How to Stay Off the Naughty List at the Holiday Party

     Despite the altruistic intentions employers typically have for throwing holiday office parties, the combination of alcohol, coworkers and holiday cheer can have harmful effects on office morale. Rather than providing a venue to thank employees for their contributions and celebrate the season, these parties can end up in tears, misunderstandings, and even worse: lawsuits!

     To set a tone of temperance, remind your employees that normal work rules and standards apply to holiday parties (regardless of whether the party is on or off company property). Send out an office e-mail refreshing everyone’s memories of the importance of good behavior and include a gentle reminder of the office discrimination and harassment policies.

     Here is a top-five list of items to bring to your employees’ attention:

1. Lay off the eggnog (and other spirits of the season). It should go without saying, but it doesn’t. Despite stories around the water cooler of the last year’s holiday foibles, it’s almost inevitable that there is “that guy” who repeats the same mistakes from the year before. Don’t be “that guy”.

     If you’re going to serve alcohol, hold parties outside of the office, thereby shifting the responsibility of serving the alcohol to those with a liquor license and professional bartenders. Also, consider placing a limit on the amount of alcohol served (i.e. provide each guest with a limited number of “drink tickets”.

     Some people lose their inhibitions when they drink. This is not necessarily a bad thing if a drink gives you the courage to sing karaoke; however, sexual harassment by coworkers is at an all-time high at holiday parties. Unless your company has an employer liability lawsuit on its holiday wish list, keep your drinking and comments in moderation.

     Note to Employers: Designate a few managers/supervisors (to refrain from drinking and) to watch for over-consumption/inappropriate behavior. Stop serving alcohol well before the party ends, if there is a bar. Use the money saved on drinks towards a taxi service for your employees. Don’t encourage employees to drink too much (i.e. no drinking games). Also, be sure to serve food and leave out the mistletoe.

     Injuries occurring to employees at the party may be compensable through workers’ compensation and an employer may have liability for injuries caused by an inebriated employee leaving the party.


2. Don’t dress for the party as if you are auditioning for the: “What Not to Wear: Office Holiday Party” episode. Nightclub attire does not an office party attire make. You know how much your co-workers love to gossip so don’t give them anything to talk about. Avoid revealing or overly flashy attire.

     Note to Employers: In reminding employees that “work policies” apply, it might be best to indicate that the office dress code is similarly in effect at the party.


3. Don’t play hooky without a good reason. Even if the party is “optional” it is a good opportunity to make a good (or bad) impression on your coworkers. Don’t skip it if you can help it.

     Note to Employers: It might seem counterintuitive, but make attendance voluntary, not mandatory. This can encourage attendance by making the party seem like a reward rather than a burden; and some people are just not comfortable in these types of settings.


4. Don’t add people to the guest list. Unless an invitation otherwise specifies, office parties are for employees only.

     Note to employers: Consider inviting spouses, significant others or guests: they may help keep potentially unruly employees in check.


5. Don’t stay too long: Although it’s good to be enthusiastic in boosting intra-office morale, your enthusiasm shouldn’t involve closing out the bar! No need to ditch the party within minutes of your arrival, but at the same time, don’t overstay your welcome, especially if you’re overstaying your welcome at the bar!

Voluntary Classification Settlement Program

The IRS has announced the Voluntary Classification Settlement Program (VCSP) which will allow employers to voluntarily reclassify as employees workers previously classified as independent contractors.  An employer can reclassify all of its workers as employees or only certain subsets of workers as employees.

An employer is eligible for the program if the employer:

• Has consistently treated the workers as independent contractors;
• Has filed all required Forms 1099 for the workers for the previous three years; 
• Is not currently under audit by the IRS, U.S. Department of Labor, Maryland Department of Labor Licensing and Regulation or other such state agency; however, an employer who was previously audited by such an agency is eligible if the employer complied with the results of the previous audit.

In return for voluntarily reclassifying its workers, the IRS will cap the employer’s employment tax liability at 10 percent of the employment tax liability that would have been due on compensation paid to the workers, but the employer will not be liable for any interest and penalties on the liability; and will not be subject to an employment tax audit with respect to the worker classification of the workers for prior years.

To participate in the VCSP an employer must agree to extend the 3-year period of limitations on assessment of employment taxes for 3 additional years, for periods beginning in the first, second and third calendar years beginning after the date on which the employer has agreed under the VCSP to begin treating the workers as employees.

Adopt an Adult?

Have you ever thought of adopting an adult for inheritance purposes? This is a question both for lawyers and non-lawyers. Most people are not aware that you can adopt an adult in Maryland. It can be a valuable tool for estate planning and inheritance purposes. Although the overwhelming numbers of adoption proceedings involve minors, Maryland law provides that an individual of any age may be adopted.            

There are good reasons to adopt an adult as part of a thoughtful and effective estate plan. First, persons who are adopted, even as adults, are generally treated the same as natural-born children of those who adopt them. An adult who inherits from an unrelated decedent must pay a 10 percent Maryland inheritance tax on the assets inherited. 

However, adult adoptees, just like natural-born children, are not subject to the state inheritance tax when inheriting from their adoptive parents. Second, if someone dies intestate (without a Will) and without a spouse, his/her assets will be distributed equally among his children, whether adopted or natural born. Third, an adult adoption virtually ensures that the adoptee will inherit from the adoptee’s adoptive parents, because the likelihood of a successful court challenge to the adoptee’s status is significantly diminished following adoption.

During this past legislative session, the Maryland General Assembly considered legislation to legalize same-sex marriage. If that legislation had been enacted, then (presumably) the same-sex couples would receive the same tax benefits as heterosexual married couples do in Maryland. Upon the death of one partner in a same-sex marriage, if his/her estate was left to a spouse, there would have been no Maryland inheritance tax assessed, as the unlimited marital exemption would apply. 

Because the legislation did not pass, the 10 percent Maryland inheritance tax referenced above is still in effect. Therefore, if a partner in a same-sex relationship dies leaving the estate to a partner, the entire estate will be subject to a 10 percent Maryland inheritance tax. 

While an adult adoption may make sense in the context of domestic partners who want to insure that their partner inherits, there are other sound reasons for an adult adoption, as in the case of those who are childless but want to take advantage of provisions of a trust made by their parents or grandparents. 

One of the goals of Maryland adoption laws, which became effective in 1947, was to give adopted children the same status as natural children. This also applies to adult adoptees. Maryland law now provides that unless a Will clearly indicates otherwise, the use of the word “child, “descendant, “heir” or “issue” or any equivalent term includes an adopted individual, whether the Will was signed before or after the decree of adoption was entered.

Maryland law also provides that the legal effect of an adoption of an individual who is an adult is the same as that of the adoption of a minor. Among other things, that also means that an adult adoptee (as with all adoptees) loses the statutory right, in the absence of a Will, to inherit from his/her birth parents. However, the birth parents still can leave their estate through their Wills to their natural-born child, even when adopted by another.

Until the Maryland legislature approves same sex-marriage, adult adoption is one method to avoid the onerous 10 percent inheritance tax.