When should you hire an outside investigator?

In many circumstances, a company’s internal HR personnel can and probably should conduct investigations into allegations of workplace misconduct. In our experience as former in-house attorneys, there were numerous cases where it was clearly more practical, efficient, and less costly to conduct an investigation internally. For example, it would make little sense to hire an outside investigator to look into plain vanilla allegations where the risk of legal exposure is low.

On the other hand, we have also seen companies come to regret decisions to use internal investigators. These situations often arise during litigation, when a savvy plaintiff’s attorney will vigorously cross-examine the company’s internal investigator in a variety of areas, such as competency to handle the investigation subject matter, thoroughness, or actual (or perceived) lack of impartiality. HR personnel are also often questioned regarding the timeliness of the investigation, as many of them also have “day jobs” for the company, resulting in their investigations often taking too long to complete or their reports lacking sufficient detail. A misstep in any of these areas can lead to a finding of lack of good faith, which could place the company in a potentially worse position than if no investigation had been conducted at all.

Here are some situations in which an outside attorney investigator should be considered:

• The complaining party has hired a lawyer, filed a lawsuit, or filed a charge with the government (e.g., EEOC, DFEH, DOL, OSHA, DLSE)
• Allegations involve misconduct by high-level employees or corporate officers, such as the CEO or a vice president
• Sensitive or egregious complaints, such as sexual harassment, discrimination, retaliation, whistleblowing, theft/embezzlement, assault/battery or drug dealing
• Complaints by more than one employee about the same problem (e.g., several employees complain that a particular manager is harassing them)
• Allegations of widespread discrimination (e.g., the company treats women differently regarding pay or promotions, or it only hires younger workers)
• Challenges to an employer’s policies or practices as having a disparate impact on a protected category of employees (e.g., based on age, race, gender)
• Allegations involve the potential for significant financial or legal exposure
• Allegations involve the potential for adverse media publicity
• Internal personnel lack the subject matter expertise to conduct the investigation, or the bandwidth to complete it timely
• Any time an internal investigator’s experience or impartiality may be challenged

It is also important to note that in California, employers have a legal duty to investigate certain types of claims, such as sexual harassment claims. California and federal courts have found that employers can mitigate – or even avoid – legal liability for certain types of claims if they have conducted a good faith, effective investigation. A major factor in this analysis is whether the investigation was conducted by an experienced, knowledgeable, and impartial workplace investigator.

Companies should consider the foregoing factors to determine whether claims of workplace misconduct should be investigated using internal personnel or by an experienced, outside attorney investigator.