By Ken Rose and Robert Rose, The Rose Group APLC and TRG Workplace Investigations
May 19, 2016
More and more, employers are finding themselves facing the need to conduct internal workplace investigations. The purpose of a workplace investigation should be to give the employer’s decision makers an unbiased understanding of relevant evidence, together with the investigator’s good faith determination of credibility of the complainant, the accused, and other witnesses– sufficient to make appropriate personnel decisions.
The most common reason that employers are compelled to conduct an investigation is because an employee has lodged a complaint alleging employment discrimination, harassment, or retaliation. The federal and California anti-discrimination laws explicitly require employers to conduct a “prompt, thorough, and impartial investigation” of complaints alleging sexual harassment. See, e.g., California Gov. Code § 12940(k); EEOC Policy Guidance on Current Issues of Sexual Harassment, EEOC Notice No. N-915-050. Additionally, employers will want to conduct investigations of alleged employee misconduct or ethical violations, whistleblower complaints that report illegal activity occurred, or even their own compensation practices to determine if they comport with the rigorous federal and State wage and hour laws.
A neutral investigator’s prompt, thorough, and effective workplace investigation allows for proper risk assessment, may deter costly and protracted litigation that is more likely to be brought in the absence of an investigation, and can provide a roadmap for a successful defense in the event that a lawsuit is filed concerning the subject matter covered by the investigation. Indeed, employers can mitigate – or even avoid – legal liability for certain types of claims if they have conducted a good faith investigation using an experienced, knowledgeable, and impartial workplace investigator who investigated timely, and was fair and thorough. The California Supreme Court’s opinion in Cotran v. Rollings Hudig Hall Internat., Inc., 17 Cal.4th 93 (1998) set forth three elements for determining good cause in termination decisions based on employee misconduct, the second of which was whether the termination followed “an appropriate investigation and [was] for reasons that are not arbitrary or pretextual . . .'”
Crucial blunders in workplace investigations, whether due to the investigator’s lack of skills or experience, lack of diligence, or appearance of a conflict of interest, are not uncommon and can expose an employer to avoidable liability. A poorly conducted investigation is of no value to the employer and can actually be a detrimental because it will be subject to attack for being disingenuous, cursory, and biased. The opinions issued by the California Court of Appeal in Nazir v. United Airlines, Inc. 178 Cal.App.4th 243 (2009), and Mendoza v. W. Med. Ctr. Santa Ana, 222 Cal.App.4th 1334 (2014), are illustrative.
Nazir stands for the proposition that the appearance of bias in a workplace investigation can backfire on the employer. In Nazir, the investigation was conducted by the plaintiff’s supervisor and a labor relations rep who reported to the supervisor. Their investigation found credible a complaint by a female employee that plaintiff had made several inappropriate comments about females to her and grabbed her by the arm. However, the “chink in the armor” was that the investigating supervisor had been the subject of complaints by plaintiff that the supervisor had failed to take action against co-workers who called him derogatory names and were disrespectful. The Court agreed with plaintiff that he is entitled to a trial at which he may be able to persuade a jury that the investigation was a sham that was used as a subterfuge to fire him due to his religion and national origin. The Court, referring to the supervisor and the labor relations rep, did not hide its contempt for the airline’s selection of investigators:
“These, then were the persons to lead the [airline’s] investigation, a person who at least inferentially had an axe to grind, assisted by someone who ‘served’ him. Such an investigation can itself be evidence of pretext. As one Court of Appeal described it, such investigation could ‘exploit a disciplinary process predisposed to confirm all charges. And confirm it did, in an ‘investigation’ that can hardly be called ‘thorough.'”
Mendoza stands for the proposition that the lack of a thorough investigation, on which an adverse employment action is based, could be construed as evidence that the employer terminated the plaintiff in retaliation for filing a discrimination complaint. In Mendoza , the plaintiff complained that a recently-hired supervisor was sexually harassing him. The supervisor acknowledged that sexually inappropriate conduct occurred, but claimed that plaintiff consented to and even initiated it. The employer assigned a senior level supervisor to investigate. He conducted a brief investigation, interviewing only plaintiff and the alleged harasser. The hospital concluded that both employees violated its policies, and terminated both of them. Plaintiff sued, claiming the hospital discharged him in retaliation for making the sexual harassment complaint. The Court concluded that a jury could find evidence of substantial retaliatory motive based on the hospital’s less than thorough investigation. The Court pointed to the hospital’s limited investigation as “evidence suggesting that defendants did not value the discovery of the truth so much as a way to clean up the mess that was uncovered when Mendoza made his complaint.” The Court slammed the employer for trying to take the easy path:
“At oral argument, defense counsel asked (perhaps rhetorically) just what employers were expected to do when faced with a scenario in which two employees provide conflicting accounts of inappropriate conduct. Our answer is simple: employers should conduct a thorough investigation and make a good faith decision based on the results of the investigation. Here, the jury found this did not occur. Hopefully, this opinion will disabuse employers of the notion that liability (or a jury trial) can be avoided by simply firing every employee involved in the dispute.”
Clearly then, because internal investigations can have serious ramifications for employers, the employer’s determination of who should conduct the workplace investigation is of paramount importance. Increasingly, employers are engaging independent employment law specialists, such as TRG WORKPLACE INVESTIGATIONS, to conduct workplace investigations of potentially consequential matters. TRG WORKPLACE INVESTIGATIONS has been brought in as outside investigators in the most sensitive of circumstances, which call for highly skilled, independent professionals whose judgment and integrity you trust implicitly.
So, when should an employer bring in independent outside employment law specialist to conduct a workplace investigation?
1. The employer has concerns that the matters to be investigated will be litigated, and thus the adequacy of the employer’s response to the complaint may become a legal issue.
Telltale signs include where the subject matter of the complaint involves sensitive matters such as sexual harassment, discrimination, retaliation, or whistleblowing; the complaining or accused employee has hired a lawyer; or the complainant filed a charge with a governmental agency such as the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing. In these circumstances, the qualifications of the investigator and the quality of the investigation likely will become especially important to the employer’s defense of its actions. Typically, the employer will request a written investigative report, which can best be accomplished by outside attorneys using their legal training. A thorough written report can demonstrate to the jury that the employer took claims of inappropriate conduct seriously and sought the truth. Furthermore, the investigator must be available to assist in potential litigation by serving as a witness to testify about the investigation at a deposition and at trial.
2. The employer does not want to use its go to employment law defense firm to handle the investigation because it wants to avoid a conflict of interest that might bar that firm from being its defense counsel should litigation occur.
For a truly independent workplace investigation, the employer should look to hire an employment law specialist that does not provide regular employment law counsel to the employer. While it seems logical for employers to want to have their regular go-to employment law defense firm conduct its workplace investigations, if litigation ensues, the attorney-investigator may become a witness in the litigation and then the employer’s go-to defense firm will be conflicted out of representing the employer in the lawsuit. Retaining a separate law firm to do the investigation only, prevents this type of conflict of interest from developing.
3. The investigator’s impartiality may be challenged.
Internal human resources, and other personnel on the employer’s payroll, while potentially competent to perform workplace investigations, may have an actual or perceived conflict of interest depending on the circumstances of the matter. This has the potential to seriously undermine the integrity of the investigation. In fact, questions of bias will almost always be raised and linger when using an internal investigator. The relationship between those internal personnel capable of performing workplace investigations with the complainant, accused, and/or witnesses might create a perception of bias that can impair the validity or credibility of the investigation. This concern is particularly acute when the complaint being investigated alleges misconduct by high-level employees or corporate officers. Using an independent employment law firm diminishes the appearance of bias.
4. The employer wants the attorney-client and work product privileges to apply to the investigation, to the fullest extent consistent with applicable law.
An attorney-investigator’s communications with the employer, as well as the investigation itself, generally are privileged and confidential until and unless the employer decides to act based on the investigation findings. However, if the employer relies on the investigation to support a decision, such as a termination, then the attorney client privilege and work product doctrine probably are waived from that point on should there be litigation challenging the underlying decision. Using an independent employment law firm to conduct the investigation under an attorney client engagement should allow the employer the latitude to maintain the confidentiality of the investigation until it decides to affirmatively make a decision predicated on the investigation findings.
5. The employer lacks internal personnel with the necessary skill level, subject matter expertise, or experience, to conduct a thorough, and competent investigation.
What starts out as an apparently simple investigation may become more complex and sensitive as the allegations or facts are brought to light. An inexperienced investigator may not recognize the potential problems and could quickly be out of his or her depth. Using an independent employment law firm to conduct a workplace investigation is advantageous because the attorneys understand how to conduct investigations and should be thoroughly familiar with federal and state employment laws.
6. The employer’s internal personnel capable of performing unbiased workplace investigations are too busy to devote the concentrated effort needed to immediately conduct and complete a time intensive investigation.
Internal human resources, and other personnel on the employer’s payroll competent to perform workplace investigations may not in a position to “drop everything” they are working on (or planned to be working on) and devote nearly all of their time thereafter to conducting the investigation. Lack of diligence in completing an investigation can lead to an inference of lack of good faith, which could place the employer in a potentially worse position than if no investigation had been conducted at all. Lawyers are primed to jump on new matters quickly, and the employer can condition selection of the attorney investigator on immediate availability.
7. Bringing in an outside employment law firm sends a message that complaints will be taken seriously.
Investigations conducted by individuals from outside an employer’s organization often are able to conduct a more effective investigation because employees feel less constrained discussing workplace issues with them.