Workplace complaints, especially those involving harassment, discrimination, or misconduct, can’t be ignored. Handled poorly, they expose a company to lawsuits, costly settlements, or even regulatory penalties. Handled well, they protect employees, minimize financial risk, and strengthen trust across the organization.

Employers face more scrutiny than ever. In the 2024 fiscal year, the Equal Employment Opportunity Commission (EEOC) received a record 88,531 workplace discrimination charges, many of which stemmed from mishandled internal complaints. Add to that the rising cost of litigation, the reputational damage of negative press, and the potential for regulatory audits, and the stakes are clear.

Why Investigations Matter

Internal investigations are not just about resolving disputes. They are also about reducing exposure to claims, aligning with company values, and ensuring compliance with federal and state laws.

The Supreme Court’s Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth decisions created what’s now known as the ‘Faragher-Ellerth defense.’ The Faragher-Ellerth defense allows employers to avoid liability for supervisor misconduct if they can prove they had clear anti-harassment policies, offered training, gave employees a way to report misconduct, and if the complaining employee unreasonably failed to use those protections.

In practice, this means that workplace policies must not only exist on paper. They must be supported by regular training, clear reporting channels, and prompt, thorough investigations whenever issues arise.

Beyond their legal necessity, investigations also serve as a preventative measure. They can often reveal problems unrelated to the original complaint. For example, a minor dispute between employees might expose breaches of confidentiality, misuse of company property, or even loyalty concerns. In this way, investigations can also serve as an important proactive tool to uncover and address hidden risks before they escalate.

What Makes an Investigation Effective?

According to Max Barack of Garfinkel Group, LLC, a strong investigation is built on four pillars: promptness, impartiality, thoroughness, and documentation.

This means starting quickly after a complaint is received, assigning a neutral investigator, interviewing both complainant and accused, and collecting contemporaneous documents like emails, text messages, or personnel records. Documentation is especially vital, as juries and regulators often treat contemporaneous notes as more credible than later recollections.

Timely investigations not only strengthen employer defenses in court, but they also prevent small issues from snowballing into systemic problems.

Who Should Investigate?

One of the first decisions that needs to be made is who should conduct the investigation. Should you keep it internal or bring in an outsider?

The choice depends on the circumstances and whether an investigation can be conducted with impartiality. Helen Bloch of Law Offices of Helen Bloch, P.C provides a few examples for different scenarios:

Small business dealing with non-legal issues:

• This may involve two employees bickering and not getting along.
• The owner can handle the investigation directly because the issue is not tied to protected classes and doesn’t amount to a legal violation.

Small business dealing with serious misconduct:

• This may involve an employee alleging that another employee grabbed a body part.
• Due to the sensitivity and legal exposure, the employer should hire an outside investigator to ensure impartiality and credibility.

Larger company with in-house resources (i.e. HR staff and attorneys):

• This may involve allegations of corruption, foul play, or sensitive misconduct, and can also include a business client’s wrongdoings, where a client does something to an employee.
• HR or legal may be suited to conduct the investigation if they are properly trained to do so. If bias or undue influence is a concern, then the safer choice is to retain an outside investigator.
• A harassment complaint involving senior leadership, for example, almost always calls for an external investigator.

The general rule is that when there’s a risk of favoritism, or if the investigator knows all the players in the company, it’s better to default to an outside investigator who can remain objective.

The Attorney-Client Privilege Trap

A frequent misconception is that investigations led by company lawyers are always privileged. That is not guaranteed.

The Supreme Court’s Upjohn Co. v. United States case clarified that privilege belongs to the company, not individual employees. Employees interviewed by in-house counsel must be told that the lawyer represents the company and that their statements could be shared.

Without careful handling, an employer may unintentionally waive privilege, exposing sensitive notes or witness statements in later litigation.

The rules on whether a communication is privileged can vary depending on the state, so companies need to carefully evaluate how privilege applies in each investigation.

When To Call the Police

Not all investigations can stay in-house. Some allegations involve potential crimes such as theft, assault, fraud, or drug use. In those cases, law enforcement must be notified promptly.

Charles Krugel of the Law Offices of Charles Krugel flags: “You may have contractual obligations to report under grant funding or venture capital, or some sort of third-party funding to report to the authorities untoward conduct”.

Employers in regulated industries such as healthcare, financial services, or hospitality may also be legally obligated to notify authorities when certain incidents occur. Failing to do so can trigger regulatory penalties, void insurance coverage, or even result in charges of obstruction.

Interviewing the Right Way

Interviews are the heart of an investigation. They must be handled carefully to avoid retraumatizing victims, intimidating witnesses, or contaminating evidence. Open-ended questions work best, allowing witnesses to describe events in their own words.

It’s good practice to interview complainants first to show that concerns are taken seriously, and then circling back after other interviews to address inconsistencies. In-person interviews can often reveal valuable nonverbal cues, such as hesitation or discomfort, that are harder to detect over the phone or email.

In cases where employees work remotely, video interviews can provide a compromise. Even then, employers should be mindful of privacy, choosing settings where the interviewee feels safe and protected.

Consistency vs Flexibility

Not every investigation should follow the exact same playbook.

As Amit Bindra of The Prinz Law Firm, P.C. puts it, investigations are like shoes: you don’t wear the same pair for every occasion. The process should be flexible enough to adapt to the seriousness of the allegation, while staying consistent for similar categories of cases.

He stresses that employers should adapt the scope and rigor of investigations to the issue, while still staying consistent for similar categories of complaints:

Minor policy issues

• Small squabbles or less serious infractions may not justify a full-scale investigation.
• It may be sufficient to address the issue informally, document the incident, and use coaching or mediation instead of deploying significant resources.

Serious legal exposure

• This may involve claims like wage and hour violations, which could spiral into class or collective actions if ignored.
• In such instances, it’s important to conduct a structured, formal investigation immediately, since failure to act could expose the company to substantial liability.

High-risk issues

• This may involve allegations of harassment, discrimination, or retaliation, which should always trigger thorough, standardized procedures.
• Follow a consistent, rigorous protocol here. Bring in trained investigators (internal or external), interview all relevant parties, and carefully document findings.

Confidentiality and Retaliation

Retaliation, whether overt or subtle, is one of the most common and expensive follow-on claims in employment litigation. They represented nearly half of all workplace discrimination filings made to the EEOC in fiscal year 2024.

Absolute confidentiality is impossible, but investigators should promise to limit information-sharing to those who need to know.

Employers should reinforce employee protections against retaliation, which include monitoring for retaliation and intervening quickly if retaliation is suspected. Red flags may include cut work hours, sudden negative performance reviews, or subtle mistreatment that only appears after someone participates in an investigation. Addressing these signs early is crucial to protecting employees and preventing a second wave of claims.

Wrapping Up the Investigation

The end of an investigation should be as structured as the beginning. Findings must be documented in a written report, with clear reasoning and recommendations. Depending on the outcome, action may include training, reassignment, discipline, or termination.

Closing out the process also means communicating the outcome of the investigation to both the complainant and the accused. Importantly, complainants should be reminded that retaliation is prohibited, while accused employees should be told what corrective steps, if any, will follow. This closure process reassures both parties and strengthens the company’s credibility.

Create A Safer Work Environment

Workplace investigations demand quick action, impartial judgment, and a clear eye on legal obligations. When done right, they protect companies from liability, safeguard employees, and demonstrate a culture of accountability.

Employers who approach investigations with seriousness and transparency not only reduce legal and financial risk but also send a powerful message: the workplace is a safe and fair environment for all.

To learn more about this topic, view I Know What You Did Last Summer Workplace Investigations. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about HR.

This article was originally published here.

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