Internal Investigation as a Defense

The Internal Investigation as an Affirmative Defense
And Avoiding its Hidden Dangers

By Michael O. Hawkins, J.D.

Employers have quickly learned that immediately upon learning of a potential instance of workplace discrimination that they have a duty under Title VII of the Civil Rights Act of 1964 to take reasonable steps to investigate and eliminate the conduct. In 1998, the U.S. Supreme Court in Faragher v. City of Boca Raton and in Burlington Indus., Inc. v. Ellerth reinforced the importance to employers of taking affirmative steps to prevent discriminatory conduct from occurring and to investigate and respond to incidents of workplace discrimination once they become known.

The Supreme Court's holdings in these two cases clarified that, even if a supervisor or manager sexually harassed a subordinate employee, the employer may escape vicarious liability under Title VII for the harasser's conduct by proving that the employer used "reasonable care" to prevent and correct any sexually harassing behavior and that the plaintiff employee, "unreasonably failed" to take advantage of available anti-discrimination policies to bring the problem to the attention of the employer prior to instigating a law suit. This type of defense is commonly referred to as the "prompt remedial action" defense and is only applicable when the supervisor's or manager's conduct does not result in a "tangible employment action" against the employee. A "tangible employment action" means such things as dismissal, demotion, or even an unwanted or unfavorable reassignment. Lower courts have extended the Supreme Court's holdings to include other forms of discrimination that Title VII prohibits such as those based on race, color, creed, religion, or national origin.

These cases have allowed employers to avoid liability by proving that they took prompt remedial action in response to complaints of sexual harassment or discrimination. The courts have given employers a strong rational to raise this defense and to present evidence concerning their investigations of the complaints. Due to the fact that the defense utilizes a "reasonable care" standard in analyzing the appropriateness of the employer's actions, the trial courts must engage in an intensive scrutiny of the facts to determine the extent, quality and details of the employer's investigation in order to determine that the employer satisfied its burden of proving that it did act promptly and reasonably.

The very nature of this type of defense focuses on the conduct of the employer's investigation instead of the allegations of the plaintiff against the employer. This means that the employer's investigation of the harassment or discrimination complaint becomes the centerpiece of the employer's defense. As a result, the investigation and the investigator often become the most crucial witnesses to support the defense at trial. When an employer uses legal counsel to conduct the investigation of an employee's harassment or discrimination complaint, there is a very good chance that the lawyer will become a vital fact witness in any ensuing litigation.

Employer's who utilize attorneys to investigate such employee allegations often expect that the investigative materials which may include facts adverse to the employer, and the employers communications with the attorney will be protected from disclosure under the attorney-client or work product privileges.

As employer's sought to prevent disclosure of such information and relying on their investigation as a defense, plaintiff's began to seek access to those materials compiled during the investigation to show that the employer failed to use reasonable care or failed to act promptly. Courts are now recognizing an "implied waiver doctrine" to compel disclosure of information prepared or gathered by the employer's attorney during the investigation of the harassment or discrimination complaint when the employer relies upon the investigation in defending the employee's law suit. This means that employers cannot raise their investigation as a sword to attack an employee's law suit and also use the various privileges (attorney-client, work product, etc.) as a shield to defend against disclosure during litigation.

Whenever an employer is faced with sexual harassment or discrimination allegations, it should promptly conduct a complete and thorough investigation. This should be done with the objective of using the investigator's testimony, notes and finding to support the employer's prompt remedial action defense, but with the understanding that any and all investigative materials will be subject to disclosure.

Employer's should be fully aware that they may not be able to hide behind the attorney-client or work product privilege in such cases and that it may be more prudent to utilize the services of an investigative professional. In addition, after the completion of the investigation, the employer should discuss the investigative results with its attorney in order to make a decision whether or not to raise the investigation as a shield. Depending on what the investigation disclosed or revealed, the employer may find it wiser to not utilize the "prompt remedial action" defense. The decision must be made as to whether or not the production of the investigation's results could be turned from a shield for the employer to a sword for the plaintiff.