September 06, 2018
Author: M. Levy Leatherman
Organization: Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
I. Threat Assessments When to Call an Attorney
A. Common Triggers
i. Formal Complaint
It is imperative that companies maintain a clear, formal reporting mechanism for workplace complaints. Many companies choose to offer multiple means for reporting complaints, typically through vertical reporting (i.e. through supervisors), with options to report directly to human resources and/or to a reporting hotline. Maintaining comprehensive reporting mechanisms provides multiple benefits to employers: employees understand that they can safely raise their concerns without fear of retaliation, and an employee’s failure to utilize reporting procedures may preclude a lawsuit per the United States Supreme Court’s Ellerth-Faragher decisions.
The receipt of a formal complaint, whether written or oral, and no mater to whom it was reported, is the most obvious ‘trigger’ to raise the question of whether to call your attorney.
ii. Subpoena for documents
Another common situation where you may consider involving an attorney is when you receive a subpoena. The subpoena may be related to an employee indirectly, or may involve an employee's personal matters, such as domestic or criminal matters. Subpoenas should not be taken lightly or disregarded. A subpoena is considered a court order, and failure to respond timely may result in severe sanctions to the company.
iii. Request for employment records
Employees may sometimes request to see their personnel files. If the employee in question has been involved in a workplace incident or has made a complaint, a request to see his or her personnel file could be an indication of a forthcoming charge or lawsuit. In Louisiana, except in limited circumstances for certain public employees, employees do not have a right to review their personnel file. The decision to allow review of a personnel file comes down to company policy, which should be consistent for all employees. In any situation, the decision to allow review of personnel files should be considered carefully.
iv. Adverse employment actions
When considering an adverse employment action (e.g. layoffs, terminations, transfers, demotions), you may consider calling an attorney, particularly if there are concerns about the individuals at issue or those individuals have already been involved in activities that could lead to charges of retaliation.
Obviously not all employment actions can or should be run by an attorney; however, sometimes it is prudent to discuss an employment action if it could lead to further litigation.
v. Receipt of a lawsuit or other demand
If you receive a lawsuit, and there were no prior indications from the employee, contact your attorney immediately. Lawsuits come with specific deadlines for responding. A failure to respond timely can lead to a default judgment or may prevent certain actions your attorney may otherwise take.
Likewise, in certain circumstances, laws may require an employee to make a demand or attempt to resolve a case before filing suit. If you receive a demand for settlement of claims without prior notice, immediately refer it to your attorney.
B. Tactical considerations
Whether an employer can handle an employment situation internally is going to depend on factors only the employer can know. Factors to consider include:
- Severity and immediacy of the situation
- Disposition of the actors involved
- Sophistication of HR personnel
For instance, an employer with only a single HR employee will face difficulty impartially investigating a situation with allegations against the HR employee. Inexperienced HR personnel should also recognize their own limitations and consult with either more experienced personnel or look for guidance from an attorney. As noted above, the failure to respond to a subpoena, lawsuit, or demand could expose the company to significant liability or penalties. Do the HR personnel have the requisite training to perform a properly documented investigation, and importantly, to be proactive in corrective measures going forward?
If the employees involved in the complaint or investigation are litigious (or suspected to be litigious), their disposition should also be considered in approaching the investigation. Be mindful that employees who are questioned during an investigation may naturally take a defensive posture if questioned on their complaints or allegations. Are HR personnel equipped to avoid a confrontation about the subject matter? Has an employee threatened to involve an attorney, or has an attorney already contacted you on the employee's behalf? If so, you should carefully consider whether HR personnel have the experience necessary to appropriately respond to an attorney. It also takes experience for HR personnel to correctly judge whether to take an employee's threat to call an attorney as a credible threat.
C. Practical considerations
In addition to the above considerations, there are several practical considerations that must be balanced when considering whether to call an attorney in to investigate. These practical considerations may drastically impact the defense of a case.
i. Lawyer disqualification
An attorney must be cognizant of ethical and professional constraints when representing an employer-client. One such rule is the lawyer-as-a-witness rule. Louisiana Rule of Professional Conduct 3.7 provides in pertinent part that:
(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services rendered in the case; or
(3) disqualification of the lawyer would work substantial hardship on the client.
What does that mean? Significantly, it means that your chosen counsel may not be able to represent you in litigation if you choose to involve them in an early investigation. Just as HR personnel may be called to testify as a company witness regarding an investigation, a lawyer who participates in an investigation by interviewing witnesses and participating in decision-making may be called as a witness.
As Rule 3.7 states, a lawyer shall not act as an advocate and a witness in the same proceeding. While other jurisdictions that have adopted this Rule have interpreted it to mean that a lawyer may not appear as an advocate and a witness at trial, Louisiana courts generally trend toward disqualifying lawyers entirely. See e.g. W.F. Poe Syndicate, Inc. et al. v. Usry & Weeks, et al., 642 So.2d 859 (La. 1994).
However, keep in mind that disqualification may only be a risk if the lawyer is likely to be a necessary witness. To the extent the attorney offers advice regarding the issues rather than being directly involved in the investigation, the attorney is less likely to be a necessary witness.
ii. Attorney-client and work-product privileges
Other significant considerations are the attorney-client and work-product privileges. These privileges protect communications between an attorney and his or her client and the attorney's work product. In other words, a communication protected by the attorney-client privilege cannot be discovered or disclosed in litigation. These privileges are designed to allow an attorney to render legal advice to his or her client without threat of giving away strategy and to protect sensitive information.
Louisiana has adopted the subject-matter test set forth in the United States Supreme Court decision of Upjohn Co. v. U.S., 449 U.S. 383 (1981), for determining when the attorney-client privilege applies for employees of corporate entities. The subject matter test does not offer blanket privilege for any communications with any employee, but instead sets forth specific factors for determining whether the privilege should apply:
(i) was the information needed to supply a basis for legal advice;
(ii) did the communication(s) involve the employee’s corporate duties;
(iii) did the employee know he or she was being questioned so that the corporation could obtain legal advice; and,
(iv) was the communication intended to be confidential.
Not every communication between an attorney and a corporate employee will be privileged. This is an important fact when considering whether to bring an attorney in to conduct an investigation. Extra care must be taken to ensure that the attorney's mental impressions are not transmitted in a non-privileged manner.
Also keep in mind that the disclosure of otherwise privileged information to a third-party results in the waiver of the privilege. Thus, to the extent an attorney is involved in an investigation, there is some risk of inadvertent disclosure of privileged information to an adverse party, such as an employee threatening a suit.
Finally, does your organization have employment practices liability insurance? Generally, policies do not cover employment practices unless an EPLI rider has been purchased. This is important to know - first to know whether the alleged employment practice is covered, but second, the EPLI policy may not pay for your chosen attorney. If it does not, is the organization willing to foot the bill? EPLI policies often have a panel of approved attorneys.
II. Current Issues Presented by the EEOC and NLRB
A. National Labor Relations Board (NLRB)
i. My organization doesn't have any union employees. Is it really subject to NLRB rulings?
Maybe. Regardless of whether the organization actively maintains union employees, the National Labor Relations Act (NLRA) is very broad and, as a practical matter, covers most private sector employees. The NLRA provides rights to employees of covered employers to engage in certain protected concerted activity to improve pay or working conditions, regardless of union status. The bulk of the NLRA's recent decisions have turned on the NLRA's prohibition against employment actions or policies that might dissuade an employee from taking part in protected concerted activity.
ii. Confidentiality in Investigations
For years, it has been common practice for employers conducting investigations to require employees to maintain confidentiality throughout the process. Employers have legitimate reasons for desiring confidentiality. However, the NLRB has recently attacked blanket policies, instead requiring employees to tread very carefully when directing employees to not discuss investigations. The NLRB shows no signs of slowing down these prohibitions.
iii. The Boeing Co., No. 19–CA–089374 (7/26/13) (Wedekind, J)
This labor charge against Boeing arose out of an HR complaint filed by employee Joanna Gamble about the conduct of her supervisor. During the investigation, Boeing had Gamble sign a confidentiality notice that specifically \"directed\" witnesses not to discuss an investigation or complaint with any other Boeing employee or the witness's union representative, if applicable. After Gamble received the investigation report, which concluded that her allegations were \"not substantiated,\" Gamble emailed and discussed the findings with her coworkers, who shared her concerns about the supervisor. A few days later, Gamble was issued a written warning for violating the confidentiality notice. Gamble responded to the warning by filing an unfair labor practices charge with the NLRB, alleging that Boeing had interfered with her rights under Section 7 of the NLRA to discuss the terms and conditions of her employment with her coworkers. Ten days after Gamble filed the charge, Boeing rescinded the written warning, and revised its confidentiality notice to state that the company \"recommend[ed]\" that employees refrain from discussing investigations with each other.
Judge Wedekind first took up the question of whether the original confidentiality notice violated the NLRA. Boeing argued that it had legitimate interests in keeping all HR investigations confidential, including ensuring the integrity of ongoing investigations, preventing workplace retaliation, and promoting an environment where employees could report issues. While Judge Wedekind acknowledged the persuasive weight of those arguments, he noted that he was bound by the NLRB's prior decisions in Hyundai America Shipping Agency, Inc., 357 NLRB No. 80 (2011), and Banner Estrella Medical Center, 358 NLRB No. 93 (2012). In those decisions, the NLRB held that blanket confidentiality policies were unlawful where they failed to consider on a case-by-case basis whether confidentiality was truly necessary to protect the integrity of an investigation. In response, Boeing argued that it was impractical for it to conduct a separate evaluation of the need for confidentiality in each HR investigation, as it had conducted more than one-thousand HR investigations from September 2011 until February 2013. Judge Wedekind, while seemingly agreeing with Boeing, stated that he had no authority to depart from Hyundai or Banner. Accordingly, the judge ruled that the original \"directed\" policy was unlawful.
Judge Wedekind next took up the revised notice, which \"recommend[ed]\" that witnesses maintain confidentiality. While Boeing argued that this language was sufficient to cure the problems with its original notice, the judge disagreed, holding that the company could not even recommend confidentiality. The judge noted that the recommendation was considered a request by the Company, that Boeing clearly communicated its desire for confidentiality, and that employees signed the notice. As a result, it was less than clear that employees were free to disregard the request for confidentiality. Thus, the judge held even the revised policy was unlawful.
iv. Banner Estrella Medical Center, 358 NLRB No. 93 (2012)
In Banner, the NLRB held that an employer may not maintain a blanket rule prohibiting employees from discussing ongoing workplace investigations. The Board based its decision on the argument that a blanket rule violates the NLRA because it discourages employees from engaging in protected concerted activity.
The facts at issue in Banner were fairly simple. The NLRB's general counsel argued that Banner's standard \"Interview of Complainant Form,\" which instructed that employees who made internal complaints not discuss their complaints with coworkers during an investigation, violated Section 8(a)(1) of the Act. Banner's HR personnel did not provide employees with the form during interviews, instead using it as a guide and usually instructing employees to maintain confidentiality.
The NLRB rejected the argument that confidentiality was necessary to protect the integrity of the investigation and found the employer's \"generalized concern\" insufficient to outweigh the employee's rights under the NLRA. The Board held an employer cannot have a blanket policy, but instead, before instructing an employee to maintain confidentiality, the employer must identify on a case-by-case basis a specific need to protect witnesses, prevent tampering with evidence or fabrication of testimony, or prevent a cover-up.
While the list of legitimate concerns set forth in Banner may not be exhaustive, it is certainly illustrative of the NLRB's view of investigation confidentiality. The takeaway from Banner and its progeny is that employers must narrowly tailor requests for confidentiality in investigations to comport with specific, legitimate business justifications. Generalized concern is not sufficient to support a request for confidentiality, nor is a policy that simply requests that employees maintain confidentiality.
v. NLRB Guidance
With these restrictions in mind, the next question is what kind of policy would actually pass muster. The NLRB Office of General Counsel issued an Advice Memorandum dated January 29, 2013, but not released until April 2013, in which the General Counsel stated that the following policy would likely be lawful: [The company] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [the company] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.
As a first step, then, employers must determine whether confidentiality is truly necessary to protect an investigation by considering, among other things, whether witnesses need protection, evidence may be destroyed, whether testimony may be fabricated, or whether the company may need to prevent a cover-up. Then, and only then, can employers instruct that an employee must maintain confidentiality or be disciplined.
vi. Other Restrictions on Employee Speech
The NLRB has also been increasingly active in striking down employer policies related to employee social media. Social media includes Facebook, LinkedIn, Instagram, etc. Prior to recent decisions, it was fairly common for employers to have policies that prohibited employees from posting negative or defamatory comments about the company on electronic media. The NLRB has taken these policies to task, issuing a series of decisions that have greatly narrowed the permissible boundaries of employer social media policies.
The first and most well-known decision is Costco Wholesale Club, No. 34-CA- 012421 (Sep. 7, 2012). Costco's policy provided as follows:
Any communication transmitted, stored or displayed electronically must comply with the policies outlined in the Costco Employee Agreement. Employees should be aware that statements posted electronically (such as [to]online message boards or discussion groups) that damage the Company, defame any individual or damage any person's reputation, or violate the policies outlined in the Costco Employee Agreement, may be subject to discipline, up to and including termination of employment.
The NLRB rejected this policy, finding that it violated Section 8 of the NLRA because it was overbroad and “would reasonably tend to chill employees” in the exercise of their rights to engage in protected concerted activity as set forth in Section 7 of the NLRA. The NLRB stated that where an employer’s rule or policy does not explicitly restrict Section 7 rights, like Costco’s policy, finding a violation of Section 8 is dependent upon whether (i) employees would reasonably construe the language to prohibit Section 7 activity; (ii) the rule was promulgated because of union activity; or (iii) the rule had been applied to restrict Section 7 rights. As for Costco’s policy, the NLRB held that employees could reasonably conclude that the policy prohibited them from engaging in protected activities or communications because it had a broad prohibition that “clearly encompasses concerted communications” protesting Costco’s treatment of its employees and contained no language excluding protected communications.
Employers must exercise caution when monitoring employee social media. Employers have legitimate business interests in protecting company goodwill, and in some cases it may be necessary to actually access social media as part of investigation, such as when an employee complains of harassment. Still, concerted employee discussion of workplace conditions uncovered during an investigation may be an unlawful basis for an employment action.
B. The Equal Employment Opportunity Commission
The EEOC takes an obvious interest in workplace investigations: in many circumstances, the need for investigation arises under statutes that the EEOC is charged with enforcing. The EEOC encourages proactive investigations and remediation of employment issues. Still, its encouragement is not without limits. The EEOC has recently taken the position, although not enshrined in regulatory guidance or any legal opinions, that an employer’s workplace investigation confidentiality policy could violate Title VII of the Civil Rights Act of 1964. The EEOC’s Buffalo District Office issued a pre-determination letter of violation, finding that a blanket confidentiality policy could violate the statute. The policy in question required investigation confidentiality and warned employees that they could be disciplined up to and including termination for discussing the allegations with anyone else.
The EEOC took issue with this overbroad policy, as a complaint to management, union officials, newspapers, etc. about discrimination is considered protected opposition. The EEOC’s primary concern with the policy at issue was that it was so overbroad that an employee could reasonably conclude that he or she would be disciplined for inquiring with the EEOC about the allegations if an internal investigation was taking place. Take this guidance with a grain of salt. The EEOC has not yet found a test case for this particular issue, and the guidance does not preclude more narrowly tailored policies or requests for confidentiality.
C. What kind of policy would satisfy the NLRB and the EEOC?
III. Preserving Evidence: What to Do When an Employee Waits to File a Complaint
Despite offering comprehensive reporting mechanisms, employers are often faced with learning about complaints of harassment or discrimination for the first time when they receive an EEOC charge or a lawsuit. These charges or suits can come months in the case of an EEOC charge or years in the case of a 42 U.S.C. § 1981 claim after the alleged discrimination or harassment. Memories fade, records are destroyed, employees move on, and defense becomes difficult. With patience and common sense, however, evidence can be readily available to defend against charges and lawsuits.
A. Types of Evidence
i. Witness testimony
Eyewitness testimony is often the most important evidence available. However, witness testimony can be unreliable, particularly with the passage of time. In the event of a charge or lawsuit of which there was no prior notice, the allegations should be examined to determine who the alleged actors or witnesses to the claims may be. In some cases, employees name specific co-employees. In others, an employee may name a nickname, a first name, or simply initials, making it difficult to locate witnesses. In any event, every effort must be made to quickly locate and interview witnesses. Once an employee has filed a charge or lawsuit, an attorney should be involved in this process. Allowing an attorney to interview witnesses at this stage does not present the same problems as in an early workplace investigation, and can prevent a duplication of effort, as the attorney will likely want to discuss issues with key witnesses anyway. Regardless, the critical witnesses – whether decisionmakers, coworkers, or otherwise – must be located, if possible, and interviewed thoroughly regarding the scope of the charge or lawsuit. A statement, declaration, or affidavit detailing the witness’s recollection of the alleged events should be secured. This document will serve as evidence by itself, but it will also permit the witness to refresh his or her memory in the event of a deposition or trial testimony.
Of course, there are likely to be situations where a witness has passed away, cannot be located, or left the company on bad terms. There is no simple answer for these situations.
ii. Documentary evidence
If the employee in question did not file a complaint, it is unlikely that any documents will exist that directly support or contradict his or her claims. However, the employee’s personnel file can be a treasure trove of information, and it is important to immediately compile all documents that comprise the employee’s personnel file. It is also important to have a strong records retention policy. Louisiana state law requires that records reflecting the “name, address, and position of each employee, and all wages paid to each employee” be retained for at least three years after the employee’s last date of employment. La. R.S. 23:668. This period coincides with some of the longest periods provided by federal statutes, including the FLSA. However, with the relative ease and cost associated with electronic records, it may be best to maintain records longer than this bare-minimum period. For instance, under certain circumstances an employee can file a lawsuit under 42 U.S.C. § 1981 up to four years after the alleged act of discrimination.
A well-documented personnel file is an invaluable tool in defending against a late-filed charge or lawsuit. The personnel file should include any record of application, any record of promotion or transfer, any notations or documents regarding discipline, and other documents supporting an adverse employment action, among others.
B. Steps to Take
As noted above, certain steps should be taken immediately to best preserve evidence from the passage of time. Certain evidence simply cannot be recreated or reconstructed: for example, it is simply impossible to obtain photographs where an employee alleges workplace harassment based on racial graffiti at a construction site four years earlier. Still, employers should take steps to preserve what evidence can be preserved. A litigation hold letter should be sent to all individuals who might have information to prevent the routine destruction of records pursuant to a retention policy. Email searches should be conducted as soon as possible to retrieve relevant emails. A review of hotline complaints, if applicable, and of other internal complaints should be conducted to ensure that no similar allegations were already investigated. Pertinent evidence disputing or confirming allegations can often be located with a diligent search that goes beyond simple witness interviews.
C. Legal defenses against a dilatory employee
a. Ellerth-Faragher Defense
This legal defense takes its name from a pair of United States Supreme Court cases, Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998). The Ellerth-Faragher defense is a defense that applies to cases of supervisor harassment, and has been extended beyond its initial application to sexual harassment complaints. The defense provides generally that when an employee unreasonably fails to take advantage of corrective measures offered by the employer, he or she cannot prevail on a claim of harassment. Ellerth-Faragher only applies to cases of alleged supervisor harassment where, for instance, the employee failed to utilize the provided reporting mechanism.
b. Timeliness of the charge
An employee must file a charge with the EEOC (or state agency) before filing suit under a number of federal statutes. In Louisiana, a charge must be filed within 300 days of the allegedly discriminatory act. Personnel records should be carefully reviewed to determine whether an employee has correctly alleged dates in the charge, such that his or her charge may be precluded as untimely.
IV. The Intersection of Workplace and Criminal Investigations
Sometimes employers face a situation where an employee is charged with a crime, whether it is associated with employment or not. In addition to complying with the requests of law enforcement, employers should also be wary of blanket policies relating to criminal allegations or convictions, as well as the potential for liability for acts of their employees.
A. Blanket policies excluding employees based on arrests or convictions
Many employers maintain a policy that either prohibits employees with certain convictions from being employed or provides that an arrest or conviction may lead to termination. As is clear from earlier discussion on confidentiality policies, the EEOC has its eye on blanket policies. In this case, the EEOC is concerned with the potential for disparate impact of such a prohibition. Disparate impact describes a policy that is facially neutral but its application is discriminatory. Disparate impact is typically proven through statistical evidence.
With policies regarding criminal arrests or convictions and employment actions, the EEOC's concern is that an automatic policy that results in discipline or termination will have a disparate impact on minorities. The EEOC recently updated its policy statements to reinforce these principles, in part because of the ease through which employers can now obtain criminal history about employees.
When considering a policy regarding exclusion or discipline based on a criminal arrest or conviction, employers must seriously consider whether such a policy is actually necessary. The EEOC requires that these policies be \"job related and consistent with business necessity.\" In other words, the exclusion policy should be tailored to the requirements and needs of the particular position.
B. Potential for employer liability
Employers have yet another consideration in the balancing act of employment: potential liability for learning too much about an employee. In Louisiana, an employer can be held liable for an employee's actions under several theories: negligent hiring, negligent retention, and vicarious liability.
Negligent hiring and retention are premised upon the employer's alleged knowledge, or lack thereof, of an employee criminal history or violent or criminal tendencies. For example, if an employer conducts a background check on an employee and learns of a prior violent crime, yet hires the employee anyway, an injured third-party may be able to sue under a negligent hiring or retention. The same holds true for information an employer learns through a workplace or criminal investigation. Any prior knowledge by the employer can be used to establish liability for effectively placing the third-party in harm's way.
Conversely, employers must perform due diligence on employees when hiring for certain positions. This may include background and reference checks. The failure to learn information about an employee's violent or criminal history can also be the basis for liability under negligent hiring or retention. The failure to inquire about the nature of a criminal offense when the employer has knowledge of an ongoing criminal investigation is likewise a potential problem.