Avoid Making Mistakes in Conducting Internal Investigations

By Julie A Moore, Esquire
Reprinted with permission of the New Hampshire Business Review, Vol. 21, No. 7, March 26-April 8, 1999

Investigations into employee misconduct, particularly sexual harassment, can be a real problem for organizations and for the employees involved in the process, if care is not taken to ensure that the investigation is performed properly. The effort itself can become a liability and issue for the employer.

What is a proper investigation? The United States Supreme Court, in the twin decisions on sexual harassment last June (Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth), held that prompt and effective investigations must be undertaken when an organization is aware of a sexual harassment complaint. The Court, however, offered no guidance on what constitutes a legally sufficient investigation and what procedures should be followed. Let’s see how juries and the New Hampshire courts have responded where the adequacy of a company’s investigation is at issue can guide employers on how to handle complaints properly.

Cases Where a Jury Found Inadequate Investigation

Two sensational cases come to mind when advising employers to take internal investigations seriously. One involves a California jury who awarded outrageous amounts of money where a woman claimed she was victimized by an employer’s shoddy sexual harassment investigation. The second resulted in a sizeable verdict in favor of a man who claimed he was wrongly accused of sexual harassment. Let’s look at the facts of these cases illustrates the kind of reaction – and inaction – that juries deplore.

Case Study #1: A legal secretary working for one of the nation’s largest law firms claimed that one of the senior partners sexually harassed her by improperly grabbing her and by making sexually suggestive remarks. The firm conducted a cursory investigation, but concluded that it did not have sufficient evidence to determine that harassment had occurred. The firm took only one step: requiring the partner to attend two sensitivity training sessions.

The secretary quit her job, became a pre-school teacher, and suffered no financial losses as a result of her resignation. Not surprisingly, she then sued. At trial, she was able to show that several different people at the law firm had received numerous complaints about this partner’s behavior over a period of four years. This partner had an extensive history of mistreating women in the office. The firm, historically, took no steps to correct the longstanding problem.

The California jury awarded Ms. Weeks a bundle of money: $6.9 million against the law firm and $225,000 against the harassing partner. Yes, individuals can be held personally responsible for such misconduct, depending on the legal theories that are developed. On top of that, the Court ordered the firm to pay the secretary’s attorneys’ fees, which amounted to a staggering $1.85 million.

Obviously, the jury was outraged by the partner’s conduct and, more significantly, by the law firm’s inaction. The firm made only token efforts to get to the bottom of the secretary’s allegations. The firm failed to conduct any investigation into whether or not the allegations were true. If it had, it would have learned that this partner had been accused before, and interviews with the other alleged victims would have enabled the firm to more accurately assess this accused’s propensities and history of alleged misconduct. In short, the secretary’s story was easily corroborated. Instead, the firm failed to investigate and stop the ongoing harassment. No discipline was imposed. The work environment was not modified in any way. The firm lost a valued employee. Morale was adversely affected. The firm was on the news and in the newspaper headlines not for its legal work, but for its costly and sloppy personnel practices.

This is not commonplace, but it is not unique either. For example, a Missouri jury awarded a female employee of a national retailer $50 million in punitive damages, $35,000 for emotional pain and suffering, and $1 for lost wages when her complaints about her supervisor’s and store manager’s sexual harassment fell on deaf ears. The conduct she alleged was flagrant – the response from upper management was inaction. The result was a loud and clear message to employers that they had better act when put on notice of a problem.

Case Study #2: This situation involved a male vice president at an oil company who was awarded in excess of $1 million in damages when he claimed he was improperly terminated from employment after being accused of sexual harassment. There, the company received an anonymous letter accusing the vice president of sexual harassment. A company investigation was undertaken, which included numerous interviews with past and present female employees. The accused was confronted with the allegations, which he denied. Nevertheless, the company fired him. The vice president sued for damages, claiming that his former employer neglected to conduct a "fair" investigation or consideration of his denials. On appeal, the New Mexico Supreme Court affirmed the judgment in the vice president’s favor. The Supreme Court found that the investigators "failed to differentiate between first-hand knowledge, attributed hearsay or mere gossip or rumor, and no attempt was made to evaluate the credibility of the persons interviewed."

A Case Where a Judge Found Adequate Investigation

Case Study #3: Sometimes, however, a Court decides that an employer did the right thing and acted appropriately and, as a result, it dismisses the case before it reaches a jury. In a case against the largest medical center in the state, the United States District Court of New Hampshire ruled that a proper investigation into a sexual harassment complaint had taken place and found the medical center not liable to the alleged victim.

The complaining party was a laboratory technician who claimed that she was subjected to a hostile work environment during her two-year tenure in the lab. She chronicled several incidents of demeaning sexually-related comments, jokes, photos and materials, including Madonna’s tell-all book in the workplace.

The complaining party reported the purported offensive sexual atmosphere to her personnel supervisor and complained, specifically, about her supervisor. The personnel supervisor met with the accused supervisor and, after he acknowledged making one of the alleged inappropriate comments, she issued him a final written warning. The personnel supervisor advised that if another incident of that sort occurred, he would be fired. A permanent statement regarding the accused's conduct and the discipline imposed was placed in his personnel file. No further disciplinary action was taken against the accused because it was his first offense, he apologized to the complaining party, and he accepted the consequences of his misconduct.

The personnel supervisor then took additional action. She notified the director of employee relations and education of the allegations, her investigation, and the remedial steps she had taken in response. The director then contacted the accused, and gave him a second warning reinforcing the view that if he engaged in any similar misconduct in the future he would be fired. The director then met with the complaining party and asked whether she felt that she was still being subjected to harassing behavior. She responded that she was not.

The director went further. He conducted a "gender survey," aimed at determining whether employees in the lab felt that there were any instances in which hospital staff or employees had engaged in inappropriate, harassing, or demeaning conduct. Based on his investigation, he was satisfied that the work environment was not permeated with inappropriate conduct or innuendo.

The medical center filed a motion with the Court to dismiss the case, in part, because of the prompt and effective investigation it undertook once it learned of sexual harassment in the workplace. The Court ruled that the medical center’s response was prompt and, "given that the plaintiff admitted to [the director] that the harassment stopped, it was appropriate and effective." The Court then granted the motion to dismiss. The case was over.

A Case Where the Parties Reached a Hefty Settlement

Case Study #4: In a recent development, the Boston Red Sox entered into what was reported to be a six-figure settlement with a former African-American sales manager who had accused the organization of failing to halt racial harassment he had suffered in the workplace. He claims that the organization failed to investigate fully two racially-based incidents in which he was targeted. The first episode involved a photograph of him and his then fiancée, who is white, that was defaced with a racial epithet. The second instance involved his then fiancée’s picture, being replaced with a picture of the Swedish nanny who was murdered last year in Boston. His then fiancée was a nanny for several ballplayers. This manager claimed that the club’s investigation was half-hearted and less than thorough, and failed to identify the harassers.

Learning Experiences

Employers are wise to learn from the teachings of these actual cases. Conducting investigations is a necessary duty which can be triggered by many factors, but virtually always when an employee believes that sexual harassment has occurred and management learns of it. Let’s examine six common errors and omissions that investigators should be wary of, based on the case examples illustrated above. It should be noted that this is not an exhaustive list of factors employers need to consider in conducting investigations.

1. Not treating the complaint as a formal complaint. Know that employees are not required under the law to submit written statements to top management advising them that "sexual harassment" or other illegal harassment has occurred in order to get an organization’s attention. Of course, many employers have specific policies and procedures for employees to follow when they launch complaints such as sexual harassment. Those policies themselves must withstand scrutiny to ensure that they are reasonable and user-friendly. When employers learn of any conduct that may be construed as illegal harassment, regardless of the source, they should act on it.

2. Failing to conduct any investigation. Employers are required under the law to investigate sexual harassment complaints. The law has recently been extended in many jurisdictions to include other unlawful harassment. The extent and nature of the investigation varies on a case-by-case basis. Usually, however, the investigation will include speaking to the complaining party, the accused, and any corroborating witnesses. A reasonable investigation may require additional steps or it could begin and end with the accused. Employers who fail to take some investigative steps to ascertain the truth are at risk.

3. Neglecting to obtain detailed statements from persons involved. Of course, in the cases above where the employers were found to be at fault, they had failed to discover the truth about the complained-of misconduct. The medical center, on the other hand, was exemplary in its response. While department surveys may not be necessary in every case, using all appropriate measures to ascertain what is really happening in the workplace certainly is model behavior.

4. Doing an inadequate background check. It is crucial for investigators to know the history of the complaining party, the accused, and any witnesses that play a role in the alleged unlawful harassment. This background includes, but is not limited to, whether or not any of the parties have been involved in other incidents of such harassment. If the accused law firm had previously researched the sexual workplace propensities of the accused, for instance, the jury likely would not have sent such a strong message. It is much better for the employer to discover patterns of repeat misconduct than a jury to learn about them from victimized employees at trial.

5. Letting the problems escalate instead of diffusing them. As the medical center’s example illustrates, acting swiftly upon learning of a potentially explosive situation benefits everyone involved. "Prompt" responses are required under the law. What is "prompt" in each case will often depend on the circumstances, but an employer will rarely be criticized for acting within a day or days of receiving a complaint.

6. Not making credibility assessments. At the end of an investigation, the investigator must reach a conclusion as to what actually took place, which may be inconclusive. This determination often involves weighing the statements of each witness, applying common sense and sound logic, and considering all the attendant circumstances. In doing so, investigators must scrutinize the source of the information, the motives that may be involved, and the history of behavior of those involved. While it is no easy task, it is a necessary component to an effective investigation. As the judge in case study #2 pointed out, the investigator needs to assess and memorialize in written format the quality and credibility of the evidence.

Only skilled, trained investigators should conduct internal investigations into employee misconduct. Persons chosen to investigate can be company management or outside specialists, and care should be taken to choose the appropriate investigator when complaints arise. In most instances, for example, the investigator should not be in the accused or accuser’s direct chain of command. Employers must always act swiftly, decisively, and thoroughly in response to complaints. Inaction, by the employer must be avoided at all costs, or history amply demonstrates the ultimate cost could be much greater.

Julie A. Moore, Esquire of Employment Practices Group in North Andover, Massachusetts, specializes in risk-management, workplace training and internal investigations on sexual harassment and other employment issues. She is admitted to practice law in Massachusetts and New Hampshire. She can be reached at jmoore@employmentpg.com or 978-975-0080.