Investigations, Alternate Dispute Resolution and Litigation Overview
- Internal investigations are one of the employer's best tools to address claims of misconduct in the workplace and to shield the employer from liability. See Internal Investigations.
- Simply conducting an investigation will not always be effective. The employer must take steps to choose the right investigator and to utilize the right investigative techniques. See Investigative Techniques.
- Employers are well-advised to properly document their internal investigations and to act appropriately based on their findings. See Results of the Investigation.
- When employers are made aware of more severe misconduct in the workplace like criminal activity or widespread issues, they may require the assistance of outside investigators. See External Investigations.
- Some employers have the benefit of employing in-house counsel and may choose to have that individual oversee investigations. See Investigations by an Attorney.
- Some employment disputes may escalate beyond workplace constraints and thus, require the assistance of an impartial mediator to resolve disputes. See Mediation.
- To prevent time-consuming and costly litigation, employers may benefit from utilizing arbitration agreements so that employees may be compelled to arbitrate their disputes rather than pursue litigation. See Arbitration.
- When internal practices and alternative dispute resolution tactics are unsuccessful, employers may be faced with litigation. See Litigation.
When disputes arise in the workplace or allegations of misconduct are made against an employee, the employer is often obligated to investigate. This obligation derives both from the law, as failing to investigate can create liability, and from the employer's directive to remain viable and profitable. An employer that receives a complaint of nefarious business practices or workplace harassment must act in the best interests of the employer as a whole in ascertaining whether the allegations are accurate, while also being mindful of the sensitivity and potential damage done to individual employees. In that regard, performing internal investigations in a timely, thorough and tactful manner can prevent the dispute from escalating while also supporting and reassuring the employee(s) who complained. See Investigations, Alternative Dispute Resolution and Litigation > Internal Investigations.
Once the employer has made the decision to investigate, it must then also choose the right investigator to ensure that the integrity of the investigation is not called into question and that the investigator will be able to obtain the information he or she needs from witnesses in the workplace. Selecting the right investigator can go a long way toward acquiring useful information in the course of an investigation. See Investigations, Alternative Dispute Resolution and Litigation > Internal Investigations. Similarly, the tactics used by the investigator and the employer at large may make the difference between a fruitful investigation and a waste of time.
Results of the Investigation
As the employer and the HR professional are well aware, documenting the results of an investigation is paramount. An investigation is worthless unless fully, properly and contemporaneously documented. See Investigations, Alternative Dispute Resolution and Litigation > Internal Investigations. After properly documenting the results of an investigation, the employer is then faced with the task of determining how best to use the results to address the issue(s) in question and/or how to use the results to improve business practices, generally. Generally, the employer must act in good faith upon the results of an investigation. So long as the employer acts in good faith and makes reasonable conclusions stemming from the results of the investigation, it may be shielded from liability in the future, even if the employer arrived at the wrong conclusion. See Investigations, Alternative Dispute Resolution and Litigation > Internal Investigations.
In more severe circumstances, the employer may choose to have an outside agency perform an investigation, such as when the employer is notified of widespread corruption, serious or criminal conduct in the workplace, or when the employer is faced with the necessity of performing an immediate investigation that exceeds its capabilities. See Investigations, Alternative Dispute Resolution and Litigation > External Investigations. Once again, the identity of the investigator or investigation agency notwithstanding, the employer is still obligated to properly and fully document the results. Further, the employer should take careful steps to ensure that the results of investigations are not disclosed to employees who don't truly need to be so advised. See Investigations, Alternative Dispute Resolution and Litigation > External Investigations.
Investigations by an Attorney
When investigations are handled by outside counsel, the role of the employer and the HR professional will be modified. Rather than acting as a fact finder, the HR professional will need to act as a gatekeeper or a liaison between outside counsel and the employer. Importantly, when these types of investigations are ongoing, the employer may benefit from one or more privileges that protect the results of the attorney's inquiries. Specifically, the attorney client privilege may shield any communications between the employer and the attorney from disclosure and the attorney work product privilege may shield the attorney's opinions and conclusions from disclosure, should the dispute escalate to a more formal litigation setting. See Investigations, Alternative Dispute Resolution and Litigation > External Investigations.
When employment disputes escalate beyond the investigation, the employer still has several tools at its disposal to prevent full-fledged, time consuming and costly litigation. In fact, the employer can take steps to prevent litigation in this regard by requiring employees to mediate any disputes that arise from their employment. Mediation is an informal dispute resolution process in which the parties agree to have a neutral third party attempt to find some agreeable middle ground. See Investigations, Alternative Dispute Resolution and Litigation > Mediation.
Given that mediation can be extremely effective and efficient, the EEOC may encourage prospective litigants to try mediation before proceeding with litigation. Judges also have the discretion to direct the parties to attempt mediation, though the mediator's recommendation will not be binding on the parties. See Investigations, Alternative Dispute Resolution and Litigation > Mediation and Investigations, Alternative Dispute Resolution and Litigation > Mediation. If mediation is a real possibility, the employer and the HR professional are well advised to familiarize themselves with the process of mediation, how it will work, and some negotiation strategies they can use to reach their goals. See The Process of Mediation and Negotiation Strategies.
Similarly, employers can also force or encourage prospective litigants to participate in arbitration which, depending on the nature of the agreement that gave rise to arbitration, could be binding on the parties. See Investigations, Alternative Dispute Resolution and Litigation > Arbitration. Given that prospective litigants may have no choice but to proceed with arbitration, the legal basis for arbitration and upholding arbitration agreements should be clear. Employers can accomplish that goal by authoring clear arbitration agreements and taking steps to ensure that the agreements will be enforceable if a former employee were to challenge the validity of the agreement. See Investigations, Alternative Dispute Resolution and Litigation > Arbitration. If the employer is successful in that regard, it should likewise familiarize itself with the process of arbitration, and understand the difference between several types of arbitration.
When all else fails, however, the employer and the HR professional alike should be prepared for litigation. Litigation can be a costly, time-consuming and potentially damaging endeavor, but it doesn't have to be. Employment litigation, in particular, is fraught with emotion and former employees looking for not only compensation, but in some cases, revenge. See Investigations, Alternative Dispute Resolution and Litigation > Litigation. Thus, the employer is well advised to take steps to prevent litigation before it occurs. See Investigations, Alternative Dispute Resolution and Litigation > Litigation.
In preparing for the possibility of litigation and shielding the employer's finances therefrom, one of the most effective tools the employer can use is employment practice liability insurance (EPLI). EPLI policies allow an employer to retain qualified, experience counsel and to utilize the insurance carrier's experience and investigative tools. Employers who choose to purchase EPLI policies, however, must be extremely cautious in familiarizing themselves with the terms of the policies and the requirements they must meet in order to ensure the policies will be effective and applicable if the employer were to be faced with litigation. Failure to abide by the terms of an EPLI policy may render the policy invalid or may provide the insurer with an opportunity to disclaim coverage altogether. See Investigations, Alternative Dispute Resolution and Litigation > Litigation.
Another tool at the employer's disposal to prepare for and properly defend against litigation is documentation. The employer who keeps and maintains full and accurate records is well situated to defend itself against frivolous claims. Once the employer is made aware of potential or even pending litigation, however, it is under an obligation to preserve the documents that will be relevant to the dispute. Employers should cultivate thorough document retention policies and should consider issuing directives like a litigation hold to ensure employees are aware that they should not destroy evidence, purposefully or otherwise, and that doing so could harm the employer's position in the dispute. See Investigations, Alternative Dispute Resolution and Litigation > Litigation.
During the course of litigation, the HR professional may find that he or she has been called as a witness to testify during the proceedings. Typically, if the HR professional is named as a witness, he or she will have to provide deposition testimony, which, despite its less-formal setting, carries the same weight as trial testimony. Thus, any potential witnesses should understand the purpose for the deposition, together with some common tactics used by opposing counsel during depositions. See Investigations, Alternative Dispute Resolution and Litigation > Litigation. In rare cases, the HR professional may also be called as witness to testify during trial and, while much of the same advice would apply to that testimony, the HR professional should understand some of the basic differences between deposition testimony and trial testimony.
As the employer and the HR professional are well aware, employment litigation is a wide-ranging and diverse field with many potential pitfalls and avenues of recourse available to prospective litigants. Indeed, the incidence of employment lawsuits is on the rise in the United States. Modern employers may be exposed to liability for negligent hiring if they improperly investigate a prospective employee's background and that individual later harms a third party or the employer at large. See Investigations, Alternative Dispute Resolution and Litigation > Litigation. Likewise, employers may face liability if they improperly classify employees as independent contractors and deny them proper wages. See Investigations, Alternative Dispute Resolution and Litigation > Litigation. Further, employers that withhold earned benefits from outgoing employees may face lawsuits aimed at ensuring that employees are properly compensated with the appropriate benefits following discharge. See Investigations, Alternative Dispute Resolution and Litigation > Litigation.
More commonly, employers may be exposed to liability based on harassment in the workplace by supervisors against their subordinates, discrimination in the workplace against protected categories of employees, derived from both federal and state law, contractual disputes with employees or even claims for defamation from former employees who allege that the employer's practices harmed their professional reputation.
Given the wide variety of potential legal hazards, employers and HR professionals alike are well advised to familiarize themselves with common employee complaints, the several tools at their disposal to assuage employee concerns before they escalate, methods to prevent litigation altogether through negotiation and what they can expect during the course of litigation. The information found in this chapter will assist the employer and the HR professional in that regard.