3 critical steps to minimizing alcohol liability risk

Michele Stumpe

Spring cleaning is a long-revered tradition of discarding unnecessary clutter to make way for a more productive year. Applying this same concept to alcohol policies and procedures can yield tremendous long-term benefits, reduced risks and protection against liability.

The keys to cleaning up your alcohol service program include a strict, easily understood written policy; high-quality comprehensive training; and proactive monitoring tools to evaluate employee compliance. Here is some practical advice for evaluating and improving current practices:

Written policies

• Take a clear and comprehensive approach. For many restaurants, alcohol policies consist of a few generalized paragraphs in the employee handbook with vague advice to “ID everyone who appears to be under 40” and “refuse alcohol sales to intoxicated patrons.” This type of ambiguity is often the death knell for a business facing an alcohol citation or dram shop litigation. For example, the “appears to be” language in an ID-checking policy gives employees an automatic out by taking the position that the patron “appeared” to them to be of proper age. A better policy would be “ID any patron who is under 40.”

• Include provisions regarding easy identification and treatment of minors’ IDs. On average, 80 percent of failed compliance checks occur after the employee requests and is shown a minor’s ID, but fails to recognize it as a minor’s ID or verify the age, and proceeds to make the sale.

• Incorporate relevant state and local laws. Alcohol suspensions and revocations frequently occur because management and/or employees are not familiar with state and/or local restrictions. This is particularly true of companies with restaurants in multiple jurisdictions. These companies often implement generic policies that don’t address each location’s governing regulations. Every state has different alcohol laws. In addition, in some states, every local jurisdiction has the ability to impose additional restrictions specific only to that jurisdiction (such as employee permit or training requirements, drink special prohibitions, and minimum age for mystery shoppers or servers). Ensuring that all staff and managers know the relevant laws and regulations is an important linchpin of avoiding liability.

• Put it in writing. This avoids confusion by employees and provides an objective basis for disciplining employees.

• Require employees to sign a copy of the policy acknowledging an understanding of the provisions. This provides a defense that the restaurant exercised reasonable care to implement rules regarding alcohol sales and to notify its employees of such.

• Require manager review of the policy with employees and documentation of such review. This provides further evidence of responsible efforts to insure that employees are familiar with the policies.  

Training

• Train employees on responsible alcohol sales and service before allowing them to engage in alcohol sales.

• Engage managers in the alcohol training. If managers are not a part of the training, they are less capable of monitoring employees for compliance and less likely to enforce company policies and legal requirements.

• There are a number of cost-effective and thorough training options. Choose a training program that includes comprehensive coverage of:

-State and local laws (such as merlot to go requirements, permit requirements, happy hour restrictions, BYOB regulations, employee conduct provisions, etc.);

-ID-checking procedures, including recognition of fake IDs, common strategies by minors attempting to obtain alcohol, recognition of minors’ IDs and proper protocol for refusing sales;

-How alcohol affects patrons, recognizing signs of intoxication, methodology for preventing intoxication and proper procedures for dealing with intoxicated customers;

-Handling difficult customers and difficult situations.

• At the end of each training session, conduct comprehensive testing of employees. The testing should include multiple forms of questioning and a sufficient number of questions to insure understanding of all topics covered. For employees who do not achieve 100 percent, review erroneous answers with the employee and insure a complete understanding of the correct answer before the employee is permitted to serve or sell alcoholic beverages.

• Utilize tools to reinforce training such as signage, pad holder reminders and menu notices to customers.

Monitoring and compliance

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• Establish programs and procedures for monitoring employee compliance with the company’s alcohol policies. Such programs expose potential risks and provide an opportunity to correct problems before they become a liability.

• Some effective means of monitoring and compliance include:

-Regular reminders and refresher training;

-Mystery shopping (best practice is to use shoppers who are 21 years old and older);

-Manager review programs;

-Incentives to reward regular implementation of responsible alcohol sales and service procedures;

-Disciplinary measures for employees who do not follow company policy.

Through a comprehensive approach to all aspects of alcohol compliance (policy, training and monitoring), restaurants can significantly reduce the risks of liability and minimize damages or consequences in the event a violation occurs.

Michele L. Stumpe, Esq., is a partner at the law firm of Taylor English Duma LLP. She has been representing and assisting businesses and alcohol retailers for more than 20 years. Her experience includes successfully handling multimillion-dollar civil dram shop and premises liability lawsuits. In addition, Ms. Stumpe has served as a consultant to various governmental entities, trade organizations, and major corporations.