The games are beginning on the court and in the office.

 With the tipoff of March Madness on Thursday, the fun and excitement of office pools and game-related chatter will be spilling into the workplace. In fact, nearly $3 billion will be wagered on the NCAA Tournament in office pools alone. In total, an estimated 77 million employees plan to participate in tournament-related activities – from researching and creating their brackets, to watching games in the break room or streaming them on office computers.

Although this can certainly boost employee morale and engagement, it may also lead to lost productivity, put added strain on employer resources and even leave businesses vulnerable to legal liability. To mitigate these risks, employers must develop a proactive approach to managing March Madness in the workplace.

All Fun and Games, or a Risky Gamble?

March Madness captures the attention of millions of workers every year. From the time the matchups are released on a late Sunday afternoon until the nets are cut down, you can bet that employees across the nation are devoting precious time “on the clock” to researching brackets, organizing pools or just watching the games. Even the non-sports fans will be sucked in, as office pools are circulated and everyone is encouraged to toss in some money for their chance at the prize. But is this a harmless activity, or should employers be concerned about the potential legal issues surrounding March Madness?

Pools at work are very common. Technically, these office pools are illegal in Ohio and any other state that prohibits sports gambling, and those who participate are breaking the law. Moreover, office pools may violate those company policies prohibiting illegal activity at work. Of course, there seems to be an implied exception for small-stakes pools related to March Madness and the Super Bowl. It would be quite surprising to see the police raiding your office and busting up a $20 office pool. Even those law-abiding employees who know that they could get fired for transacting illegal business on company time don’t usually consider office pools to fall under this prohibition.

Despite the potential legal risks, many employers turn a blind eye and embrace these office pools as a way of maintaining morale, building camaraderie and allowing informal bonding among employees who might not otherwise be social at work.

Managing March Madness in the Workplace

Certainly, office pools--if done the right way--can be a good thing in the workplace. However, employers should not encourage pools, and certainly should never sponsor them. They should also refrain from pressuring anyone to participate in an office pool, and the stakes should be kept small ($20 or less per pool entry). Finally, employers should ensure that 100 percent of the proceeds go to the winners.

Employees are advised to check with their supervisors before starting a pool in the workplace.  Employers have every right to discipline and even terminate employees who conduct illegal business at work, and employees don’t have a constitutional right to enter an NCAA pool at work. The best way to avoid problems is to be upfront and clear.

Perhaps a bigger problem in the workplace is the lost productivity resulting from watching the games, absences, water-cooler talk and other pool-related gossip. Now that the games are available for viewing online and without charge, lost productivity has grown exponentially to be an even greater issue.

Years ago, employers’ concerns circled around the use of company computers or the intranet at work for tournament-related activities. However, with the ever-increasing capabilities of smart phones, employees are more than capable of catching all the games on their personal phones or tablets. Of course, use of personal electronic devices may also be covered by company policies. The important thing to remember is to be uniform in your application of any company policies as it relates to March Madness office pools.

According to a recent report by outplacement firm Challenger, Gray & Christmas, 20 percent of American workers participated in office pools last year. It also estimated that the loss of productivity associated with the opening week of March Madness cost employers nearly $4 billion in lost revenue.

Although this estimate may run high, there is no doubt that the NCAA Tournament impacts both employees and their work. Employers can always clamp down on prohibiting office pools, but should understand that employee morale may suffer. The savvy employer will strike a balance that allows employees to enjoy participating in March Madness pools while continuing to produce high-quality work.

Kevin Hess is a partner at the Columbus office of Fisher Phillips, a national management-side labor and employment law firm.