Conducting a Lawful Misconduct Investigation

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September 06, 2018
Author: Marc L. Jacuzzi, Esq.

Designing the Investigation
Step One -- What to do When the Allegation is Made

a. If the allegation is an anonymous complaint, proceed to step two.

b. If the allegations are made by a concerned party who is not the alleged victim of the harassment, get the following information:

  • Who is the alleged victim(s)?
  • Who is/are the alleged bad actor(s)?
  • How did the concerned party get his/her information? Did he/she observe the behaviors at issue?
  • Did someone tell him/her about what was going on? If so, who told him/her?
  • What exactly are the behaviors at issue?
  • Over what period of time have the behaviors occurred?
  • Are there any witnesses to the behaviors? Who are they?

c. If the alleged victim makes the complaint, get the following information:

  • Who is/are the alleged bad actor(s) or practices?
  • What exactly are the behaviors at issue?
  • Over what period of time have the behaviors occurred?
  • Are there any witnesses to the behaviors? Who are they?
  • How would he/she like to see the problem resolved?




Step Two -- How Much Investigation is Needed?
a. Quantify the specific nature of the complaint. That is, does the allegation involve alleged discrimination based on a protected characteristic? Something else?

Does the behavior (or the motivation behind it) violate a statute? Does it violate company policy?
b. Is the Company obligated to resolve the issue?
c. Will a single answer resolve the issue?
d. Do you need more facts than the employee is able to provide?
e. Do you need additional resources to resolve the issue?

Step Three -- Interim Remedial Action
Is interim remedial action necessary?

Interim remedial action should be considered when:

  • the victim requests it;
  • the allegations involve a situation that, if true, would be intolerable for a reasonable victim (remember it’s a reasonable victim standard);
  • the allegations involve claims of sexual harassment; and
  • reconsider interim remedial action as needed during the investigation.

Step Four -- Choose an Investigator
Criteria: Ability, neutrally and fairly, to investigate and determine facts necessary to resolve the complaint; capable and properly trained to understand the issues under the investigation; adept in interviewing witnesses, secure enough to ask the difficult and often-times embarrassing questions, and sensitive enough to draw out honest answers.

Consider splitting responsibility for interviews between two different people.
a. Human resources professional or manager -- if no litigation is presently threatened, the alleged bad actor is of equal or lesser rank in the company and there are no other especially sensitive issues arising out of the identity of the victim or the bad actor. Special issues include if the victim or bad actor is an owner of the company, a relative of the owner of the company, or a key customer of the company, etc.

b. Employee relations consultant -- when the company anticipates possible litigation arising out of the allegations and is considering the possible need to have the investigator testify about the investigation. Caution, anytime litigation is possible; the investigatory process should be strategized with legal counsel. It is also important to remember that there is no attorney - client privilege between a consultant and company management.

c. Licensed Private Investigator.
d. Outside counsel – Pros: when special factual or company political issues would make the human resources professional or manager ineffective, or when attorney client privilege is to be protected. Cons: Potential loss of privilege.

e. Federal Fair Credit Reporting Act and Fair and Accurate Credit Transactions Act (“FACTA”) considerations when a non-employee is used to conduct the investigation. An exception from the notice and disclosure requirements exists in both federal and state law. FCRA/FACTA, Section 603(x) excepts certain communications for employee investigations. Similarly, California Civil Code §1786.16(c) excepts investigative consumer reports procured or caused to be prepared by the employer during investigation of, or suspicion of wrongdoing or misconduct. CAUTION! If an adverse employment action results from the investigation, only a summary of the nature and substance of the investigative report is provided to the harasser. Step Five -- Identify Areas of Inquiry

a. Secure and review copies of relevant company policies, procedures, and guidelines.
b. Obtain and review copies of all relevant documents.
c. List interviews needed. This list will include the alleged victim and the bad actor as well as all witnesses and potential witnesses.
d. Determine the order of the interviews. Always interview the victim first. The victim's perceptions of the issues will be critical to ensuring that the following interviews of witnesses are complete. For example, after interviewing the victim, you may discover additional witnesses or documents to review. Should you interview the alleged bad actor before interviewing third party witnesses? Interview the alleged bad actor next if:

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  • The victim says that there were no direct witnesses to the behaviors alleged and he/she did not tell anyone about the behaviors; or
  • Documentary evidence exists to support the claims of discrimination/harassment; or
  • Other physical evidence of harassment exists; or
  • The victim has not previously complained about the discrimination to another supervisor, manager, or company official.

e. Cautionary Notes - - Off-limits Investigative Techniques

  • Polygraph requirement (L.C. §432.2)
  • Secret audio recording (P.C. § 632)
  • Searches where privacy interest retained (California Constitution Article I, Section 1)
  • Do not restrain an interviewee or prevent him/her from leaving (false imprisonment)
  • Do not use an overly harsh/abusive style (intentional infliction of emotional distress)

Step Six -- Conduct the Interviews

Determine who will be present in addition to the interviewer and interviewee:

  • Union non-supervisory employees may have the right, if they raise the issue, to have a representative present during an interview, which could lead to that employee's being disciplined. If an employee is asked to attend a meeting with supervisors, and the employee has reason to believe the meeting may result in discipline or discharge, he or she has the right to have a co-worker present in the meeting. This should apply only to the alleged wrongdoers.
  • Employees generally do not have the right to have legal counsel present and can be required to cooperate with the process.
  • During especially sensitive interviews (due to the personality of the witness (usually the victim), the nature of the allegations, etc, the interviewer may want a witness present.

Prepare an introductory explanation: for example, \"the company investigating allegations of discrimination or inappropriate interpersonal behavior in the X conclusions have been made...your cooperation is need fear no reprisal.\"

Ask \"who, what, when, where\" questions. BE SPECIFIC, GET SPECIFIC RESPONSES.

Document specifically and accurately the witnesses statements. These notes will not be attorney-client privileged. DO NOT DRAW ANY CONCLUSIONS.

It is helpful to have questions drafted in advance, but be flexible so that you can followup when needed.

After each interview, you will need to consider revising the investigation plan. Did you uncover additional potential witnesses? Other documents to review? Do newly raised serious allegations suggest a conference with legal counsel? Do you need to re-interview some witnesses?

Step Seven -- Assess Credibility
a. Consider interviewees' demeanor.
b. A story, which is internally inconsistent, may lack credibility.
c. A story, which is obviously exaggerated, lacks credibility.
d. Did the alleged bad actor make any admissions? Did the purported victim make any admissions?
e. Consider the alleged bad actor’s denials, if any. A strong and clear denial is more credible than an evasion/denial.
f. Did the alleged bad actor give a plausible explanation for his/her version of the events?
g. Our witnesses partial, impartial?

Step Eight -- Examine the Objective Facts
a. Did the complainant raise the issues in a timely manner? That is, were the events complained of reasonably recent? If not, why not?
b. Why was the complaint raised now? Does the complainant have a motive other than ending the objectionable behaviors?
c. Did either the alleged victim or the alleged bad actor make any statements during the investigation, which you found to be untrue?

Step Nine - - Reach a Conclusion
a. Standard is Preponderance of Evidence.
b. Double/triple hearsay does not amount to substantial evidence.
c. Where does the weight of the evidence fall?

Step Ten -- Formulate a Recommendation
AVOID MAKING LEGAL CONCLUSIONS. The strongest conclusion, which should be made internally, is that the alleged bad actor engaged in inappropriate behaviors, which were offensive, violated company policy, and/or damaging to the Company. (Consult with counsel regarding conclusions before finalizing them.)

a. Did some form of discriminatory or inappropriate behavior occur? In what way was it inappropriate? Did it violate company policy? Did it show a lack of respect? Was it poor judgment in a supervisor?
b. How serious was the inappropriate behavior? Was the behavior mildly offensive, moderately offensive, or very offensive? Did it occur only once, infrequently or frequently?
c. Had the bad actor been asked to eliminate such behaviors in the past? After a formal investigation or by the victim in this case? Behaviors, which are repeated after they have been asked to cease, are more serious. d. Is the bad actor a supervisor or manager or an equal of the victim?
e. What has the company done in the past about behaviors of this kind? Remember to treat similarly situated individuals similarly.
f. How long has the bad actor been employed by the company? What has his/her work/performance history been?
g. Has the bad actor ever received any relevant training (e.g. harassment preventing training)? When was that training?
h. Are there any mitigating circumstances?

Step Eleven -- Options for Discipline
Whether or not inappropriate behavior or action occurred:

a. Always follow every investigation with training and a reiteration of the company's policy/standards. The training and the reiteration of the policy should be documented for the personnel file.
If inappropriate behavior occurred, consider:
b. Verbal discussion/counseling (documented for the file);
c. Written warning;
d. Suspension;
e. Performance improvement plan;
f. Demotion;
g. Transfer;
h. Reduction in compensation (wage cut, bonus ineligibility, etc.);
i. Termination;
j. Other corrective action to remedy discrimination.

Step Twelve -- Follow-up
Follow-up with the victim to ensure that the problem has been resolved, that the alleged bad actor has ceased all objectionable behavior, that the victim has suffered no adverse consequences because he/she made the complaint or participated in the investigation.

Follow-up frequency:
a. At least monthly for the first three months. Follow-up questions need not be explicit (e.g. \"Is so and so bothering you?\") but should be general (e.g.,

How is it going? Is everything OK these days?)
b. Additional personal follow-up as needed.
c. Harassment prevention training should be conducted at least every two years for all supervisors
d. The company's no harassment policy should be reiterated at least annually by a senior management person. This can be done by means of an annual posting, a paycheck stuffer, etc.

Step Thirteen -- Document the Process
a. Summarize investigation background (sequence and process followed).
b. Relevant company guidelines or policies.
c. Summarize key findings:

  • Interview(s) with complainant
  • Interview(s) with the alleged bad actor
  • Interviews with third party witnesses
  • Relevant supporting documentation

(Include only facts, not conclusions. Do not include extraneous facts gleaned during the investigation.)

d. Describe your factual analysis:

  • Inconsistencies in statements
  • Key admissions
  • Strong denials
  • Credibility assessments (why did you believe or disbelieve the various witnesses?)

e. Conclusion:

  • How policies apply (what they require under these circumstances)
  • Bottom-line factual conclusions (avoid legal conclusions)
  • Action recommended (including discipline and follow-up)

Cotran v. Rollins Hudig Hall and Silva v. Lucky Stores The California Court in Cotran v. Rollins Hudig Hall Internat, Inc. (1998) 17 Cal.4th 93 set forth a new standard for good cause in termination decisions. Three factual determinations are relevant to the question of employer liability: (1) did the employer act with good faith in making the decision to terminate; (2) did the decision follow an investigation that was appropriate under the circumstances; and (3) did the employer have reasonable grounds for believing the employee had engaged in the misconduct.

Following quick on the steps of Cotran, the California Appellate Courts reaffirmed its decision in Silva v. Lucky Stores, Inc. (1998), 65 Cal.App.4th 256. Silva is a “how to” primer on effective and legal terminations.

Silva began working for Lucky in November 1966 as an entry-level clerk. In 1974, after intervening promotions, Silva was made a store manager. He continued to work as a store manager until October 7, 1994, when two female employees reported that he had sexually harassed them. After a month-long investigation, Lucky's review board concluded that Silva had violated the store's sexual harassment policy and procedures and terminated his employment.

Cotran had set forth a new standard for good cause in termination decisions. Three factual determinations are relevant to the question of employer liability:
(1) did the employer act with good faith in making the decision to terminate?
(2) did the decision follow an investigation that was appropriate under the circumstances; and
(3) did the employer have reasonable grounds for believing the employee had engaged in the misconduct?

All of the elements of the Cotran standard are triable to the jury.
(a) Employer Good Faith Silva does not claim that Lucky had a wrongful motive in determining there was good cause to terminate his employment. It determined honestly and in good faith, that good cause existed for his discharge.
b) Appropriate Investigation
Lucky's evidence demonstrates an appropriate investigation under the circumstances. Lucky utilized Szczesny, an uninvolved human resources representative, to investigate the charges. Szczesny had been trained by in-house counsel on how to conduct an investigation. Szczesny investigated the complaints promptly and memorialized his findings on Lucky's witness interview forms. He had important witnesses provide their own written statement regarding the events at issue.

Szczesny asked relevant, open-ended, nonleading questions. He attempted to elicit facts as opposed to opinions or supposition. He maintained confidentiality by conducting a number of interviews off the store premises or by telephone. He encouraged those he interviewed to page him if they wanted to talk with him again. The record does not indicate how Szczesny determined which independent employees to interview. Apparently, various employee witnesses gave him additional names of persons who might provide pertinent information. Szczesny's notes indicate those interviewed were generally happy with their jobs, i.e., they were not disgruntled employees.

Szczesny notified Silva of the charges promptly and afforded him an opportunity to present his version of the incidents. He encouraged Silva to call him if he wanted to talk with him again and Silva called Szczesny the next day to provide more information.
Szczesny provided the critical witnesses with an opportunity to clarify, correct or challenge information provided by other witnesses which was contrary to their statements or which cast doubt on their credibility.

The company gave Silva a final opportunity to comment on the information he had gathered.
While the investigation was not perfect, it was appropriate given that it was conducted \"under the exigencies of the workaday world and without benefit of the slowmoving machinery of a contested trial.\"

c) Objective Reasonableness of Lucky's Factual Determination of Misconduct Cotran defined \"good cause\" in the context of an implied employment contract as \"fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary or capricious, unrelated to business needs or goals, or pretextual. A reasoned conclusion . . . supported by substantial evidence . . . .\"

Silva argued in the trial court that Lucky should not have terminated his employment because he denied the allegations of sexual harassment. In addition, Lucky was unjust in terminating his 28-year employment simply on the word of Ms. Barajas and Ms. Saldana. Neither ground raises a triable issue regarding the reasonableness of Lucky's decision to terminate his employment. The reliance \"on double and triple hearsay\" as well as gossip and rumor - is not substantial evidence.

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