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Workplace Gambling – its Not Just Fun and Games

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With March Madness approaching, it is not an uncommon situation for office pools to be organized by co-workers. While this may seem like a fun and harmless workplace activity, promoting teamwork and enhancing morale, such “gambling” actually can place the employees and the company at risk for criminal penalties.

California Penal Code Section 337a makes it illegal for individuals or employers to participate in or receive compensation for gambling in the workplace. California Penal Code Section 336.9 provides that pools with less than $2,500 at stake carries a maximum fine of $250.00. Even though the penalty for participating in a bet is not a felony, but considered an “infraction,” it still amounts to illegal conduct at work.

Also, because the Penal Code specifically uses the term “compensation” in relation to office betting, an office pool where the prize is a gift certificate or even additional vacations days granted by the Company, the potential for a finding of illegal activity still exists. Gift certificates and additional vacation days have monetary value and can lead to a finding of illegal conduct.

There are many other concerns that arise when workplace “gambling” or wagering occurs. First, there is the issue of decreased productivity. There is the time spent organizing the pool, the time spent collecting money for the pool, time spent by employees talking about the upcoming event and the likely outcome of the game, and then time spent after the event distributing the pool proceeds and dissecting the game. This is all time taken away from work which during these difficult economic times, most employers cannot afford to lose.

There is also the issue of using workplace equipment for non work related activities – using the computers to put the pool together, going on-line to check out the fantasy leagues, using the copier or printer for preparing and distributing the pool to everyone involved. It is certain that most Companies’ policies specifically provide that Company equipment is not to be used for non-business related activities. So the question becomes, if you permit employees to use the equipment to organize and participate in an office pool, then where do you draw the line when other employees use office equipment for other non-work related activities? How can you permit such conduct in one instance but not another without creating the impression that the written policies of the Company are applied without consistency? You can’t.

Another area of concern is what happens when there is a disagreement over the handling of the pool – such as when the bet isn’t paid off properly or someone disputes the amount that they put in and received as “winnings? Is this a workplace disagreement where your H.R. Department is going to be expected to get involved or is this a non-work related issue that the employees will be expected to resolve themselves? How can your H.R. Department legitimately get involved in resolving workplace activities which are clearly illegal?

The better practice is to have a policy that prohibits any type of “pools” or gambling in the workplace and then once the policy is in place, ensure that it is enforced – and enforced equally. You cannot allow an office pool for something like March Madness but then draw the line when someone wants to implement a pool for something else (baby due date pools for example).

Once the policy is put into place, and the employees are put on notice of the prohibited conduct, then the Company must decide on appropriate action if such activities are found to continue. Discipline for violating such a policy can range from warnings, to counseling, and in some cases, termination.