Conducting Employee Investigations
October 5, 1998
Good investigations take more than good intentions
David Hurd
Employers who discipline or terminate employees must first
perform an investigation sufficient to withstand court scrutiny, regardless of
the good intentions of the employer.
Must you, as an employer, be "right" on the facts when you
terminate for "good cause"? Are you protected from liability in a wrongful
termination lawsuit if you act in good faith when you terminate an employee?
Formerly, there was a split of authority in California on those issues. A
definitive ruling has now been made in Cotran vs. Rollins Hudig Hall
International Inc.
In the Cotran case, a male employee was suspected of sexually
harassing two female employees. The management investigated, then fired the
harassing employee. The employee sued for wrongful termination. At trial, the
jury decided that the employer was wrong on the facts shown by the employer's
investigation. The jury awarded damages of $1.78 million to the fired employee.
But the California Supreme Court reversed that decision,
saying that the employer need not be right so long as the decision to terminate
is done for a "fair and honest cause or reason, regulated by good faith," and
for reasons that are not "trivial, capricious, unrelated to business needs or
goals, or pretextual."
To meet that standard, however, the employer must conduct an
adequate investigation, including notice to the employee accused of misconduct
and an opportunity to respond to the allegations.
What is an "adequate" investigation? The court did not
explain, but an appellate case has now provided some guidance. In Silva vs.
Lucky Stores Inc., an employee likewise was accused of sexual harassment. The
employer responded by immediately investigating the allegations, and the accused
employee was fired.
In finding that the investigation was "adequate," the
appellate court noted the following key points:
The investigation was conducted by someone who was impartial.
The investigator was trained by an attorney.
The investigator preserved the interviews on witness
interview forms.
The investigator permitted the witnesses to submit their own
written statements regarding the events.
The investigator asked relevant, open-ended, non-leading
questions.
The investigator elicited facts, rather than opinions or
suppositions.
The investigation was done in a confidential manner.
The witnesses were encouraged to speak with the investigator
on more than one occasion.
The accused was promptly notified of the charges.
The accused was provided access to the statements by other
witnesses.
The accused was provided with the opportunity to clarify,
correct or challenge information provided by other witnesses.
The accused was provided with the final opportunity to
comment on all the information that had been gathered.
The investigation was done promptly.
Under the present law, if you discipline a worker, whether
it's based on charges of harassment or any other violation of employer policies,
you will be expected to conduct an adequate investigation as set out in the
Cotran and Silva cases.
Furthermore, you can expect your procedures, motives and
rationale to be subject to court scrutiny.
As an employer -- in situations involving allegations by the
employee against the company, officers or executives -- you should consider
hiring an outside investigator(s) trained in both employment law and
investigatory procedures. Employers are now required to demonstrate an
absolutely unbiased and fair investigation under all circumstances relating to
employee complaints.
David Hurd is an attorney and author of "The California
Employee Survival Handbook," now in its third edition. He can be reached at P.O.
Box 5587, Sacramento or by calling (916) 502-0890.
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