Play Detective How To Conduct an Internal Investigation

Investigation. The very phrase oozes intrigue, recalling images from detective novels: Anonymous letters. Secret corridors. Butlers with guilty faces.

Well, don’t invest in a trenchcoat just yet. Conducting an internal investigation doesn’t demand magnifying glasses or superhuman powers of deduction. It does, however, require asking the right questions of the right people in the right manner. It does necessitate a critical mind that stops this side of being judgmental. And it does demand that HR use a variety of tactics, as the law requires different actions for different situations. For instance, investigating a complaint of sexual harassment requires a different approach than dealing with employee theft, because harassment brings with it a host of employer liability issues.

Here, Richard J. Simmons, attorney with the Los Angeles-based law firm of Musick, Peeler & Garrett, offers help in conducting a thorough—and legal—internal investigation.

First of all, who generally is the best person or department to conduct an internal investigation?
It’s going to depend on the resources the employer has—and the nature of the investigation. If it’s suspected wrongdoing by an employee, then it would typically involve either human resources people or security. If it’s misconduct, like one employee having treated someone else in an abrasive, offensive or inappropriate manner, then human resources would typically do it. If it’s something about theft, then maybe security would do it.

Let’s focus for a second on sexual harassment. When an employee initially files a complaint, is there a first step that a company should take?
If the individual who was allegedly harassed brings it to your attention, the first step is to say “thank you. Thank you for bringing this matter to our attention.”

Why is this so important?
Because the way you react can ultimately affect your liability and even the degree of your liability. If someone comes to you and says they’ve been sexually harassed and you say “Don’t tell me that, because now I have to investigate, your personal life is going to be exposed, this could be brutal for you as well as us”—it looks as though you were discouraging the person from coming forward and candidly disclosing a problem that you have a responsibility to address. But I see that all the time. So the first thing I would say in a sexual harassment case is thank you. It shows your good faith and that you are certainly willing to accept the claim.

What else should you cover in this initial meeting?
The second point you’d want to emphasize is to tell the employee that you have a strict policy against harassment and would not tolerate it by anyone. The third point you should absolutely make is to assure the employee that there will be no retaliation against them for having brought this matter to your attention.

And what should you say to the person being investigated?
When you investigate the alleged culprit, you’ve got to make the same points. Which is: No. 1, we have a strict policy against harassment and would not tolerate it by anyone. And No. 2, we won’t tolerate retaliation. You’ve got to anticipate the possibility that retaliation will occur. It’s just instinctive, even if the accused is innocent, for him or her to retaliate. Let the alleged offender know that you won’t tolerate it. That’s a critical point, you can’t overstate the significance of that.

What if an employee comes to you accusing another employee of stealing? Would you handle the meeting in a similar manner?
In this case what I’d do is get as much of a factual background as I could. I’d find out all the circumstances that led this person to believe that another person committed theft. [Ask questions such as] “Why do you believe that? What was the first hint you had that it occurred? Did you observe it? What evidence do you have?” You’ll want to ask if there are any witnesses, if the accused admitted it, if the accused was confronted. Basically, you’re going to do this fact-intensive analysis as to what forms the basis of the employee’s accusation. And sometimes people say, “Because [my property] is missing, and I know this guy wanted my stuff.” It may be that general. In other cases you’ll have much stronger evidence.

Once an employer embarks on an internal investigation, what are the primary legal concerns?
Well, it really is going to vary. There are some general guidelines for any type of investigation, but others that are really going to be specific [to the type of investigation]. One general consideration is whether you’re creating documents that will be discoverable. You don’t want to do that, particularly if the documents disclose weaknesses to your case or actual violations of the law. As an example, I had a case once where a client did an internal investigation and wrote, “This issue presents potentially staggering liability” in the first line of the memo.

What other information might be made available to a plaintiff if an internal investigation ends up in court?
Also discoverable by the other side is [information] not under the attorney/client privilege. You need to decide whether you’re going to have an investigation done under the direction of lawyers so that you can assert an attorney/client privilege. For example, if the president of the company sends you to investigate something and you write a memo—even if you do not write a memo, if you have notes—they’re completely discoverable. If it’s done under the direction of a lawyer then they probably are not discoverable.

Once you’re fully into the investigation, in cases like sexual harassment, are there questions that you should ask and questions that you shouldn’t ask?
You have to start off with sort of a broad slate in your mind. Do not prejudge any case. You don’t know at the beginning whether someone is absolutely guilty or absolutely innocent, or if the truth is somewhere in between. [On one hand] you want to be sympathetic to the person who comes to you. On the other hand, you don’t want to say “Gee, this is terrible!” and start making judgments early on.

So what approach do you take?
You’ve got to look at your role. You’re a fact finder, and you will evaluate, but you need to hear all the evidence before you can make a judgment. So the key is to have a good ear and to listen to all the facts. There’s often a fear to get into specifics, but as I say the devil lies in the details. If this person is credible, they’re going to have some specifics for you. They don’t have to recount the exact date and the exact hour, but you need to ask when this first occurred; were there any witnesses; did anyone overhear it; if so, who; did anybody else react; did you tell anybody about it at the time? These are all corroborating facts that are really important in harassment cases. Because often all you end up with is she said it happened, he said it didn’t. So you want to look for as much corroborating evidence as you can.

How should you probe for this corroborating evidence?
It’s basically a matter of asking questions that would surface as a matter of logic. Get facts: who, when, what, and where, with as much specificity as you can get. Sometimes recollections are going to be very vague, other times they’ll be very precise. You want to get as much information as you can, and don’t try to resolve it in 15 minutes if it’s going to take a lot longer. Do a good job with it.

What next?
Your objective is to take immediate corrective action. So you’re going to do an immediate investigation. Now one of the things that you have to be prepared for in a harassment case is when an employee says they’re coming to you in confidence. A lot of employers have policies that say they’ll maintain strict confidentiality. Well, that’s a poor policy because, in point of fact, the law says you must maintain as much [of an employee’s] confidence as possible, but that’s not pure confidentiality. Because you’re going to have to investigate, which will require that information be disclosed. So if somebody comes to you in confidence and says “This is between you and me, right?” you can’t say yes because then you end up violating your commitment. What you should say is that while you’ll keep it as confidential as you can, you can’t assure total confidentiality, because this is a legal matter. It’s like somebody coming to you in confidence, saying “Gee, John killed Suzie, don’t tell anyone.”

Would the same approach apply to other internal investigations—just try to get as much information as you can?
Yes, apart from the heightened sensitivity that you’d have in a harassment case, you’d definitely want to do the same thorough job in any investigation. Again, your job is to be a fact finder, so you’re going to find as much information as you can. And don’t be surprised if you have to go back after you’ve talked to some other people to pose additional follow-up questions.

As you’re conducting the investigation, how much information should you give to the person who first came to you with the complaint?
[Using a sexual harassment complaint as an example] I would not start off interviewing a third party. Let’s say Judy comes to me and complains and says that Jeff was a witness. I wouldn’t start off with Jeff by saying “this is what I’ve been told, is it true or false?” I don’t ever tell people what I have, because it’s too easy for them to just say yes, without giving me the type of testimony that would come out in court. So I’m going to start off with a general [questioning], and I may end up with a specific [question].

So how would you begin this general questioning?
I’m going to start off by saying “We have information indicating that Joe engaged in some questionable conduct with women, do you have any information about this?” If he says yes, you probe further. So I start up with a general question, let him come up with his own answers. Maybe he says, “No, sounds preposterous to me, I’ve never heard or seen anything involving Joe that was inappropriate.” Well, at that point I’m going to go further. I’m not just going to let that answer stand—I’m going to say, “Let me give you more specific situations. Do you know of any instance when he has actually made advances towards women, or do you know of a situation where he made inappropriate comments?” I’m going to start off with a general question. I will also insist that people cooperate fully; they must.

How do you express the message that employees must cooperate?
The employer has to be aware of losing control, because employees will sometimes say they don’t want to get involved, or they don’t want to say anything about Joe, or they don’t want to point fingers. Don’t accept that as an answer. Tell employees they need to cooperate fully, and if they don’t you’ll be forced to address it as insubordination, a refusal to cooperate. The employer is in control, and employees must realize that.

What about the case of an employee accused of stealing some of the company’s product. How do you handle the target of that kind of investigation?
You’ve got to be careful about what you accuse someone of. My approach to investigations is to give them an opportunity to explain. So I won’t accuse you, I’ll say, “Listen we’ve got some information that’s disturbing, and we want to provide you an opportunity to explain your role in this before we reach any conclusions.” The guy may say that you’re accusing him of theft. Tell him you’re not accusing him of anything right now—your objective is to give him a chance to respond.

What rights do employees have in this situation?
Employees do not have a right to an attorney to be present in one of these meetings. If the person is a union employee and asks for a union steward or a union representative to be present, the employee does have that right. If there’s no union they don’t have the right to have an attorney or anyone else present. And typically I won’t allow them to have an attorney present, because then it becomes a legal proceeding and the attorneys will typically block the investigation.

The employer seems to have a big say in how the questioning is conducted. Any lines to not cross?
What an employer cannot do is force employees to stay if they want to leave. In the Fermino vs. Fedco case, which went to the California Supreme Court, the employer had security and personnel and management people present. When the employee got up and wanted to leave, a company official slid in front of the door and gestured in a manner that allegedly prevented the employee from leaving. And the Supreme Court said that was false imprisonment. So if you’re investigating something and the employee wants to leave, they have the right to go. You can tell them you need their cooperation, that this is their chance to cooperate, and if they fail to do so you can take action based on your own investigation. But you can’t force them to stay in a room with you.

As you are conducting the investigation, what kind of interim action should be taken? Do you suggest suspending the accused employee?
Everything is based on the facts and circumstances of a particular case. If you have overwhelming evidence, then you might want to suspend right away. Or if you think that the person is in a sensitive position, or a position where he or she can do further damage, then you might suspend. Sometimes you suspend solely to investigate, sometimes you suspend in order to protect the work environment so that this person will not disrupt it or do anything that involves further detriment to the employer. So you have to look at the facts and circumstances. It also depends on how long you think the investigation is going to last. If you think it’s going to be a two-month investigation, suspending for two months is rather harsh; you better have really strong evidence, I think. Also suspensions can trigger wage and hour obligations, so you have to be sure that that’s the way you want to go. Oftentimes it is the appropriate way to go, but not always.

At an investigation’s end, when you’re deciding whether to terminate an employee, what steps should you take to ensure the action is legally defensible?
It’s going to depend in large part on whether the employer has an at-will standard, or a for-cause standard. [Most employers are moving to] at-will standards now. The difference is if you have a for-cause standard in your handbook, then as a matter of contract you have to prove that you had cause to fire. And I have to prove that in the form of admissible evidence that a jury will agree with years later. So the idea is if I can fire only for-cause under my policies or contract, I have to be able to prove cause. If you have an at-will standard, you’ll be better off. In many cases, you simply need to show that you had a good faith belief that the employee was guilty, and you can win your case. So there’s a real big difference there as to what type of latitude you have as an employer, depending on which standard you have.

Are there any other important points an employer should know?
You always want to be professional—no matter what you think the person is guilty of when an investigation starts. I can tell you from experience representing hundreds of employers for a lot of years, that oftentimes clients come to me with cases where they are absolutely convinced the person is guilty, absolutely convinced that he’s dirty, and I say, “Well, just amuse me for a moment and tell me what you have.” And I go through the facts and I find out that there are many i’s here that have not been dotted, t’s that have not been crossed. And we find out that the person is completely innocent. And you’ve got to be prepared for that, so be professional about it. Because as convinced as you may be at the outset, you may be wrong. And just as important, juries can get angry, offended by employers, even though they had the right to discipline someone, but they were ruthless in the way they investigated, so you want to avoid that. You want to be professional, that’s really important. And although there’s an exception to every rule in this area, my general rule is that you want to give the person a chance to explain. First of all you pin them down with their explanation, and that’s good because they can’t concoct some other theory later; and secondly, if they come up with a good explanation you can investigate it. It’s a good safety net—it can protect you against mistakes that could otherwise be harmful to the employee and to you. The other general point is: A good investigation is a prompt investigation. The longer it takes you to investigate, the more likely that memories fade, and evidence is lost.

Personnel Journal, April 1995, Vol. 74, No. 4, pp. 158-166.

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