When you operate a business that serves and sells alcohol, there are many regulations and responsibilities that you will need to abide by. One of the most important is understanding what liability you have as a business owner, and how to ensure that your patrons and bystanders stay safe.
The Dram Shop Act under the Texas Alcoholic Beverage Commission (TABC) Code outlines when a TABC permit holder is liable for damages caused by an intoxicated patron after being served alcoholic beverages. Understanding the Dram Shop Act and how you can protect your business from liability claims is vital.
One defense under the TABC Code is Safe Harbor, which may protect a business from liability claims. Below, we’ll outline some key aspects of the Dram Shop Act and explain the Safe Harbor defense and how you can be proactive in protecting your business.
What Is the Dram Shop Act?
Businesses that sell and serve alcoholic beverages in Texas and have a TABC permit are all subject to the regulations of the Dram Shop Act. The Dram Shop Act protects people from negligent acts by businesses that sell alcoholic beverages to intoxicated individuals or to minors. Essentially, under the Act, plaintiffs are able to bring dram shop liability claims against businesses that allegedly sold, served, or allowed consumption of alcohol to patrons who were already visibly intoxicated or were under the legal drinking age. The claims can result in the business, if found liable, needing to pay damages, including property damage, hospital bills, lost wages from work, and more.
When Are Businesses Liable?
Businesses can be found liable if they fail to provide responsible alcohol service. This can be found through:
- Knowingly served alcohol to someone who was visibly intoxicated
- Knowingly (or negligently) served alcohol to a minor
When the damages caused can be proven to be a direct result of the alcohol that was served to the minor or intoxicated customer, the Dram Shop Act cause of action applies. For example, if someone is visibly intoxicated, knowingly served by an establishment, and then gets in a car accident caused by their inebriation, the business can be found liable under the Dram Shop Act.
What Is the Safe Harbor Defense?
While under the Dram Shop Act a business can be found liable if they meet the requirements in the previous section, there is a provision under the law which may protect them. This is called the Safe Harbor defense.
How Does It Affect Your Business When a Claim is Made?
Under the Safe Harbor defense, TABC Code allows a business to protect itself from the actions of a TABC-certified employee who commits an illegal act, including serving alcoholic beverages to a minor or person who is obviously intoxicated, while working as a server or seller of alcohol at the business’s establishment. Essentially, this means that, if an employee has the correct training, and there are set policies in place at a business, then the business is not liable for the employees actions if they sell to an obviously intoxicated person or a minor.
How Can Your Business Ensure Safe Harbor?
In order to be eligible to be covered by the Safe Harbor defense, it’s vital for your TABC-certified business to engage in proactive practices to engage in responsible alcohol service. These practices include:
- Implementing rigorous and training programs for staff who may be serving alcohol, including ongoing training past when they are first hired
- Using technology to monitor and control alcohol sales
- Documenting incidents and maintaining surveillance
- Posting signage about your policies regarding serving alcohol (such as signs stating that you can card anyone at any time to verify their age)
Being able to prove that you have trained your staff, such as through TABC certification and training programs, or through a TABC approved school, is essential. This will not only help you in regard to Safe Harbor and the Dram Shop Act, but may also help you in lowering liability insurance costs.
How Can a Law Firm Like Monshaugen & Van Huff, P.C. Can Help?
Having a legal team who are experts in liquor laws, both on a state and federal level, can be one of the best ways to ensure that your TABC-certified business stays in compliance with all federal, state, county, and local laws. Ensuring that you remain in good standing with your TABC-certification starts with understanding all regulations surrounding your TABC-certification.
Our team of experienced lawyers have worked with countless dram shops across the state of Texas to help them follow regulations, maintain compliance, and ensure that they are not liable under the Dram Shop Act. We can help you with detailed legal guidance on regulatory compliance, assess your business for any possible violations or areas of concern, and help you with any and all TABC licensing and permitting needs. Call us today at (713) 880-2992 or fill out our contact form to get started
About Albert T. Van Huff
Albert T. Van Huff is a lawyer with over 23 years experience in Texas liquor law. Albert is a partner at Monshaugen & Van Huff, P.C., where he has successfully guided numerous clients through the complexities of Texas liquor laws.