Nov 29, 2016

How to Get Your Company into the Holiday Spirit without Being a Grinch

Laptop Decorated for the Holidays
  1. End-of-the-Year and Holiday Bonuses:  Manage Expectations

You may recall the shock and anger, in the movie National Lampoon’s Christmas Vacation, when Clark Griswold finally receives the holiday bonus he has been waiting for-only to discover that, instead of his usual check, his boss gifted him a one-year membership to the Jelly of the Month Club.  After an epic rant and with Cousin Eddie’s help, Clark learns that his boss decided to cut-out holiday bonuses without telling anyone.  Cue the music as Clark sympathetically explains that he depends on his yearly bonus as a part of salary, and has done so for the last 17 years.  Finally, his Grinch-like boss acquiesces and gives Clark his standard bonus plus 20 percent.


Although a happy ending for the Griswold family, this scene underscores some of the issues employers face when deciding whether and how to give end-of-the-year and holiday bonuses.  Here are a few basic guidelines to keep in mind this time of year.  They apply to non-exempt employees only:

  • If non-discretionary bonuses, gifts, prizes, awards, and/or incentive payments are based on the quality, quantity, or efficiency of production or hours worked, then the value of such payments must be calculated into the employee’s average hourly rate for the purpose of overtime pay.  This means that any overtime worked in the pay period during which the bonus was received would need to be recalculated to adjust for the value of the non-discretionary bonuses, gifts, prizes, awards, or incentive pay.
    • Note:  Employers need not worry about adjusting to the Department of Labor’s new overtime regulations on December 1, 2016.  Those efforts were enjoined as described here.
  • If the prize is merchandise, the amount to be allocated is the actual cost to the employer.
  • Employers may only exclude a bonus from the regular hourly rate if the bonus was discretionary. A bonus is discretionary if the allocation and amount of the bonus are left to the employer’s sole discretion and the payment was not made pursuant to any prior contract, agreement, or promise that would lead the employee to expect the payment (to wit: Clark Griswold).


  1. Office Parties:  Better Safe than Sorry

While they often have a positive impact on office moral, company holiday parties may cause litigation and unnecessary office gossip.  Regardless of the time and location of the event, company parties may be considered within the scope of employment and, therefore, may subject employers to liability, even when the attendance is optional. Here are just a few tips:

  • Discrimination
    • Avoid religiously themed events, in order to respect the diverse beliefs of the attending individuals;
    • Provide non-alcoholic drinks for those with certain religious beliefs and/or medical conditions;
    • Ensure alternate dietary requirements are considered (e.g., do not serve a pork dish without providing a kosher option);
    • Ensure that the party’s location and activities are accessible to employees with disabilities, and
    • Only give appropriate and neutral gifts to employees-gift cards are the safest bet.
  • Sexual Harassment
    • Reduce the risk of improper fraternization by hosting an alcohol-free event, removing hard liquor from the menu, limiting the number of beverages each employee may consume (two is standard), or providing access to a cash bar as opposed to an open bar;
    • Instruct supervisors and managers to maintain professional standards during the event to serve as examples for their subordinates and avoid any activities that may lead to physical contact or inappropriate conversation, and
    • If anyone complains of or reports inappropriate behavior, take the complaint seriously.  Document, investigate promptly, and take remedial action if necessary.
  • Physical Injury
    • If the party is held off-premises, employers should perform a reasonable inspection of the property before the event to ensure no harmful or dangerous conditions exist.  Employers may be liable for dangerous conditions that cause injury to attendees;
    • Instruct caterers and bartenders not to serve an excessive amount of alcohol to any one individual. Many states have “dram shop” laws that impose a duty upon hosts to ensure that guests are not over-served, and
    • Arrange for taxi services or encourage the use of Uber or Lyft so that employees who drink in excess will get home safely.


  1. Charitable Activities:  For Volunteers Only

The holidays are known for not only giving gifts, but also giving time. Employers and employees alike may be interested in volunteering in philanthropic pursuits. The Fair Labor Standards Act permits employees to donate their time for humanitarian, religious, charitable, or other public-service reasons. However, such services must be conducted on a voluntary basis without the contemplation of pay.  Note, employees may not volunteer services to for-profit private sector employers.

Public sector employees may not volunteer services to another public sector employer without additional compensation where the employee is performing the same work for which he or she is employed. Similarly, the Department of Labor mandates compensation to public sector employees who provide services for a charity at the employer’s request, under the employer’s direction or control, or during the employee’s regular work hours.

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