Weekly HR - Avoiding Holiday Liability - Holiday Parties

 Weekly HR - Avoiding Holiday Liability - Part 3 of 4

Holiday Parties

Holiday parties should be a morale booster and unforgettable because of the celebrations and the fun, not as a result of the legal consequences that occur because of poor decisions.  In addition, many citizens will ask questions such as is this a good use of tax dollars?  Or with a quorum of elected officials in attendance, isn’t this a violation of the Open Meetings Act? 

The first question that almost always comes up is in regards to the use of taxpayer money on a holiday party.  Keep in mind that although a final determination as to whether hosting such a party would violate the spirit of the public purpose spending restrictions of the Kentucky Constitution has yet to occur, many cities pose a strong argument that such an expenditure is for a public purpose. The touchstone of the public purpose spending analysis requires a determination as to whether the expenditure lends itself to the benefit of the community as a whole rather than a private individual or group of private individuals. The purpose behind the city having a social event for its employees is to boost and maintain employee morale, comradery, and loyalty to the city. Thus, the expenditure could potentially result in improved customer service, a better working environment, a greater ability to recruit and retain employees, and increased productivity. These would, in turn, provide an invaluable benefit to the citizens of your city. Concluding that cities did not have the ability to do this for employees could have the effect of driving public employees away from public service and into jobs where they would feel more rewarded and valued for their contributions - a result that could be harmful to city government’s ability to adequately meet the needs of its citizens.

With regard to the Open Meetings Law, the Attorney General’s Office has long recognized in its decisions and opinions that conventions, training, and other social events are not considered public meetings when attended by a quorum of a public agency AND members of the agency do not engage in discussions of public business. The most recent opinion discussing this issue is 03-OMD-178, which cites 00-OMD-147, 95-OMD-136, and OAG 78-634 as supporting the above conclusion. Keep in mind, that the requirement is that members of the public agency are prohibited from any discussion of public business. A failure to refrain from such discussions would result in a violation of the Open Meetings Law. 

Another question that often comes up is whether or not the city can provide alcohol at a social event?  As often is often the case with municipal law, there is no black and white answer to this question.  There is no case or opinion in Kentucky that is directly on point.  However, the city must be satisfied that if challenged, this type of expenditure comports with the public purpose spending requirements of the Kentucky Constitution.  Leaving the potential political issues aside, the courts of the Commonwealth have given broad discretion to governmental entities to determine what constitutes a public purpose.  As a result, the courts have afforded great deference to the determination of legislative bodies if the public purpose of an expenditure is challenged.   In the case of Dannheiser v. City of Henderson, the Kentucky Supreme Court articulated the general rule that "the determination by the [c]ity as to a valid public purpose is conclusive so long as the purpose to be achieved has a reasonable relationship with the public interest."

Ultimately, the answer lies in the sound determination of the city and in its ability to articulate some benefit provided to the public by making the expenditure.  Because alcohol has traditionally been a contentious political issue, it may be more likely to come under public scrutiny than other types of expenditures that similarly fall into this "gray area" of the law.

Additionally, cities should consider the following holiday party tips to protect itself and its employees:

For more information, sample policies or questions contact Andrea Shindlebower at ashindlebower@klc.org.

Next week: Avoiding holiday liability … gift exchanges.