Tips for Conducting Employee Investigations

Investigating your employee for inappropriate conduct can be a sensitive and difficult task. An employer’s decisions regarding how to conduct the investigation can have significant impact in subsequent litigation related to the investigation.

Here are some tips for how New Mexico employers can turn the early stages of an employee investigation into a successful defense.

When to involve an attorney

Involving an attorney early in the process can protect your investigations in future litigation. The attorney-client privilege protects communications between attorneys and their clients from disclosure if those communications were made for the purposes of obtaining legal advice. This privilege extends to communications between the client and its employees if the content of those communications is necessary to the attorney’s legal opinion.

If an attorney is involved from the earliest stages of an employee investigation, the attorney-client privilege can protect communications during the investigation. Whether the attorney-client privilege applies and how far it extends is a question New Mexico courts have addressed in the past.

In Gingrich v. Sandia Corporation, the New Mexico Court of Appeals evaluated whether an investigation and the investigator’s report were protected by the attorney-client privilege. The investigator was an attorney. The Court of Appeals agreed with the lower court, which held that the investigation itself was protected by attorney-client privilege, but the Court of Appeals held that the investigation report was not protected because the employer relied upon the report to discipline employees and it formed the basis for the employer’s defense in the lawsuit.

What does this mean for a New Mexico employer? It is crucial that any investigation be unbiased and fair. If a written report is prepared, it should be drafted with the knowledge that it might be disclosed in potential litigation. However, materials related to the investigator’s interviews, including details the investigator chooses not to include in an investigation report, may be protected by attorney-client privilege if an attorney is involved in the investigation.

An employer may wonder whether it is worthwhile to obtain a written investigation report if it may be used as evidence in subsequent litigation. This is a decision the employer should make based on the specific facts at issue. However, when a written investigative report is appropriate, a thorough report can demonstrate to the jury that the employer took claims of inappropriate conduct seriously and handled each aspect of the claim responsibly.

Without a contemporaneous paper trail of the steps an employer takes to remedy an inappropriate work environment, a complainant can argue that the employer fostered a locker room environment in which inappropriate conduct was rampant.

In Ocana v. American Furniture Co.,the New Mexico Supreme Court articulated public policy in favor of an employer that prohibits, identifies, and addresses discrimination. Thus, under New Mexico law, an employer can limit its liability for inappropriate conduct by proving that it (1) exercises reasonable care to prevent and correct promptly inappropriate conduct; and (2) the aggrieved party unreasonably failed to take advantage of any corrective opportunities provided by the employer. An employer may be able to satisfy these elements with a well-written investigation report.

It is important to remember that when inappropriate conduct is investigated, the employer’s inquiry should focus on whether the company’s policies have been violated, rather than focusing on whether a legal wrong, i.e., harassment, discrimination, or retaliation, has occurred.

If the employer’s investigation focuses on whether inappropriate conduct has occurred, it preserves potential arguments that the alleged inappropriate conduct, even if it did occur, did not constitute harassment or discrimination under applicable laws.

For example, consider an internal investigation that concludes an employee violated a computer policy by circulating inappropriate jokes as compared to an internal investigation that concludes an employee committed harassment by circulating inappropriate jokes. The former will keep available the argument in subsequent litigation that the inappropriate jokes did not constitute harassment. The latter is more difficult to defend. An employee who has engaged in inappropriate conduct is still subject to discipline, but one who the employer has admitted “harassed” another employee may expose the employer to liability.

What are some common investigation pitfalls? 

Asking close-ended questions is the most common investigation error. Yes or no questions provide limited information. Failing to take thorough notes is another common mistake.

It is important to remember that investigations today may be important months or years from now. The final investigation report should include the allegations, the contact information of people who were interviewed, interview summaries, summaries of any documents reviewed, and the investigator’s conclusion.

Another common error is failing to follow-up on facts or information. For example, consider the case of an employee who states he received harassing text messages but cannot remember the date or number of messages. A thorough investigator should obtain cell phone records that could corroborate or refute the complainant’s version of events.

Finally, the scope of the investigation should be flexible and the investigator should interview all witnesses who may have relevant information. A poorly conducted investigation is of no value to the employer and can actually be a detriment if a future litigant claims that the employer intentionally conducted a mediocre investigation.

If an employer receives a complaint of inappropriate conduct and the complainant states a fellow employee witnessed the incident, it is crucial that the investigator follow-up with the potential witness. If an employer receives a complaint of inappropriate conduct but fails to investigate the incident for six months, the investigation report will serve as a tool for the complainant in subsequent litigation to prove the employer was not diligent.

An employer that is proactive early in the investigation process, that investigates claims diligently, and that creates a workplace in which complaints are addressed and resolved can use an employee investigation as a shield in subsequent litigation.


This article was reprinted with permission from Albuquerque Business First.

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