When and How California Employers Must Investigate Workplace Misconduct

Workplace misconduct remains all too common, and can dampen employee morale and productivity. But it doesn’t always have to result in an expensive and disruptive lawsuit or other negative impact to the company. A prompt and thorough workplace investigation into complaints of workplace misconduct has the potential to prevent or drastically mitigate the effects of a lawsuit.

The law requires an investigation

Under both California and federal law, employers have a legal duty to prevent and correct wrongful conduct (e.g., discrimination, harassment, and retaliation) at the workplace as soon as they are on notice the conduct has occurred. This notice can take many forms, including by way of a formal written complaint, claim, or charge (including at the administrative level, in a demand letter, or in a lawsuit), an oral complaint, an anonymous or confidential complaint, direct observations or suspicions, or even rumors. The California Fair Employment and Housing Council has promulgated regulations to clarify that an employer’s obligation to prevent and correct unlawful conduct, once on notice, includes conducting a prompt, fair, and thorough investigation into the claims1.

Anatomy of a fair and thorough investigation

To be fair and thorough, an employer must perform several investigative steps. First, the complainant and respondent should be interviewed. The workplace investigator must give the complainant a full opportunity to describe all aspects of their complaint—the who, what, where, why, when, and how—and, likewise, the respondent should be given an opportunity to respond to all of the allegations they are facing. The investigator should also collect and review all documents and information relevant to the complaint. This includes any documentary evidence, like emails, text messages, receipts, and photographs. Further, other witnesses having relevant information should be interviewed as well, such as coworkers, supervisors, former employees, or other relevant third parties. Finally, after the investigator has gathered and weighed the evidence, the investigator must ultimately come to a fair, analytically sound conclusion about whether the allegations are substantiated based upon a preponderance of the evidence—the civil evidentiary standard of proof. The investigator can provide their investigative findings either orally or, more commonly, in a written investigation report.

Benefits of an attorney investigator

While employers have options to who can perform the workplace investigation2, the employer’s best option is to retain an attorney investigator. One substantial benefit of having an attorney conduct the investigation is that the investigation report, including all notes, documents, and communications associated with the investigation, may be protected from disclosure under the attorney-client privilege and/or protected by the attorney work-product doctrine3. This may not be the case for investigations conducted by non-attorneys. As such, an employer can rely on well-established legal privileges to ensure the secrecy of the investigation. Of course, if the investigation itself is put at issue in subsequent litigation, it may be in the employer’s best interest to waive the privilege and rely on the investigative findings in the defense of civil claims, for example, if the results of the investigation were the reason to take action (or to not take action). 

Investigation as a defense in litigation

Sometimes, depending on the nature of the claims asserted, an investigation is critical to defending against claims by an employee. For example, let’s say an employee complains that their supervisor is sexually harassing them at work. The employer launches an investigation, which ultimately reveals that the supervisor most likely sexually harassed the employee, and as a result, the employer terminates the supervisor based upon the investigative findings. If the supervisor files a lawsuit for wrongful termination, the employer may use the investigation in its defense to show that it had legitimate, non-discriminatory reasons for terminating the supervisor (i.e., an impartial investigation revealed the supervisor was engaging in sexual harassment). In that event, the employer may want to waive the privilege to use the investigation in its defense. Conversely, if the complaining employee sues the employer for failure to correct and prevent sexual harassment based on the supervisor’s conduct, the employer may want to put the investigation at issue in the litigation to support its defense that it took prompt action to investigate and address the employee’s claims, which included correcting the conduct by terminating the supervisor.

An investigation can be critical to preserving evidence

Additionally, if an employee ultimately files a lawsuit against the employer, the investigation report would effectively provide a comprehensive factual and evidentiary roadmap of the case. Investigation reports—which customarily include a summary of witness statements and documentary evidence (with attached exhibits), analysis of the facts, and factual findings—provide a preserved, centralized snapshot of all of the evidence that would be relevant to the underlying employment claims. With statute of limitations spanning years4, having all of the evidence in one place and taken shortly after the initial allegations are made can prove invaluable to the defense, particularly as witnesses subsequently leave the company, documents are lost, or memories fade. Moreover, witness statements gathered in an investigation can be used to impeach witnesses who change their story in litigation.

An investigation can avoid a lawsuit altogether

And although there is always a risk of litigation when there has been misconduct at the workplace, properly conducted investigations could help avoid a lawsuit altogether. For one thing, having a robust complaint and investigation process and procedure shows employees the employer takes the allegations seriously and provides a fair process for resolving the claims. Such a process allows employees, whether they be the complainant or respondent, an opportunity to provide their perspectives on the allegations. It can give employees a sense of closure—despite the investigative outcome. And, ultimately, after having been through a thorough and fair investigation process, employees may be less likely to retain an attorney to assert claims against the company knowing that their claims have been addressed and resolved by the employer.

In sum, a workplace investigation is worth it

Conducting a proper workplace investigation has legal, practical, and moral benefits. Not only may an investigation be legally required, but having a thorough investigation can assist in the defense of employment claims. It will further provide the employer with all of the information needed to address and resolve such claims, even if the complaint never results in litigation. And further, providing an investigation process is a way for employers to do right by their employees—giving them a full and fair opportunity to raise (or respond to) workplace concerns, have them addressed, and ultimately feel like their employer takes workplace misconduct seriously.

1See https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2017/06/DFEH-Workplace-Harassment-Guide.pdf.

2The California Private Investigators Act requires that workplace investigations only be performed by an attorney providing legal services, a licensed private investigator, or an employee of the company (such as an employee from human resources or in employee relations). See California Business and Professions Code § 7520 et seq.

3 See City of Petaluma v. Superior Court of Sonoma County, 248 Cal.App.4th 1023 (2016) (investigation report resulting from a fact-finding investigation conducted by outside counsel was protected by attorney-client privilege). 

4 See, e.g., Cal. Govt. Code § 17208 (any cause of action for a violation of the Business and Professions Code has a four-year statute of limitations).