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Internal Investigations – A Guide for Technology Companies

By: Angelita Chavez | January 25, 2017

By: Jaymen Chavda

John Doe stormed into his HR representative’s office and alleged that Sam Manager has discriminated against him on the basis of his age. Does your company have a policy on what HR must do next?

Employees are the backbone of a company. It is unfortunate, yet foreseeable, at times when employees clash with employers, or other coworkers at the workplace. It is imperative for an employer to implement a plan for responding to an HR complaint, as the result could be costly litigation, instead of an amicable resolution.

Not all HR complaints require the need for an internal investigation. The duty arises when an employer observes actions that suggest legally prohibited activity. Employee investigations should commence upon the occurrence of a triggering event, to allow for a comprehensive inquiry and determine exposure to damages. The availability of witnesses, documents and relevant information, is more likely to exist within a short time after the employee complaint.

Many technology companies are staffed with in-house counsel. The determination for whether outside counsel is necessary for an internal investigation varies on the function of the in-house counsel. If the in-house counsel or department has a role in the company that may cause the attorney-client privilege or work product protection to be lost, then outside counsel should be used. Although in-house and outside counsel often consult on internal investigations, the use of outside counsel will provide a greater likelihood that the investigation will be privileged. Communication with counsel, written or oral, are privileged if they are confidential and made for the purpose of obtaining legal advice. To increase the likelihood of the information collected during an investigation to remain privileged, employers (through HR or legal) should request that all employees refrain from interfering with the investigation, restrict those that have access to the information obtained, mark the protected documents clearly, and most importantly, provide Upjohn warnings at the start of each employee interview.

Upjohn Co. v. United States, was a 1981 Supreme Court case which held that attorney-client privilege could be invoked to protect the communications made between company counsel and non-management employees. The Upjohn warning rose from this case, in which counsel explains to an employee that they represent the company and not the individual employee. The purpose of this warning is for the employee to understand that the company is the only party that can waive the attorney-client privilege to disclose the contents of the conversation between counsel and the employee, even over the objection of the employee. Courts have held post-Upjohn that failure by counsel to provide an Upjohn notice has led to a claim of privilege by the individual employee for communication with company counsel.

Counsel can begin the document review and interview process, by sending each affected employee a “document hold” communication. To ensure the company retains access to employee information, each employee within the scope of the investigation should be notified that the documents stored on their workstations belong to the company. Personal electronic devices may also be relevant, if used for work purposes. Local counsel in each jurisdiction can provide further information with privacy laws potentially interfering with the investigation.

Employee interviews must be conducted, with accurate notes of the interview. The company’s in-house counsel may also attend the interviews, as long as it does not create a conflict. At the beginning of each interview, counsel should provide the employee with the Upjohn notice to ensure compliance. Upon completion of all thorough interviews, counsel should provide a report to the designated committee that will oversee the investigation on behalf of the employer. The report can be oral or written, which contains the summary, facts, methodology and recommendations of the findings of the investigation.

If it is determined, after a comprehensive internal investigation that Sam Manager did, in fact, discriminate against John Plaintiff on the basis of his age, corrective action must be taken by the employer. Enforcement of company policy helps to ensure future compliance.

The Chugh, LLP team is well-versed in, and regularly conducts internal investigations for employers. Contact us to learn more about this trending topic.

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