Liability is simply the cost of failing to take appropriate preventative action. Those licensed to sell and serve alcoholic beverages such as bars and restaurants have a greater duty under the law. However, employer and social hosts, while not exposed to the same degree of liability, are increasingly expected to play a more active role in prevention.

Generally, host liability falls in to two categories: criminal and civil. Criminal liability is when a host violates a law or regulation, and is arrested for the violation. Penalties usually involve fines and/or a jail sentence. While some criminal statues exist which a company needs to be concerned about, the greatest exposure is from civil liability.

A jury in Florida assessed $800,000 in punitive damages against a company employing a salesman who got drunk while entertaining clients and later killed two people in an auto crash. This verdict appears to be the first that extends corporate liability to drinking connected with an employee's off-premises entertainment of a client.

Civil liability is a fairly simple concept. A person injured or killed due in whole, or in part, to the negligence of another person or company, and the injured party seeks compensation. This compensation can be for damages, such as; medical expenses, repair of damaged property, loss of income, or loss of companionship. This is referred to as "compensatory damages."

The legal theory and precedent of civil liability for the negligent sales or service of alcohol beverages dates back more than a century. Libelous negligent action usually involves one of the following three circumstances:

1) Sales or service of alcohol beverages to an underage person.

2) Sales or service of alcohol beverages to an intoxicated person.

3) Mishandling of an intoxicated person

The scope and extent of liability varies considerably from state to state and cannot be adequately covered in this guide. Nebraska is one of the lowest ranked states limiting liability through case law precedent. The state courts have consistently refused to allow liability for service of alcohol in the absence of legislation establishing state policy.

While civil liability against a company may be a rare occurrence, when it does happen, it can be quite disruptive to the business. In addition to the economic costs of attorneys and potential liability claims, there are emotional costs to management and staff required to remember an incident which may have occurred two or three years earlier. If in fact a person was killed or injured due to the negligence of the employees, this knowledge can be devastating to everyone involved.