Workplace Investigations:Workplace Investigations:

The Essential Law & Best PracticesThe Essential Law & Best PracticesFor Handling Employee Relations For Handling Employee Relations Issues and Conflict ResolutionIssues and Conflict Resolution

March 21, 2012March 21, 2012

Mary WangMary Wangmwang@hixsonnagatani.commwang@hixsonnagatani.com

WELCOME!WELCOME! Topic: Investigations

Materials

Questions/Comments

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James Stevens v. Vons Cos.James Stevens v. Vons Cos.,,(Cal. Ct. App. 2009)(Cal. Ct. App. 2009)

January 2002: Stevens was given the highest rating of “excellent” in his performance review, and had been with the company for 24 years.

August 2002: Stevens complained that his supervisor, Marko, made several inappropriate sexual comments

• HR Investigation: 5 of 6 witnesses confirmed that Marko made inappropriate sexual comments.

• HR Investigation Report to Stevens: His allegations were “not substantiated”

Both he and Marko would be transferred

oMarko was told she was going to be transferred for “safety” reasons.

Marko “refused” to be transferred, and was not transferred or otherwise disciplined

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Stevens v. Vons CosStevens v. Vons Cos. . (cont’d)(cont’d)

2003-04: Stevens participated in union strike, and wrote letter to SEC accusing CEO of insider trading.

March 2004:

• Tarter, District Manager, terminated Stevens based upon a report by store’s loss prevention representative that Stevens violated company policy regarding store donations of damaged products to charity.

The report:

o Inaccurately said that witness statements had been obtained.

o Indicated that Stevens said he was not aware of the policy

• Tarter terminated Stevens without further follow up.

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Stevens v. Vons CosStevens v. Vons Cos. . (cont’d)(cont’d)

Jury Verdict: $18 million for sexual harassment, and retaliatory discharge.

Investigation deficiencies found by Court of Appeal:

• Handling of sexual harassment investigation amounted to “ratification” of Marko’s conduct.

• Tarter did not give Stevens an opportunity to respond directly to the charge that he violated the donations policy.

Stevens claimed that he:

o Did not see the charitable organization remove the boxes

o Was asked in a vague way why the bottled water was in certain boxes, but that he never understood that he was under investigation for violating the donations policy.

• Tarter did not contact any of the witnesses mentioned in the report

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When Investigations Are When Investigations Are RequiredRequired

When employer is on notice of potential:

• Sexual Harassment

• Discrimination

• Potentially unsafe working conditions

Including workplace violence

• Need for disability or religious accommodation

• Employee non-compliance with trade secret or contractual obligations to employee’s former employer

See Attachment A

• Any other unlawful activity6

What does “on notice” What does “on notice” mean?mean?

Management awareness of facts that would cause a reasonable employer to inquire further

• What management knows may just be the “tip of the iceberg.”

Employee does not need to use any “magic words”

• Employee does not even need to complain!

What if the complainant is no longer with the company, and there is no evidence of continuing problems?

• Fuller v. City of Oakland, 47 F.3d 1522 (9th Cir. 1995)

What if the affected employee demands that the employer keep the matter confidential, and not investigate?

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Ingraham v. UBS FinancialIngraham v. UBS Financial(Mo. Cir. Ct., 2011)(Mo. Cir. Ct., 2011)

Carla Ingraham worked as Sales Assistant for UBS, supporting a broker by processing trade requests and preparing presentations

Beginning in 2003, her supervisor allegedly made inappropriate comments about her breast size, called her into his office to view sexually offensive emails, talked about the size of his genitals, asked her about her sexual fantasies, made calls and sent texts after hours, and told her she should perform oral sex on a client

After he berated her for leaving early one day, she complained about harassment and he fired her shortly thereafter (although she continued working with other brokers)

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Ingraham v. UBS Financial Ingraham v. UBS Financial (cont’d)(cont’d)

During investigation, most of interviewees were “drinking buddies” with her former boss

They stated that she was willing participant in banter and participated in after-hours drinking with them

The investigator didn’t tell Ingraham about these assertions or give her an opportunity to respond

Investigation concluded that charges weren’t corroborated

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Ingraham v. UBS Financial Ingraham v. UBS Financial (cont’d)(cont’d)

When other brokers asked to have Ingraham assigned to them, management took no action

Ingraham was moved closer to her former boss, giving him the opportunity to glare at and intimidate her

Ingraham was assigned to a college friend of her former boss who called her claims “silly” and “stupid” and called her a “liar”

UBS submitted a form with FINRA stating that she was terminated for lying during investigations into HR matters

Jury verdict: $10.6 million ($10 million for punitive damages)

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Botched Investigations: Botched Investigations: Legal ExposureLegal Exposure

The affected employee(s)

• Includes observers of inappropriate behavior

The accused employee

• Botched investigation can be seen as evidence of pretext for discrimination or retaliation

• Defamation

Including by employee “self publication”

oDible v. Haight Ashbury Free Clinics (Cal. Ct. App. 2009)

Punitive damages

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RecommendationsRecommendations Before the investigation:

• What to communicate to the affected employee

See sample memo (Attachment B)

• What to communicate to the accused employee

See sample memo (Attachment C)

• Selecting the investigator

When should you retain an external investigator?

oShould the external investigator be an attorney?

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Conducting the Conducting the InvestigationInvestigation

Determining Which Witnesses to Interview:

• Start with the affected employee

• Generally, interview the accused employee next

• Then, other witnesses as necessary to resolve “he said, she said” matters.

Do you need an observer to attend the witness interviews?

Witness Interview Notes

• Caution: don’t include counsel advice in the interview notes.

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Interviewing WitnessesInterviewing Witnesses

First—Standard Guidance to All Witnesses:

• Admonish not to speak with other witnesses

• State purposes of investigation:

Determine whether company policy violation occurred

To find the truth

Determine what if any corrective action needs to be taken

Second—Start with general questions:

• Example: Ask for chronological summary.

“Start with the beginning, and tell me what happened in the meeting on July 1.”

“What happened next?”

Remember: Who? What? When? Where? Why?

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Questioning WitnessesQuestioning Witnesses Third—Follow up with more specific questions as

needed:• Example: “Did John make any remarks of a sexual

nature to Jane?” “Did John say XXX to Jane?”

• Always give the accused employee the opportunity to admit or deny the specific allegation.

Fourth—For every key event, always ask every witness:• Were there any other witnesses to the event?• Are there any relevant documents, including e-mails?

Fifth—Always ask:• “Did anything else happen?”

• “Is there anything else you think I should know?”15

Concluding The Concluding The InvestigationInvestigation

When do you stop gathering information?

Common mistake: assuming you cannot or should not reach a conclusion in a “he said, she said” case

• Employer enjoys wide latitude in making good faith determinations, so long as full and proper investigation conducted.

Corrective action

• Legal standard: what is reasonably necessary the prevent the inappropriate conduct from recurring

Termination rarely required

Commonly includes warning, coaching, “clear the air” type meeting.

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Concluding The Concluding The InvestigationInvestigation

Writing an investigation report

• See sample report template (Attachment D)

• Should report be treated as confidential, attorney-client privileged?

Communicate the conclusion in writing to the affected employee(s) and the accused

• Sample memo to affected employee (Attachment E)

• Sample memo to the accused employee (Attachment F)

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Privacy UpdatePrivacy Update Hernandez v. Hillsides, Inc., (Cal. Supreme Ct.

2009): hidden video camera in shared employee office infringed employee privacy, but was not so offensive to support cause of action.

• Key facts: camera inactive when employees were present, and employer had particularly strong need to investigate computer access to pornography at facility for abused children.

• Beware: surveillance cameras may be unlawful under other circumstances.

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E-mail Review During E-mail Review During InvestigationsInvestigations

Electronic Communications Privacy Act

• Fraser v. Nationwide Mutual, (3rd. Cir. 2004) Nationwide accessed computer network server to review

Fraser e-mails

No violation of ECPA – Nationwide did not “intercept” e-mails; Nationwide was the provider of the e-mail communication service

Stored Communications Act

• Pietrylo v. Hillstone Restaurant Group, (Dist. N.J. 2009) Plaintiff creates private myspace.com group; manager

asks hostess for her password; views vulgar posts and plaintiff terminated

Management’s access violated Stored Communications Act

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E-mail Review During E-mail Review During InvestigationsInvestigations

Fourth Amendment Issues

• City of Ontario v. Quon, (U.S. S. Ct ., 2010)

Employer had handbook reserving right to monitor electronic communications; contrary to policy, employer advises plaintiff it will not review his text messages

Plaintiff sued after employer reviewed his text messages on employer-issued pager.

Held: No Fourth Amendment violation because employer had legitimate work-related rationale for the search.

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FCRA/ICRAA & Workplace FCRA/ICRAA & Workplace InvestigationsInvestigations

Federal Fair Credit Reporting Act

• Requires notification and consent for consumer report by consumer reporting agency

• Previously included misconduct investigations in this requirement

Federal Fair & Accurate Credit Transactions Act

• Excluded notification and consent requirements for investigations related to misconduct and compliance with laws

California Investigative Consumer Reporting Agencies Act

• Excludes notification and consent requirements for investigations related to wrongdoing

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Workplace Investigations Workplace Investigations Under FCRAUnder FCRA

Employer Obligation When Using CRA

• Where adverse action is taken arising out of workplace misconduct investigation, employer must provide employee:

Summary containing nature and substance of communication upon which adverse action is based, except that sources need not be disclosed

Note: Obligation imposed on employer and not on CRA

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Workplace Investigations Workplace Investigations Under ICRAAUnder ICRAA

Employer Obligations When Not Using CRA

• Where information collected is a matter of “public record,” the employer must provide the documentation at the completion of the investigation, unless the consumer waives the right to receive a copy

Contrast: Must be provided within seven days of obtaining record if not sought for investigation of wrongdoing

Exception: Record must be provided regardless of waiver if adverse action is taken as a result of the record

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Workplace Investigations Workplace Investigations Under ICRAAUnder ICRAA

“Public record” – Records documenting an arrest, indictment, conviction, civil judicial action, tax lien, or outstanding judgment

Important Note: Compliance with ICRAA does not necessarily ensure compliance with laws prohibiting discrimination based on arrests, bankruptcies, prior lawsuits, etc.

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ConclusionConclusion

Thank you!

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