Company holiday parties can increase employee morale.  From a tax standpoint, holiday parties are beneficial because a company can deduct the cost of them while not treating the costs for the party as income to the employee unless the party is truly extravagant (think party held in the Bahamas).  The company needs to keep all receipts in case of audit. You should consult your CPA to determine how to properly categorize the expenses (and maybe to ask him or her to come to the party to ensure a good relationship!).

From a liability standpoint, if alcohol is served, arrange rides for employees that party a little too hard.  It may be wise to send out a quick email with your company’s sexual harassment policy just to ensure that everyone knows that although it is the holiday season, the party is still a business event.

From an employment law standpoint, if the party is held outside of normal business hours, it should be made clear that attendance is not required for hourly employees or contract workers.  If you attendance is mandatory, you may be required to pay employees for their time at the party and it may affect the contractor’s status as an independent contractor.

Depending on the type of business, it may be best to hold it at a venue that would not subject any employees to religious or sexual discrimination feelings (i.e. strip clubs or restaurants with skimpily clad waitresses).  In addition, if you live in a city where discrimination based on sexual orientation is illegal, you may want to ensure that employees are allowed to bring a “guest” rather than a “spouse”.  This will also help to ensure that single employees know that they can bring a friend or significant other.

If you have any questions about your holiday party, or want your favorite attorney to attend, please call me at 720-258-6647 or email me at