Conducting Internal Investigations: What You Need to Know
by Nancy Durand
On Thursday, August 20, 2020, Smith Buss & Jacobs’ attorney, Nancy Durand, presented a webinar entitled “How to Effectively Conduct an Internal Investigation: A Practical Guide.” In case you missed it, here’s what you need to know.
An internal investigation can serve as an important tool for responding to incidents of suspected misconduct in the workplace either by employees, senior management, or members of an organization’s board of directors. When you have reason to know or suspect that an employee, officer, director, or others within an organization have engaged in wrongdoing, an internal investigation will help determine whether the allegations of misconduct have merit, who may be involved in the misconduct, preventive steps that should be taken to avoid similar misconduct in the future, and any appropriate disciplinary measures that should be taken. It will also help management and the board of directors to obtain all of the relevant facts needed to make informed decisions, consistent with their fiduciary obligations. Moreover, an internal investigation will demonstrate an organization’s diligence and good faith efforts to stop misconduct and promote a culture of transparency and compliance.
Employers should always investigate the following reported or credible suspected misconduct:
• Discrimination of all types;
• Sexual harassment and other workplace harassment;
• Violation of health and safety laws resulting in serious injury or death;
• Drug and alcohol usage in the workplace;
• Workplace violence;
• Violations of certain workplace policies and procedures, including conflict of interest policies;
• Theft, whether of money, equipment or services;
• Mismanagement; and
If an internal investigation is conducted properly, it can help an employer mount the best possible defense in a litigation or to avoid litigation entirely. But a poorly conceived internal investigation can do more harm than good. An ineffective investigation can cause significant disruption in business activities, result in unnecessary excess costs to the organization, and cause highly confidential information to be leaked to third parties.
The ability to preserve confidentiality is paramount in an internal investigation, especially to prevent negative information from being discoverable in litigation or prematurely disclosed to government authorities. That is why most employers chose to have the investigation conducted by either in-house or outside counsel. While in some cases an investigation may be conducted by members of management or HR executives, keep in mind that an investigation that is conducted by non-attorneys will not be insulated by attorney-client privilege or attorney work product protection. That means, if there is later litigation or government investigation relating to the misconduct, all documents and information unfavorable to the organization that comes out during the investigation will be discoverable and available to outside parties.
Finally, prior to conducting the investigation, the Board should come up with a strategic plan for obtaining complete and accurate information that is consistent with the objectives of the investigation. The investigative plan should consider such things as the documents or other evidence to be collected, the witnesses to be interviewed, whether to involve law enforcement officials, what consultants or subject matter experts will be required, the employment status of the employee accused of misconduct, and any accommodations required to be given to the alleged victim of misconduct, among other considerations.
In sum, a Board should be prepared to conduct an internal investigation in response to actual or credible allegations of wrongdoing or threatened litigation. (In many instances, businesses and nonprofits are required by law to conduct an internal investigation.) When considering whether to initiate an internal investigation, you should also consider the potential cost of not conducting the investigation, including the potential cost of litigation that could have been prevented or mitigated with a properly performed investigation.
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