1. Investigations Generally: Why, When, and How?
Workplace investigations are difficult but necessary. They mitigate risk and help maintain an enjoyable workplace.
It is best practice to conduct prompt investigations when issues arise. Due to strict, employee-friendly federal and state laws, any complaint raised by an employee has the potential to become a costly lawsuit. An employee who has made a complaint can potentially take action against not only his or her perpetrator, but also the company itself since the company may have failed to protect the employee against the conduct or to discipline the wrongdoer. In fact, most jurisdictions make employers responsible for addressing and resolving allegations of misconduct, harassment, or discrimination in the workplace. So, in addition to being responsible for their own conduct, employers become arbiters and enforcers of conduct between employees. As such, the onus falls on employers to promote company policies prohibiting misconduct and to quickly investigate and enforce violations of policy.
It is wise to investigate any plausible complaint of workplace misconduct. While blatantly frivolous or otherwise absurd claims do not merit extensive investigation, there should be sufficient investigation to determine the frivolous nature of the complaint. In addition, certain classes of misconduct warrant a more complete investigation. These include but are not limited to: (1) discrimination, (2) harassment, (3) misconduct or company policy violations, (4) theft or fraud, (5) whistleblowing, (6) grievances, (7) retaliation, and (8) safety concerns. Some states emphasize specific classes of misconduct. California, for example, recently passed SB 553 which requires that employers investigate allegations of workplace violence. The new law defines “workplace violence” broadly to include verbal or written statements that convey, or are reasonably perceived to convey, an intent to cause physical harm or place someone in fear of such harm.
Investigations can be conducted internally or externally. Internal investigations are conducted by an employee selected from within the company. External investigations rely on specialized third parties. The benefits of internal investigations are their speed, cost, and ability to contain unwanted negative publicity. The benefits of hiring an external investigator are third party objectivity and avoiding conflicts of interest while conducting the investigation. External investigations are recommended when the integrity of any internal committee may be called into question.
Investigations should be prompt, impartial and objective, thorough, and confidential. When a complaint is first received, the responsible officer or manager should gather all relevant facts about the complaint from the source. After hearing from the person alleging wrongdoing, the company should then designate an investigator to review applicable company policies and determine whether the policies were violated based on the facts alleged in the complaint, interview the alleged wrongdoer and all witnesses to the alleged misconduct in determining whether any applicable policies have been violated. The investigator should respect confidences but should not make any guarantees of absolute confidentiality.
Next, the investigator weighs all the evidence and determines the credibility of each source and how all the facts fit together to form a cohesive and plausible story. Based on these factual determinations, the investigator then revisits whether company policies have been violated.
If the investigator finds there was a violation of policy or other misconduct, recommendations about what action, if any, to take to remedy the violations can be made, but ultimate authority for implementing recommended actions remains with the managing agents of the employer. The investigator should recommend an action appropriate for the severity of the offense. To avoid allegations of discrimination or preferential treatment, any punishment should be consistent with past punishments for similar offenses.
The investigation process should be well documented to protect against future complaints. The final report should detail the investigatory process, the sources of evidence relied upon, and the findings of the investigation. Other details employers may consider including are: (1) preliminary case information; (2) an incident summary; (3) a summary of the allegations; (4) details and notes from the investigatory process; (5) a summary of interviews, separated by interviewee; (6) assessments of credibility of interviewees and other evidence; (7) factors leading to the decision made and/or the action to be taken; (8) the final decision of the investigator and a summary of the plan of action; and (9) identification of future ways to ensure compliance with the company policies violated.
Finally, the employer owes a duty to all parties involved to inform them of the outcome of the investigation. This includes the alleged wrongdoer, the complaining party, and any supervisors involved in the investigation who may need to take action based on the decision and any punishment issued.
2. Maintaining Confidences
Employers cannot violate employees rights to complain about workplace misconduct. Workplace rules are considered “presumptively unlawful” if they have a “reasonable tendency to chill” employees from exercising their rights under Section 7 of the National Labor Rights Act. When forming company policy regarding confidentiality, employers should consider whether the policy advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule. The policy should be the least restrictive means of protecting the company’s best interest while still providing employees with the necessary channels to complain and receive redress. If an employer can meet its confidentiality needs with a more employee-friendly rule, the more restrictive rule is likely unlawful.
In California and other states, for example, a standard nondisclosure agreement cannot prevent employees from disclosing facts related to potential harassment, discrimination, and retaliation claims based on a protected category.
3. Arbitration as an Alternative to Litigation
Litigation is slow and expensive. Arbitration can be an attractive alternative as it is more efficient, the proceedings are confidential and private (rather than open to the public as the courts are), and the decisions are final and binding so that they cannot be appealed or overturned.
Under an arbitration agreement, the employer and employee enter into a contract in which they agree that if a dispute arises, they will submit the dispute to a mutually agreeable arbitrator, rather than the courts. Notably, however, in an employment relationship, the employer must pay the cost of arbitration. Since February 2023, arbitration agreements can be a condition of employment nationwide. It is best practice to create an arbitration agreement separate and distinct from the remainder of the employment agreement to ensure its enforceability should any issues arise. Class and representative action waivers may now be part of the arbitration agreement as well.
4. Disciplinary Measures and Transfers
Employers should have a policy describing appropriate disciplinary action that may be taken for violations of company policy, but the employer must avoid making any particular promises regarding progressive discipline in order to avoid limiting the terms of the at-will employment relationship. The policy should state that it does not encompass all forms of discipline which may be undertaken and that specific disciplinary measures can only be determined at the discretion of the company and in response to the nature of the specific misconduct in question. The company should be consistent in enforcing its policies.
There are several ways employers can reduce the risk of generating liability when undertaking disciplinary measures. First, employers should provide notice of company procedures and policies by having written and accessible policies prohibiting harassment and other forms of misconduct, as well as a written complaint procedure. Written and published policies make it harder for employees to argue they were unaware of such policies or that the company’s action was not in accordance with the policies. Employers should also train supervisors and employees to understand and comply with these policies and should act promptly on all complaints.
Finally, while it may appear an appealing remedy, transferring a party to a workplace dispute to another division in the company could be considered an adverse employment action and could support an employment discrimination claim if it entails materially adverse consequences. If a wronged employee is transferred, he or she might view the transfer as retaliation for whistleblowing.
5. Conclusion
Investigations play a necessary role in the workplace, but could result in increased liability if executed poorly. The experienced attorneys at Palmer Kazanjian Wohl Hodson stand ready to guide you through the workplace investigation process and help you comply with other federal and state laws relating to employer workplace obligations.