are drinking. Some ideas include:

• Make sure supervisors are aware that any event they organize 鈥� even informal happy hours 鈥� could bind the company.
• Inform supervisors they are always on the clock when it comes to acting responsibly. They have an obligation to be the eyes and ears of the organization at such events, monitoring all workers for signs of inebriation or unprofessional behavior.
• If a supervisor believes an employee is not fit to drive, he or she should order a taxi or ride-share driver at company expense.
• Employees should be invited but not compelled or forced to attend such social events.
• In no event should a supervisor encourage someone to drink any amount of alcohol. Similarly, if a supervisor sees a co-worker teasing another employee (even in jest) about being a 鈥渓ightweight鈥� or not cool enough to drink a certain amount, the supervisor should immediately put an end to that and make it clear that each employee is the final decision maker when it comes to his or her own comfort level.
• All this being said, it might be best for supervisors to avoid drinking with their subordinates at informal after-hours events altogether. That would sidestep any such concerns and all but eliminate any possibility of company liability.
• If all of these warnings are not sinking home, a final warning should strike fear into supervisors鈥� hearts: let them know they could be personally liable for any such damages resulting from an injury. After all, the Supreme Court cleared Schutz鈥檚 case to proceed against both the employer AND the supervisor. If supervisors don鈥檛 want to end up in the same position as a defendant in a lawsuit, they should heed officials鈥� advice and warnings.

Rich Meneghello is a partner in the Portland office of Fisher Phillips, a national firm dedicated to representing employers鈥� interests in all aspects of workplace law. Contact him at 503-205-8044 or [email protected], or follow him on Twitter 鈥� @pdxLaborLawyer.