Workplace Misconduct: Laying the Groundwork for a Successful Internal Investigation

Confidential information
It’s in a diary
This is my investigation
It’s not a public inquiry.

— “Private Investigations,” Mark Knopfler/Dire Straits

It’s Friday. Thoughts are turning to the weekend ahead. The phone rings: We have a problem — I’ve gotten a complaint of sexual harassment against a senior VP. What do I do?

I’ve had variations of this call dozens of times. In the months since #MeToo and #TimesUp grabbed national headlines, the volume of calls about workplace complaints, especially those involving senior executives, has skyrocketed.

Employers and executives must act promptly when faced with these complaints. An effective workplace investigation can mean the difference between effective resolution and unwanted litigation. Moreover, in the current business environment, how employers investigate potential misconduct can affect that company’s reputation almost as much as the alleged conduct itself.

Consistent principles and procedures must be followed whenever allegations of misconduct are investigated. While volumes are written on how to ask questions and read body language, less guidance is available on the necessary pre-planning necessary for an effective investigation.

The Reasons for an Internal Investigation

A workplace investigation should be conducted when there is a complaint or credible information that there may have been significant wrongdoing, misconduct or ethical lapses. A workplace investigation may also be appropriate even if there have not been specific allegations against an employee or department, but there have been allegations against others, and the investigation is intended to exclude the possibility that wrongdoing occurred within the company.

An effective investigation process protects the company and its shareholders by:

• Preventing and detecting misconduct and violations;
• Ensuring that corporate activities comply with applicable laws and regulations; and
• Identifying areas of improvement for business operations or employee performance.

Therefore, an investigation is not conducted simply to uncover sufficient facts to justify a desired result or to just record in the “permanent record” that an incident did or did not occur.

An investigation is, at its core, a fact-finding mission. Investigations determine what happened with respect to a particular incident — whether suspected conduct did or did not take place, what the circumstances were, who was involved and whether a violation of law or company policy occurred. An investigation must be perceived as having been thorough, independent, unbiased and analytical.

While a proper investigation may provide the employer with an affirmative defense under the Ellerth-Faragher doctrine, an inadequate investigation may not only defeat that defense at trial, but may also be utilized to establish liability on the part of the employer.

Common attacks on investigations fall into several major categories:

• Timing of the investigation
• Qualifications of the investigator
• Thoroughness of the investigation (or lack thereof)
• Inadequate documentation and recordkeeping with respect to the investigations
• Treatment of the complainant and accuser, both during and after the investigation

Proper planning and implementation of an investigation is crucial to ensure an investigation is both effective as a fact-finding endeavor and able to withstand scrutiny at trial.

Timing: When to Investigate?

As a general rule, an investigation is appropriate when an employer receives a complaint (oral or written) or becomes aware of employee misconduct. Even if a complaining employee does not follow proper company policies regarding filing or making a complaint, employers still generally have a duty to investigate. Common allegations requiring an investigation are complaints of harassment/discrimination, misappropriation of trade secrets, conflict of interest, theft/embezzlement or other allegations of workplace misconduct.

When allegations of sexual harassment arise, a thorough investigation and prompt remedial action are required. A complaint does not have to be made in writing to human resources. Under the U.S. Supreme Court’s decision in Faragher v. City of Boca Raton, 524 U.S. 775 (1998), “an employer’s investigation of a sexual harassment complaint is not a gratuitous or optional undertaking; under federal law, an employer’s failure to investigate may allow a jury to impose liability on the employer.”

This duty also applies to other forms of “unlawful harassment.” An employer cannot avoid liability by isolating itself from its supervisors. Faragher imposes duty to take reasonable care to prevent and correct harassing behavior. Thus, an employer should investigate when it is or should be aware that harassment occurred, such as when a manager witnesses inappropriate conduct or when a co-worker reports inappropriate conduct.

Generally, employers should err on the side of investigating because the company may not uncover the severity of the problem until an investigation is conducted. In addition, investigating promptly can serve as an affirmative defense for employers and limit exposure for damages. An employer’s good-faith effort to comply with Title VII’s prohibition of unlawful workplace discrimination and harassment and prevent such misconduct in the workplace may limit or eliminate potential liability for statutory punitive damages.

In addition, starting an investigation sooner rather than later gives an employer a better chance at gathering the most relevant information because as time goes on, facts get cold, memories fade and employees leave.

Planning and Organization

The Purpose and Goal of the Investigation

Prior to beginning a workplace investigation, it is important for the company to have a game plan and know what steps to take immediately upon becoming aware of a complaint of workplace misconduct. As mentioned above, action needs to be considered promptly. This includes determining the purpose and goal(s) of the internal investigation.

Identifying the type of complaint (i.e., harassment/discrimination, theft/criminal conduct, wage/hour) or problem(s) involved lays the foundation for setting the purpose and goals of the investigation. The purpose of a workplace investigation is distinct from the goal. Generally, the “purpose” is to uncover all relevant facts and details so that the company can make an appropriate decision. The “goal” or “goals” of the investigation may be to uniformly enforce company policy, to prevent or limit the company’s legal exposure or to preserve the company’s reputation or image. As the investigation is ongoing and more information is uncovered, the goals of the investigation may change if collateral issues arise.

The purpose and goals of the investigation affect several aspects of the investigation, including:

• Its scope
• Who conducts the investigation
• Who the results are reported to
• Whether the results are made public
• How the company responds to public questions or allegations

Once the decision to investigate is made and the purpose and goals are laid out and understood by human resources and management, the company must then establish and ensure the integrity of the investigation from the outset.

Who Should Investigate?

Part of ensuring the integrity of the investigation means choosing an investigator who is uninvolved in the issue and well-trained in handling internal investigations. The investigator should not be someone who is in the direct line of supervision for the employee(s) being interviewed, because it is important to avoid any perception that the investigation was biased or based upon preconceived notions of the employee. An investigator cannot be invested in achieving a specific result or benefit from the investigation. Impartiality is key.

Options for qualified internal investigators may include: corporate management, managers, assistant managers, human resource coordinators or directors or operations directors. If the company wishes to bring in a neutral third-party investigator, it may hire outside counsel or an external human resources consultant to conduct the investigation.

Sometimes a team of two or more investigators will be used to increase effectiveness of the investigation. Two or more sets of eyes and ears allows for the investigators to observe more about the body language, tone of voice, veracity and consistency of the facts presented by witnesses during interviews. In addition, two or more individuals can corroborate events if the investigation ever becomes the subject of future tort claims.

Selecting Interviewers for an internal investigation

When selecting an investigative team, the company needs to choose individuals who understand the purpose of the investigation, whether that is to reduce the company’s legal exposure or to collect information about the workplace to ensure compliance with existing laws and promote a professional working environment. Interviewers also need to understand and prepare for how an investigation impacts the business of the company. Generally, investigations are very disruptive and can negatively impact employee morale and productivity. Interviewers who are cognizant of these impacts can work to minimize their effects while conducting the investigation in an efficient and timely manner.

In a situation where multiple investigators are involved, it is important for the company to consider and ensure a diverse investigatory team. Interviewer diversity in race, gender, communication styles, company position, etc. can increase the likelihood that interviews will be successful in eliciting the most information from the employees, because certain individuals may connect and open up differently depending on who they are speaking with.

Each interviewer should be selected based on his or her ability to develop rapport with an interviewee, ability to obtain admissions and ability to assess and understand the interviewee.

The company also needs to consider the interviewers’ writing skills and presentation style, because that individual may be asked to prepare a written report and/or may also be called as a potential witness in a jury trial. Thus, whether he or she will be able to effectively convey their perceptions and results is important.

Preserving Evidence and Protecting Employees

Prior to beginning interviews, the company should conduct background research to ensure the proper questions are asked during the interviews. This research includes looking at the history of the employees involved. Each personnel file should be reviewed for any previous or similar write-ups or complaints. In addition, prior job or performance reviews of employees involved should be considered.

All documents relating to the scope, purpose and goals of the investigation should be preserved (both hard copy and electronic). Any regularly scheduled document or email deletions should be suspended during the pendency of the investigation, or perhaps longer if future legal action is foreseeable. If the company believes the alleged misconduct could result in litigation, a companywide litigation hold should be issued to ensure employees don’t inadvertently or intentionally delete or destroy relevant documentation. A company’s failure to preserve documents can lead to spoliation issues where the company is accused of destroying evidence in anticipation of litigation.

If the complaint contains allegations of serious misconduct (i.e., sexual harassment or violent behavior), the company must decide whether to place the alleged harasser/bad actor on leave during the investigation, or at a minimum whether to separate the alleged harasser/bad actor and the complaining employee from having to work together.

An effective investigation requires considerable pre-planning before the first witness is interviewed. In many cases, what a company does before the investigation can be as important as the actual findings of the investigation.