When to conduct a workplace investigation
Unfortunately, no simple formula exists for determining exactly when to conduct a workplace investigation. However, certain types of workplace complaints automatically trigger an employers duty to investigate for purposes of avoiding liability under the law, particularly in avoiding claims of failure to prevent harassment and discrimination.[1] In addition, an employer should consider conducting an investigation whenever a complaining witness uses the magic words of discrimination or harassment, even if the term(s) appears to be used incorrectly. Failing to conduct an investigation after a report of harassment or discrimination may allow the complaining party to argue that the company failed to prevent misconduct from occurring or that it ratified unlawful conduct.[2] Also, if the underlying harassment or discrimination did in fact actually occur but there was no investigation, then the complaining party could have an independent cause of action against the company for failing to prevent harassment or discrimination.[3]
Other types of claims that give rise to a duty to investigate include allegations of retaliation[4], whistleblowing[5], incidents of workplace violence, safety violations, and workplace accidents[6]. Notably, a workplace complaint can trigger a duty to investigate even if it is made through unofficial channels. For example, if an employee makes a report of alleged sexual harassment directly to her supervisor, instead of directly to HR as prescribed in the companys handbook, [7] the company is still considered to be on notice of the report of harassment and has a duty to timely conduct a workplace investigation and respond appropriately.
In addition to the mandatory type of claims that require a workplace investigation, other complaints alleging illegal activity or violations of company policy may also be best handled with an investigation in order to avoid or minimize future liability. A prompt, thorough and fair investigation after a complaint of wrongdoing can also protect an employer from liability for wrongful termination of the alleged wrongdoer.[8] Also, if the complaining party files a lawsuit about such misconduct, the plaintiff can use the lack of an investigation to make the company look incompetent, uncaring, or bad in front of a jury. In addition, the lack of an investigation could be used as evidence to justify an award of punitive damages against a company.
For all the above reasons, an employer is well served to consider conducting an investigation at the slightest provocation.
risk/benefit analysis of workplace investigations
Conducting an effective workplace investigation can significantly benefit an employer in ways unrelated to minimizing liability. Workplace investigations provide valuable information to an employer about actual or potential problems in the workplace, employee issues concerning workplace practices that management might not otherwise be aware of, the current workplace climate, and other potential legal issues that the employer may face down the road. In short, workplace investigations are powerful tools for preventing future legal and business problems and ameliorating current ones.
However, when an investigation is not mandatory under the law, an employer should consider the potential negative impact before deciding to conduct an investigation. From a cost perspective, investigations can be expensive in terms of both time and money. Depending on the nature of the claim, an investigation can become all-consuming so that even if performed in-house, it might require a significant amount of resources.
In addition, investigations have a way of spreading bad news. Generally, an investigator must give an employee some indication of why she is conducting an investigation. Despite admonitions for a witness to keep the subject of the investigation confidential, employees tend to talk to each other and word, inevitably, gets around. In situations that do not require a mandatory investigation, an employer should, therefore, carefully consider the potential benefits of an investigation versus the potential harm to employee morale and business operations. For example, there is little benefit in investigating something that an employer already knows to be problematic, such as workers complaining that they are not getting appropriate meal and rest breaks. In such an instance, the employer should simply take the necessary measures to ensure proper compliance rather than alerting even more employees to the fact that an illegal practice exists through questioning them about it.
pre-investigative considerations
In the event of a breach of personal data, a company potentially faces significant legal, reputational, and business harm. Governmental agencies can levy fines and sanctions against companies whose ineffectual security practices failed to safeguard personal information. Less commonly, people affected by a data breach can sue individually or as a class for damages, including recovery of their costs and attorney's fees. Third parties affected by a data breach can bring claims to recover expenses incurred as a result of the breach.
In addition to fines and monetary damages, a company's reputation can be irreparably harmed in the event of a breach of personal data, regardless of the cause. Also, a data breach may have a significant financial impact beyond the legal costs, including a loss of revenue through the attrition of clients and customers and the potentially extensive cost of responding to and remediating the breach. According to the Ponemon Institute, data breaches cost companies an average of $217 per compromised record --of which $143 pertains to indirect costs and $74 represents the direct costs incurred to resolve the data breach.[13] Many data breaches involve thousands or millions of compromised records.
Once an employer has decided to conduct an investigation, there are many preliminary factors to consider and decisions to make before starting the investigation. First, an employer should determine the scope of the investigation by identifying exactly which claims and allegations will be investigated. The scope will inform the investigators decision about what documents to collect and which witnesses to interview. Ideally, the decision about the scope of the investigation will be made by the individual who directs the investigation, rather than the person actually conducting the investigation. Ideally, in a corporate environment, in-house counsel directs the investigation in order to preserve privilege. Often, when using a third-party investigator, a company will use an additional representative contact who can facilitate witness interviews and assist with the collection of relevant documents and other evidence. Such a contact should never be a party to the complaint that gave rise to the investigation. This contact can also help clarify the scope of the investigation, which can often change as additional facts are uncovered during the investigation process. A good investigator will know to first consult with the person directing the investigation before amending the scope.
Second, an employer must decide who will conduct the investigation: an in-house employee or outside personnel. In California, a third-party investigator must be a licensed private investigator or a licensed attorney. The investigator should be well-trained in interviewing witnesses and evaluating witness credibility. Often times, in-house investigators do not have such training. However, with the development of the Association of Workplace Investigators (AWI), an employer can now easily enroll internal personnel in strong investigation training programs.
Still, using a third-party investigator without ties to the company is ideal in terms of establishing neutrality and a clean-slate approach to the facts. This is particularly important when investigating senior members of a company whom an inside investigator reports to either directly or indirectly, thereby creating an inherent conflict of interest. In other cases, however, using an internal investigator may make sense from a cost perspective or if the investigation would inherently benefit from an inside investigators familiarity with the culture of the company.
Third, an employer should assess whether any pre-investigation employment action is warranted, such as granting administrative leave to the complaining witness, the accused, or both, pending the outcome of investigation.
Factors to consider when deciding whether to grant administrative leave to the alleged wrongdoer include: (1) if the allegations were proven, would they be a terminable offense?; (2) whether the alleged wrongdoer is likely to engage in misconduct or otherwise interfere with the investigation; or (3) whether the alleged wrongdoer is in the complaining witnesss chain of command. When deciding whether to place the complaining witness on leave, an employer should consider the preferences of the employee and the potential hardship the employee might suffer if she continues to work while the investigation is pending.
Factors to consider when deciding whether to grant leave to either the alleged wrongdoer or the person making the complaint include the likely impact of granting such leave on the companys day-to-day operations, and the feasibility of temporarily transferring either employee to another location or having one employee work remotely while the investigation is ongoing.
It is generally recommended that leave be given with pay when granted to either party.
Privilege Considerations
As part of the decision of who will investigate the complaint, an employer and its legal counsel should establish the confidential and privileged nature of the investigation. If the investigation will be conducted by an investigator from within the company, then that investigation should be directed by in-house or outside legal counsel to preserve privilege.
When using a third-party investigator, the retention agreement should explicitly state that the investigators work is subject to the attorney-client privilege and the attorney work product doctrine. Ideally, the company representative directing the investigation will sign the retention letter. Having outside counsel directly hire a third party investigator for a client company can create a potential conflict of interest and may not effectively create an attorney-client relationship between the investigator and the company, thus jeopardizing the privileged nature of the investigation.
However, even when best efforts are made, it will not always be possible to maintain privilege for the investigation. If a claim proceeds to litigation, a judge will make the final determination about the privileged nature of the initial investigation. In some situations, the employer itself may wish to waive privilege if the investigators findings are favorable to the employer or if the investigation revealed key facts that support the employers defense.
essential elements for effective workplace investigation
Both California case law and EEOC guidelines provide the essential elements of an effective investigation[9]:
1. Promptness: The investigation should be conducted as soon as possible, in a diligent and timely manner.[10] However, the need for a prompt investigation should be balanced with the need to thoughtfully and carefully prepare for and conduct a proper investigation. Prompt has never been specifically defined by the courts or legislatures, but several courts have found investigations conducted within hours or days of the underlying event to qualify as prompt[11]; whereas waiting four weeks before conducting an investigation fails to meet the standard of conducting a prompt investigation.[12]
2. Impartiality: The investigators aim is to objectively gather and make findings regarding the relevant facts. Therefore, the investigator should not be involved in the underlying circumstances giving rise to the investigation, nor should she be in anyway involved in the chain of command of either the complaining witness or the accused.[13] The investigator should not be perceived as biased by the companys employees or the witnesses involved in the investigation. The best way to avoid actual or perceived bias is to use a third-party investigator without pre-existing ties to the company she is investigating.
3. Confidentiality: The investigator should strive to minimize the number of people who know the details of the investigation, including the topic of the investigation, who is being investigated, and the identity of the witnesses being interviewed. Likewise, the investigator should assure witnesses that she will strive to keep their comments confidential to the extent possible. However, an investigator should never assure a witness that his or her comments will remain completely confidential because of an investigators need to make a full and thorough report to those at the company who need to know about the fact findings from the investigation.
4. Training: The investigator should be well-trained in interviewing witnesses and evaluating their credibility.
5. Thoroughness: The investigator should document the investigative process and interview all relevant witnesses who possess substantive information that support or negate the allegations. The investigator should collect and review all relevant documents and facts that support, negate, or place in context the central allegations. Ideally, an investigator should ask relevant, open-ended, questions of the witnesses, akin to direct examination in trial. It may be helpful to terminate the interview with questions like: Is there anything I havent asked you thats important for me to consider? and Who else should I interview, in your opinion, and why?
6. Assess credibility: The investigator should assess the credibility of the witnesses when there are conflicting versions of the relevant facts.
7. Make determination of facts, not law: An investigator should not render legal opinions to the employer. Instead, the investigator should inform the employer what she believes happened, whether the allegations have been substantiated and have merit, and the basis for such conclusions. For example, if a complaining witness says that she was sexually harassed because her supervisor asked her out on five separate occasions during which comments were made that were sexual in nature, the investigator should not determine whether the witness was sexually harassed. Instead, she should focus on whether there is sufficient evidence to conclude that the witness was in fact asked out five separate times and what transpired during those conversations. The conclusion of whether sexual harassment occurred should generally be made by the employers legal counsel, either internal or external. Even concluding whether a violation of policy has occurred is generally something that the employers legal counsel, rather than an investigator, should do.
8. Properly admonish witnesses. At the very beginning of any witness interview, an investigator should explain to the witness the investigators role as a neutral fact-finder, that the witness is not obligated to talk with the investigator, the confidential nature of the investigation, and that retaliation against anyone for either participating or not participating in the investigation is illegal.
post-investigation considerations
After the investigator concludes her investigation, legal counsel should determine what action should be taken, if any, in response to the investigators findings.
If it is determined that wrongdoing occurred, then the employer should take whatever action will remedy the situation. For the wrongdoer, such action can include: (1) discipline in the form of mandatory training; (2) a written warning or suspension without pay; (3) mandatory counseling; (4) a job transfer, demotion, or reduction in pay; or (5) termination. For the victim of the wrongdoing, such action can include: (1) paid leave; (2) company-paid counseling or other medical expenses related to the incident; (3) a job transfer, if desired; or (4) a severance package, if desired, with a release of liability.
In cases where it is determined that harassment or discrimination has occurred, a company should also seriously consider taking actions that affect the company environment as a whole, rather than just disciplining the wrong doer. For example, instituting a regular and rigorous sexual harassment or diversity training program, or revising policies and cultural expectations. This will prevent a future complaining witness from successfully claiming that the company tolerated a culture of discrimination or condoned exclusionary conduct.
Finally, the complaining party should be informed of the employers final decision in general terms. For example, the complaining party should know if the employee was disciplined and, if not, the overarching reason that no action was taken. If the investigator did not sustain the allegations, the employer, and not the investigator, should briefly explain why that was. Generally, limiting the role of the investigator simply to the fact finder will serve the companys interests most.
[1] The California Fair Employment and Housing Act (FEHA) provides that an employer can be held liable for workplace discrimination or harassment if the employer knew or should have known about such conduct and failed to take immediate and appropriate corrective action. Cal. Gov. Code 12940(j)(1). In addition, the Act provides that An entity shall take all reasonable steps to prevent harassment from occurring. Id at 12940(j)(1). Case law is clear that conducting an investigation is a required step in preventing harassment and discrimination as required by the FEHA. See also Title VII, 29 C.F.R. 1604.11(f) (providing that [a]n employer should take all steps necessary to prevent sexual harassment from occurring . . . .).
[2] See Garziano v. E.I. Du Pont de Nemours Co. 818 F.2d 380, 392 (5th Cir. 1987).
[3] See United States v. City of Buffalo, 457 F. Supp. 612, 635, modified in part, 633 F.2d 643 (2d. Cir. 1980); EEOC v. Murphy Motor Freight Lines, Inc., 488 F. Supp. 381, 385-86 (D. Min. 1980).
[4] Cal. Gov. Code 12940(h); Cal. Lab. Code 6310.
[5] See Stockett v. Cal. Water Agencies Joint Powers Ins. Auth. 34 Cal.4th 441, 449 (2004).
[6] Cal. Lab. Code 6401.7.
[7] This is, in part, why Maier Law Group always recommends a flexible complaint policy wherein a complaining witness may make a complaint to either HR or any manager-level staff with whom the employee feels comfortable. However, under such a complaint policy, supervisors and managerial staff should be thoroughly trained and routinely reminded on how to respond to such complaints and promptly notify the appropriate department so that the company has the opportunity to respond in a timely manner.
[8] See Cotran v. Rollins Hudig Hall Intl, Inc. (1998) 17 Cal.4th 93 at 108; Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256 at 265.
[9] See Cotran, 17 Cal.4th at 108; Silva, 65 Cal.App.4th at 265; see also EEOC Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors (June 18, 1999).
[10] See Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765 (1998); Faragher v. City of Boca Raton, 524 U.S. 775, 807 (1998).
[11] See, e.g., Montero v. AGCO Corp. 192 F.3d 856, 863, 933 (finding that the employer exercised reasonable care to correct promptly sexually harassing behavior by completing its investigation of alleged sexual harassment in eleven days); Savino v. C.P. Hall Co. 199 F.3d 925 (7th Cir. 1999) (finding that the employers investigation into and taking remedial action within a week of the plaintiffs harassment claim constituted a prompt investigation and response by the employer).
[12] See, e.g., Bennett v. N.Y. City Dept. of Corrections, 705 F. Supp. 979, 988 (S.D.N.Y. 1989).
[13] See Nazir v. United Airlines (2009) 178 Cal.App.4th 243 at 278 (finding that an investigation conducted by an internal employee with an axe to grind . . . can itself be evidence of pretext.).
DISCLAIMER
This checklist has been prepared by Maier Law Group for general informational purposes only and does not constitute advertising, solicitation, or legal advice. If you have any questions about a particular matter, please contact Maier Law Group at (415) 737-5317 or info@maierlawgroup.com.