As the year winds down and the holidays are getting under way, many employers are preparing for their company holiday parties, which offer employees a chance to kick back and reflect on the year, says Sheryl Kovach, president and CEO of Kandor Group, a human resources consulting firm in Houston. While the annual holiday party is often one of the most anticipated company events of the year, it can also get out of hand if an employer is not prepared for the potential disasters.

Choosing an appropriate venue is the first step in ensuring a company holiday party doesn't cross any lines, Kovach says. The atmosphere should project a sense of professionalism and be one that is inviting to all employees. In one instance, Kovach remembers a company wanting to host a holiday party at a church, which, of course, could be uncomfortable for a certain sect of employees because of the religious connotation. Even if the holiday party's activities don't center on religion, some employees are likely to feel unwelcome, and if one of those people is later cut from the staff, he or she could possibly threaten litigation.

"Religion is a protected category at the federal level, which means employers cannot in any way use or create the appearance of using religion in making employment-related decisions," Kovach says. "By having a holiday party in a religious environment, it could make some employees feel as though their jobs are not protected because they don't practice a certain religion. There's also the possibility that it could impact morale, especially if a company has employees from diverse backgrounds."