December often brings mixed emotions, and this is especially true for human resources departments. Jonathan Segal, a partner and managing principal at the law firm Duane Morris, said during a recent online event: "People often say this is the most wonderful time of the year, but that may not be the case for HR professionals."

Part of the reason is that inappropriate behavior may occur at company-sponsored holiday parties, and such events have, since the pandemic,regained popularity. But beyond that, there are many other issues to watch, from wage and hour classification of seasonal bonuses to ensuring decorations are used appropriately. Segal's presentation covered several best practices that employers and HR should consider.

1. Allowing inappropriate gift-giving

Employers may want to remind employees not to give anything that is sexually suggestive, provocative, or in violation of the company's harassment policy. Segal recalled a case where an employee at a client's company gave a secretary a Victoria's Secret product. "I wish we had reminded him about that," Segal said. The prohibition can also extend to political gifts, even if employers have concerns about restricting political speech in the workplace.

Segal added that employers should make clear that employees may not give gifts to politicians that could create a conflict of interest without prior approval from the general counsel or chief compliance officer, even if those gifts are not intended as bribes.

Managing alcohol-related gifts is trickier. Segal said employers may not want employees to throw away a bottle of wine given by a colleague, but they can instruct them not to drink it at work and to take it home on the day they receive it.

"I think we all agree—though I'm not sure it needs to be said—that marijuana is not appropriate as a workplace gift under any circumstances, and should never appear in the workplace, including edible cannabis products," Segal added.

2. Excluding certain holiday payments from overtime calculations

The Fair Labor Standards Act (FLSA)does provide an exception for payments of a gift nature on special occasions, which do not need to be included in an employee's regular rate of pay when calculating overtime. But Segal noted that for these payments to be excludable, the employee must not have a contractual or legal right to them, and the payment cannot be based on or tied to hours worked.

He added that such payments also cannot be so substantial that they are considered part of the employee's wages. Therefore, bonuses calculated based on categories such as productivity or performance are not excludable, nor are amounts equivalent to a full month's salary.

Segal said that even if bonuses are paid regularly enough that employees expect them, or are paid in different amounts based on job type or years of service, they may still be excludable under the FLSA.

State laws add another layer of complexity. For example, California law requires that if an employer creates an expectation of a bonus, it must be included in the regular rate of pay. Segal noted that other states have rules that are equally strict, or even stricter.

"Giving employees bonuses is a good thing, and I actually encourage you to do it," Segal said, "but I don't want you to end up facing an FLSA claim out of good intentions. If you're not sure whether a bonus can be excluded from the regular rate, be sure to include it."

3. Letting holiday parties get out of control

In the view of some lawyers, the safest way to reduce the risk of misconduct at holiday partiesis simply not to hold them. However, many employers find that such events canboost employee retention and cohesion, and can serve as a way to express gratitude.

Segal said HR should monitor employee behavior to ensure it is responsible, especially when alcohol is involved and people might do things they wouldn't normally do.

Additionally, if an employer hires a band or DJ, it's best to check the playlist in advance—or curate it themselves and have it reviewed by a diverse group within the organization to gather input. Because the dance segment is especially prone to problems.

Segal strongly advises employers to make clear they will not sponsor, fund, or attend any "after-parties." Because these events can sometimes lead to issues such as sexual assault, sexual contact, and drug use, which are never positive developments for HR.

"Nothing good ever comes from after-parties," Segal said.

He added that employers can also make clear that attending after-parties is not mandatory, and anyone who feels pressured should inform the employer.

Regarding alcohol, Segal emphasized that it must be stated in advance that drinking is prohibited for anyone under 21. Employers can further limit alcohol consumption for all attendees, for example by using stamps or other methods to limit the number of drinks per person. Control can also be strengthened by limiting the number of servers and eliminating self-serve alcohol.

Other strategies include: ensuring taxi vouchers are available, providing plenty of food and non-alcoholic beverages, shortening or eliminating happy hour, requiring employees to pay for their own drinks—or even donating an amount equal to employee drink costs to charity.

Employers can instruct servers to actively remind guests who have had too much to drink, and require managers to help monitor for signs of intoxication—and confiscate employee car keys if necessary.

"I like to say to servers: 'Actively remind, and if you have any concerns about whether anyone is fit to drive or any situation, contact the designated person,' and tell them who that designated person is in the company," Segal said. "Managers should also receive the same admonition."

If the designated person needs to deal with an intoxicated individual, Segal advised asking them to hand over their keys, and if they refuse, informing them that the police will be called.

4. Lack of consideration for decorations

Segal said decorations are always a challenge "because no matter what you display, it may not be enough, or it may offend some people."

He noted that the legal standard does not require employers to remove decorations that might make employees slightly uncomfortable, but rather whether they might cause employees reasonable discomfort to the extent that it affects their workplace performance.

"Walking past a beautifully decorated pine tree—I don't think a reasonable person would be uncomfortable with that," Segal said. "But forcing an atheist to have decorations on their desk? That's a different story."

Employers can adopt various decoration strategies. Segal suggested considering including religious symbols representing all holidays of the season—such as a Christmas tree for Christmas, a menorah for Hanukkah, a harvest basket for Kwanzaa, and a Bodhi tree for Buddha's birthday in Buddhism.

"Yes, size matters," Segal said. "If you have an 18-foot oak tree and a menorah so small it could trip someone, that might send a message. Placement can also send a message."

Segal said the goal is for employers to use decorations that reflect each holiday as reasonably as possible.

As for decorations set up by employees themselves, employers can impose restrictions, but should ensure the same standards apply regardless of what religion employees celebrate. Segal said employers should also consider how detailed the restrictions are. He suggested using words like "usually" or "generally" when drafting guidelines to maintain flexibility in special cases.

"Should we have rules about what's allowed inside or outside the door, small or large decorations... or should we just say 'I'll take a reactive approach'?" Segal added. "If I see a problematic decoration, I'll respond and make sure it's handled consistently."