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Serving Liquor, Not Liability

The company Christmas party is in full swing and everyone is having a good time. Yet one employee is acting loud and obnoxious, apparently intoxicated and demanding more liquor. What do you do? Do you suggest that this person goes home? Do you determine how much alcohol has been consumed? Do you find out whether the employee plans to drive?

David Ray
Grant Thornton
The courts have taken a tougher stand over the past several years on the liability of employers, both when serving alcohol at company functions and when allowing employees to drive company vehicles while potentially under the influence of alcohol. Even with the social backlash against drinking and driving, it is still the leading cause of death on our highways. The Canadian Substance Abuse Cost Study estimated the combined cost of all substance abuse to be $18.45 billion per year in Canada, representing $649 per person or 2.7% of the Gross Domestic Product.

In the B.C. case of Jacobsen v. Nike an employee was asked to work at a trade booth and to bring his vehicle to transport the equipment for the booth. Beer was provided during the setting up and taking down of the booth and evidence showed that the employee consumed 8 bottles of beer during the course of the evening. There was no restriction on consumption and no offer of a free taxi. On his way home the employee drove off the road and was rendered a quadriplegic. He sued his employer and was awarded $2 million in damages. In the judgment the court stated “The law imposes a higher standard of care on an employer than on a tavern-owner. If it is considered too onerous for tavern owners to monitor their patrons’ consumption, the same cannot be said of employers who provide alcohol to their employees.”

A case in Alberta demonstrated that the employer can also be liable where an employee drives a company vehicle while impaired, even if it was outside the course of employment and against the instructions of the employer. In Mugford v. Weber the employee was instructed to pick up the company vehicle at the work site in the morning and drop it off at night, to only use it for company business and to obey the law. The employee even signed an annual agreement to follow those rules. Contrary to instructions, the employee used the vehicle after hours while he was under the influence of alcohol and was in an accident. The injured party sued the employer and was successful in obtaining a judgment of $3 million. The court held that it did not matter that the employee was in breach of employment policies.

How Liability Occurs

In most cases, liability of the employer occurs where an employee or other person attending a company function is served too much liquor and, as a result, causes injury to himself or someone else. The liability is based on the law of negligence and it requires the exercise of reasonable care in providing alcohol at company functions. The liability is based in common law but may also be based on legislation such as the liquor acts, occupier’s liability acts and occupational health and safety acts.

Avoiding Liability

Employers providing alcohol are expected to look for signs of impairment, yet most employers do not have anyone who is trained to recognize such indicators. Rate of intoxication will vary with the size of drinks, food consumption, personal tolerance, other drugs that may have been ingested and the level of fatigue and stress of the drinker. Gender and body type also play a factor.

Any change in fine motor skills, such as difficulty in picking up change or gross motor skills such as staggering, may be a sign that the individual has had too much to drink. Other indicators may include a change in speech pace or volume and slurring. It is a common misconception that coffee or food will reduce the level of impairment. Food will slow the rate of absorption but it will not stop it. The only true way to sober up is to allow the passage of time.

Host liability requires that the server of alcohol consider not only the conduct of people attending but also the condition of the premises. The courts have held that, where alcohol is served, there is a greater duty of care and the premises have to be reasonably safe for both sober and intoxicated guests. Activities on the premises such as bull riding or other games and sports may also increase liability if they are not properly organized and supervised.

The courts have imposed obligations, not only to monitor consumption but also to prevent someone from driving when they are impaired. That may entail arranging alternate transportation, retention of car keys or even alerting the police if an intoxicated employee insists on driving. Employers should ensure that anyone who is serving liquor has appropriate training and reports any concerns. Even initiatives and diversions such as alternative drinks, food and music may help to control consumption levels and reduce liability.


In preparation for a social function, employers should do some planning to ensure that everyone gets home safely and to identify and take action where a guest or employee has had too much to drink but insists on driving.

David Ray is the Senior Practice Leader of Security & Investigations with Grant Thornton LLP, a full service accounting and consulting firm with offices across Canada.

Sleep and the Workplace

Well known on-the-job sleep-related accidents include the oil spill involving the Exxon Valdez tanker, two nuclear power plant incidents (Three Mile Island and Chernobyl), the Bhopal chemical release and the Challenger disaster. Several scientific studies have looked at the impact of fatigue on performance and found that sleepiness was responsible for 40% of all motor vehicle accidents.

Sara Aharon
Bellwood Health
Services Inc.
Insomnia can take different forms: difficulty falling asleep; difficulty maintaining sleep; waking up too early in the morning; and non-refreshing sleep. It is often associated with daytime consequences such as fatigue, lack of energy, difficulty concentrating and irritability. Approximately 10 percent of adults experience persistent insomnia, although most patients do not mention it during routine doctors’ office visits. Up to one third of patients seen in a doctor’s office experience occasional difficulties in sleeping.

Acute insomnia is often caused by emotional or physical discomfort. Some examples of common discomforts include significant life stress, acute illness and environmental disturbances such as noise, light and temperature. Sleeping at a time that is inconsistent with the daily biologic rhythm, such as occurs in persons with jet lag or shift workers, may also cause acute insomnia. The main consequences of acute insomnia or sleep loss (i.e. sleeping 2 hours or less in 24 hours) are sleepiness, negative mood and impairment of performance. The effects of acute sleep loss on performance are short-lived and are usually reversed by one good night of sleep (9 to 10 hours). Individuals suffering from chronic insomnia, which can involve various levels of chronic sleep deprivation, frequently complain of fatigue, mood changes (i.e. depression, irritability), difficulty concentrating and impaired daytime functioning. Insomnia appears to contribute to increased rates of work absenteeism, health care utilization and social disability. Tired, irritable employees or bosses are also more likely to get into conflict with co-workers and negatively affect the workplace atmosphere.

Studies of partial sleep deprivation show that although mood may suffer quickly, an adequate level of performance can be maintained for a few days with little more than half of the usual amount of night sleep (5 hours). Increased sleepiness and impaired performance occurred when similar schedules were maintained for more than 4 days. It has been shown that total sleep loss results in decision-making and memory impairment. In fact, creative thought and problem solving become increasingly difficult as the sleep debt increases. After 18 hours without sleep, a marine pilot will have great difficulty with short-term memory and his/her reaction time will slow down (almost doubled in duration). By the 24th hour, his/her ability to think creatively and make decisions will be dangerously low. Research by Dawson, D., Lamond, N., Donkin, K., & Reid, K. (1998) has demonstrated that after a 12-hour shift, fatigue impairs responses, reaction times, logical reasoning, and hand-eye co-ordination to an extent equivalent to having a blood alcohol content of 0.048%.

Particularly dangerous are microsleeps, which scientists define as three to four-second breaks, where the brain shuts off even though the eyes may remain open. During a microsleep, people are unable to respond to external stimuli (identified often in truck drivers, pilots and other similar situations where people engage in long shifts of a repetitive activity).
If you suffer from chronic sleep difficulties consider the following:
  • Address sleep hygiene first, as this is usually the easiest area to correct, including: a healthy diet, regular sleep schedule, exercise, unwinding before sleep, reducing/eliminating factors contributing to sleep difficulties.
  • Rule out medical conditions – see your family doctor.
  • Use relaxation techniques and tapes/CDs, deep breathing, yoga, meditation.
  • If depression or anxiety is known, address the causes and treat appropriately.
  • After trying some approaches without success, you may want to ask for a sleep study (a physician’s referral will be required).
  • In some cases, medications are used as adjunct to psychological treatment, especially when functioning is severely impaired.

    Tips for shift workers:

    Research shows that taking a 2-hour nap prior to a shift can reduce the normal decrease in performance seen on night shifts and during long periods of sleep deprivation. You will have to wake up 1-2 hours prior to driving or working to prevent grogginess. This approach takes advantage of the fact that a well-rested individual can effectively manage the loss of one’s night sleep, while individuals who are already fatigued are likely to suffer profound performance decrements from the first night. Research suggests that napping in advance can ward off sleepiness or sleep loss before it builds up. However, the nap should not be planned during the forbidden zones for sleep. Tips for staying awake during a shift include bright lights, cool/fresh air, noise, exercise and frequent movement. When possible, taking a short (20 minute) nap during peak sleepiness time is ideal.

    Dr. Sara Aharon, Ed.D., C. Psych, is the Manager of Continuing Health and Therapy at Bellwood Health Services.Bellwood Health Services Inc. is a Toronto-based addiction treatment facility. For further information, visit, or call 1-800-387-6198.

    Wage Earner Protection Plan Act

    WEPP (Wage Earner Protection Plan) is a response by the government to assist employees who suffer income loss in the face of bankruptcy or receivership. Under its provisions, individuals who have been employed for more than three months are eligible to be paid wages owing to them that were earned during the six months immediately prior to a bankruptcy or receivership to a maximum of $3,000 or four times their maximum weekly insurance earnings under the Employment Insurance Act. WEPP is to be funded out of the Consolidated Revenue Fund with the government being able to step into the shoes of the employee and claim over against the bankrupt or insolvent employer and its directors to the extent of any such payment. The Bankruptcy and Insolvency Act has also been amended to provide employees with security against certain assets of their employers to the extent of $2000. This provides an additional protection for employees in those insolvencies where there are assets which can be sold by a Trustee or Receiver and a potential source of recovery for the Federal Government where they make payments under the WEPP program. WEPP mandates that Trustees and Receivers take active steps to identify those individuals owed wages for work performed during the six month period preceding bankruptcy or receivership, inform all such employees regarding WEPP and provide such information to the Minister.

    Philip H. Gennis,
    LL.B., CIRP
    Vice President,
    Recovery &
    Grant Thornton
    These amendments are an effort to provide protection to employees against the impact of job loss due to bankruptcy and receivership. While there have been attempts at the provincial level to provide such assistance, WEPP is the first foray by the Federal Government into this area. On June 13, 2007, Bill C-62, the successor bill to C-55, received first reading in the House of Commons. It received second reading the same day and was referred to a Committee of the Whole. The Bill passed through third reading on June 14th and received first reading in the Senate the same day. With Parliament recessed for the summer, C-62, An Act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada, remains at first reading in the Senate. The speed with which it passed through the House, however, demonstrates the seriousness the government attaches to the bill.

    As of this writing, the Senate is expected to resume sitting on September 18, 2007 at which time the Bill containing the proposed reforms to insolvency law is expected to receive second reading and be referred to the Banking, Trade and Commerce Committee for hearings. Time alone will tell the final form these amendments will take and if the Federal Government will be any better at being the guardians of the wage earner than its provincial counterparts.

    The above information has been provided by Philip H. Gennis, LL.B., CIRP, Vice-President, Financial Advisory Services, Grant Thornton Limited

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