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Missteps in work investigations trip up employers’ defense

June 15th, 2015  |  Lorene Park

By Lorene D. Park, J.D.

If recent cases are an indication, HR professionals and others tasked with conducting internal investigations of employee complaints or suspected misconduct are failing to follow some basic advice readily available from employment law experts on how and when to conduct a proper investigation. For example, the Society for Human Resource Management published a “How-to” on investigations, identifying common mistakes such as ignoring complaints, losing objectivity, and failing to be thorough. The EEOC also offers guidance for employers facing discrimination or harassment complaints; summarizing what makes an effective investigation, what questions to ask, how to assess credibility, and what corrective actions might be taken. These suggestions likely could have helped the employers in the following cases, many of which can serve as cautionary tales on what not to do.

Don’t ignore, minimize, or discourage complaints—investigate them. Several recent cases involved employers that not only failed to investigate discrimination and harassment complaints but openly dissuaded further complaints. For example, a leased employee survived a motion to dismiss her intentional infliction of emotional distress claim, which was based on allegations that when she told her supervisor about sexual harassment, including being told she was “f*ckable” and invited for a lunch time “quickie,” the supervisor told her to “ignore it and smile” (McCourt v. Gatski Commercial Real Estate Services). A retaliatory harassment claim by a female corrections officer survived summary judgment based in part on evidence that a supervisor responded to her sexual harassment complaints by telling her to keep her mouth shut and that he did not have time to be a babysitter (Sanchez v. State of California).

Minimizing or ignoring discrimination or harassment complaints also hinders any defense in a subsequent lawsuit. In one case, an HR manager minimized racial harassment complaints by an African-American employee by calling the alleged harasser a “good guy” and telling the employee (who was threatened) that “you are going to be fine” (Gillum v. Safeway, Inc.). And an employer in another case now faces punitive damages over a Title VII hostile work environment claim by a female administrative assistant, whose repeated complaints about coworkers making sexual comments and putting porn on her computer prompted no investigation or remedial action. Her complaints were simply ignored (Scuffle v. Wheaton & Sons, Inc.).

Conduct a thorough investigation. Some employers do not ignore complaints but fail to take the ensuing investigation seriously. For example, a finding of employer liability for a hostile work environment was supported in an Illinois case where the HR director took no notes while investigating an employee’s complaints that photographs of sexual bathroom graffiti depicting her image were being passed around the workplace and the HR director refused to look at the photographs. Moreover, the employee’s supervisor blew off her concerns over Facebook posts of the pictures (Meng v. Aramark Corp.).

In some cases, there has been no complaint but an employer suspects employee misconduct. Again, being thorough in the investigation is imperative. For example, a JPMorgan branch manager who was fired soon after taking FMLA leave survived summary judgment on her FMLA claim based in part on evidence that, in investigating allegations of fraud against her, JPMorgan’s investigator did not follow-up on significant evidence suggesting that her ex-brother-in-law was being untruthful (in the midst of a messy divorce) in claiming the employee opened an unauthorized account in his name (Walker v. JPMorgan Chase Bank, N.A.). In another case, evidence that a convenience store employer did not sufficiently investigate or make particularized findings before blaming one co-manager for the theft of lottery tickets from an unsecured cabinet (when the other co-manager was actually the last one on duty) suggested the plaintiff’s discharge was really based on race discrimination (Bondwe v. MAPCO Express, Inc.).

Avoid biased investigators, biased investigations. Surprisingly, some employers have allowed individuals with an obvious source of bias to conduct an investigation. For example, it is not a good idea to let a supervisor investigate possible misconduct by an employee if the employee has previously accused the supervisor of impropriety. Indeed, one court recently held that allowing an accused harasser to investigate a radiology employee’s purported HIPAA violations supported her Title VII hostile work environment claim (Douglas v. Aiken Regional Medical Center).

Sometimes the way an investigation is conducted suggests bias, even if the investigators themselves show none. For example, a federal court in Oklahoma found evidence that an employee’s demotion was due to race discrimination based on the fact that African-American employees were required to turn over their computers during an independent forensic expert’s investigation into violations of a computer use policy (viewing porn at work) while some white employees did not have to turn theirs over (Crabbe v. American Fidelity Assurance Co.).

Timing of an investigation can also suggest ill motive. For example, an employee who was only investigated for possible time card fraud shortly after she took FMLA leave survived summary judgment on her retaliation claim in part due to the timing of the investigation. There was also a tell-tale email from an attorney for whom she worked, in which he queried “Do we have enough now to take action? Please?” The email was sent during the investigation and, at a minimum, showed a desire to take disciplinary action (Hartman v. The Dow Chemical Co.).

Hear all sides to a story. As these cases also suggest, the point of a proper investigation is to seek the truth, not to justify a decision or assumption that has already been made and certainly not to justify discrimination or retaliation. Thus, it is extremely important to give an employee suspected of misconduct a chance to tell his or her side of the story. Failure to do so can be evidence of unlawful intent. For example, the Sixth Circuit found questionable a bank’s motivation for firing an African-American employee who was assumed to be the aggressor in a workplace altercation. Significantly, the investigator did not allow him to tell his side of the story and even ignored evidence that the coworker started the incident (Wheat v. Fifth Third Bank).

Make sure your response is effective. If complained-of conduct continues after an investigation and corrective action, courts are likely to find the employer’s response inadequate. For example, although one company had an anti-harassment policy, investigated an employee’s complaints, and reprimanded a supervisor who asked her about sex toys and said women have the upper hand in business because they can use their sexuality (among other sexist remarks), a jury could find its response insufficient to rely on the Faragher/Ellerth defense because the inappropriate remarks continued (Macaddino v. Inland American Retail Management, LLC).

Responses should be consistent. Make sure, once an internal investigation is complete, that any discipline or other response is consistent with company policy and with the response to similar infractions in the past. Also make sure to treat similarly situated coworkers similarly. Disparate discipline is often at issue in litigation, as are allegations that the punishment didn’t fit the crime. For example, in the MAPCO case, there were two co-managers on duty the day lottery tickets were stolen but only the African-American employee was fired, and that was considered evidence of discrimination. Conversely, in another case, an employer investigated and found that all assistant managers at a theater violated the nonfraternization policy. Two females who were fired claimed discrimination because no male employees were fired. However, the investigation disclosed that they had committed more serious violations, which justified their terminations, and their claims failed as a matter of law (Serrano v. Cinemark USA, Inc.).

Other issues. While many recent cases highlight the ways in which investigatory missteps hurt an employer’s chances of successfully defending discrimination, harassment, or retaliation suits, other cases also raise important considerations with respect to internal investigations:

  • Genetic information. An employer violated GINA during an investigation into who was defecating in a warehouse by having DNA from employee cheek swabs compared to the DNA of fecal samples (Lowe v. Atlas Logistics Group Retail Services (Atlanta), LLC).
  • FCRA compliance. Although an investigation into employee misconduct normally does not fall under the Fair Credit Reporting Act, an employee had evidence that the investigation that uncovered his criminal background and led to his discharge arose from the employer’s desire to avoid his anticipated discrimination suit rather than to uncover misconduct. The FCRA claim therefore survived summary judgment (Mattiaccio v. DHA Group, Inc.).
  • Weingarten rights. An employee who is represented by a union has the right to request and have a union representative present at an investigatory interview that he/she reasonably believes may result in disciplinary action. In one recent case, an NLRB panel found that an employer unlawfully threatened a union steward with discipline for using notes while representing an employee during an interview (Howard Industries Inc.).
  • Privilege. Documents created in an investigation by an employer’s attorney may be privileged depending on the facts. For example, a bank sued for discrimination by a former employee did not have to turn over information about another employee’s exit interview and a related investigation by the employer’s attorney but did have to supply the names of the individuals interviewed. The attorney attested that she conducted the interviews, created documents, and provided legal advice on liability and protective measures. Though there were reasons for the investigation that were not in anticipation of litigation, it was not “wholly independent of litigation” so the work-product privilege applied, as did the attorney-client privilege (Richmond v. Mission Bank).
  • Spoliation of evidence. Destruction of notes, documents, tapes, or other evidence related to an internal investigation can lead to sanctions for spoliation of evidence, depending on the circumstances. One employer was let off the hook, though, because notes that were shredded had been incorporated into an investigation summary so an employee could not show prejudice and was not entitled to sanctions (Hill v. Phillips 66 Co.).

Outside investigations by regulatory agencies. Also worth noting are several recent cases in which courts issued injunctions or provided other remedies when employers failed to cooperate with, and in some cases interfered with, investigations by regulatory agencies. For example:

  • A federal court in California issued an injunction after an employer interfered with the DOL’s investigation into misclassification of cab and limo drivers as independent contractors. Drivers were told not to speak to investigators and to say they were independent contractors (Perez v. Abbas).
  • Interference and retaliation were at the forefront of a case in which a federal court issued an injunction against an employer based on evidence that it suspended, fired, and sued an employee because she spoke to the media and complained to OSHA about workplace exposure to chemicals linked to breathing problems. The employer was enjoined from: terminating, suing, or otherwise retaliating against employees for exercising OSH Act rights; telling employees not to speak to DOL representatives; and otherwise obstructing an ongoing DOL investigation (Perez v. Lear Corporation Eeds and Interiors).
  • Enforcing an administrative subpoena by the EEOC, a court in Wisconsin noted that the agency still had the authority to investigate possible discrimination even if the claimant who filed the EEOC charge had her individual suit dismissed or reached a settlement with the employer. The agency serves not only the individual’s interests, but the public’s interests, explained the court (EEOC v. Union Pacific Railroad Co.).
  • The Fifth Circuit affirmed a DOL Administrative Review Board’s award of $30,000 in damages under SOX’s antiretaliation provision after an employer identified an employee as the whistleblower who reported questionable accounting practices to the SEC, leading to an investigation. The court held that the disclosure, followed by coworker ostracism, was a materially adverse action (Halliburton Co. v. Administrative Review Board (en banc review denied, with several judges dissenting).

Good investigations provide good defenses. When done right, an employer’s investigation into potential misconduct can provide a defense to lawsuits over any remedial measures taken. Thorough investigations and effective responses to harassment and discrimination complaints by employees can provide a basis for the Faragher/Ellerth defense. And proper investigations into misconduct can also allow an employer to rely on the “honest belief” rule, in which even erroneous conclusions (as to an employee’s fault or guilt) will not lead to liability because the employer honestly believed, based on the investigation, that the employee committed the infraction that led to whatever discipline the employee claimed was unlawful. With that in mind, employers should make sure that any HR professional or other employee who undertakes an investigation is aware of the issues identified above. At a minimum:

  • Provide effective means for employees to lodge complaints and make sure they know how to do so.
  • Take all complaints seriously and have an unbiased investigator conduct a thorough investigation, hearing all sides of the story. Reach a justifiable conclusion.
  • Take remedial measures as appropriate, ensuring that the measures are consistent with policy, past practice, and as between individuals who have committed similar infractions. Avoid disparate discipline or discipline that is excessive.
  • Follow-up to make sure the remedial measures were effective.

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