Employer sponsored sports teams or events: team building or business risk?

There are many advantages to sponsoring an employee sports team or event, such as camaraderie, team building, exercise and just plain fun. However, what happens if an employee strains his back while pitching for your softball team or a fight breaks out and a third party is injured? It’s important for employers to understand the risks, including liability for a Workers’ Comp claim and liability for injuries of a third party caused by an employee.
While laws vary by state, the relationship of the company to the activity plays a key role in assessing liability. Some common guiding principles include:

• If the event is truly voluntary
•  If  an employer derives a direct business benefit from the activity
• If the event was on company property
• If employees are expected to build customer relationships by participating

Whether or not an injury during an event is work-related is not always clear-cut. Two cases illustrate this point:

In Iowa, an employee who injured his back bowling at a "Family Fun Fest" sponsored by his employer was compensated to the tune of $100,000 because the employer urged participation: "Don't make us cancel this event from lack of interest/attendance."

In contrast, in New Hampshire an employee who injured his back bowling in a company-sponsored league failed to prove that his injury arose from, or was in the course of his employment, because at the time he wasn’t on company property, was not engaged in any activities related to his job, and was not required to participate. It also was not proven that the employer received a benefit from his participation in the league.

Here are a few guidelines to help minimize the risks and liabilities:

• Don’t hold events on company premises or on company time.
• Have employees sign waivers. Make sure employees know participation is voluntary and they're playing at their own risk. Don’t require or encourage participation in any way. Recognize, however, that waivers do not provide all-encompassing protection.
• Limit company participation in the costs of the program, such as buying equipment or uniforms, refreshments, etc. The smaller the financial commitment, the less likely the team will be viewed as an extension of work.
• Know the state law. Some states provide forms that employers can require employees to sign.
• Include company policy on athletic and social events in the employee handbook.
• Prohibit alcohol.
• Treat all injuries consistently.