As most retail employers have likely seen in the news recently, Abercrombie & Fitch’s former CEO was arrested on sex trafficking and prostitution charges. News like this, along with stories of other prominent executives stepping down due to similar allegations of misconduct, prompts questions about the effectiveness of companies’ internal complaint procedures and whether retailers are equipped to promptly and effectively conduct investigations related to allegations of sexual harassment and discrimination and similar allegations of misconduct, especially those raised against company executives. As the handling of these delicate and high-stakes investigations can have a significant impact on a company’s reputation and create potential legal consequences, it is important for retail employers to establish clear policies and procedures for conducting investigations.
Establishing Clear Complaint Policies
It is a best practice, and the law in many jurisdictions, for employers to maintain harassment prevention and complaint policies. These policies should clearly outline the processes for raising internal complaints of misconduct, especially related to workplace discrimination, harassment, and retaliation, including who at the company is authorized to accept such complaints, how to contact these individuals and any preferred format (such as a written complaint form) for doing so.
Employers should also consider offering multiple reporting options for making complaints to avoid a situation in which an employee fails to notify the company of misconduct due to any perceived discomfort or reasonable fear of retaliation. For example, employers can designate a Human Resources or other representative to field complaints if an employee does not feel comfortable reporting misconduct to their direct manager or if the direct manager is associated in some fashion (i.e., as a witness or as the accused) with the alleged harassment. Retail employers can also set up hotlines or institute anonymous reporting mechanisms if appropriate for the employer’s workforce.
Having clear complaint policies and investigation protocols in place will help ensure employees know how to report misconduct and feel comfortable doing so before a situation becomes worse. Supervisory employees should also be trained on how to address internal complaints and promptly bring them to the attention of Human Resources or other individuals responsible for fielding and investigating such matters.
Additionally, employees should not be prevented or discouraged from calling law enforcement, especially when there is potential criminal activity or an immediate danger to employees or others, such as retail clients shopping in the workplace. By having clear written policies and trained managers who exercise reasonable care to prevent and promptly correct harassing behavior in the workplace, retail employers can mitigate potential liability.
Preliminary Steps: What to do first
After receiving a complaint of misconduct, employers should promptly consider the allegations raised and assess whether an internal investigation is warranted. While certain complaints are required to be investigated, not all internal complaints may rise to the level of a formal investigation. The decision of whether to investigate a particular complaint may involve consulting legal counsel to evaluate the benefits and potential risks associated with conducting an internal investigation.
Retail employers should also consider whether interim measures are appropriate during the pendency of an investigation. In some circumstances, placing an employee on leave or temporarily reassigning employees to different worksites can allow an employer to thoroughly investigate potential misconduct. Retail employers should be mindful, however, that changes to an employee’s working conditions are not without risk, and employers should thoroughly document the legitimate business reasons for any transfers, reassignments, leaves of absence or suspensions during the pendency of an investigation.
Confidentiality is key for maintaining the integrity of any investigation, but it is a particularly crucial part of investigating any claim of harassment, discrimination or other serious misconduct in the workplace. Although anonymity cannot always be guaranteed, if the privacy of complainants and witnesses is not respected, employees will not feel comfortable reporting serious misconduct. Employers should be mindful of actions that could be viewed as retaliatory against those who report misconduct, such as the disclosure of personal information or employment records that would otherwise remain private but for the investigation. Similarly, given that not all misconduct allegations will be substantiated, employers should exercise discretion in sharing information concerning active investigations with others.
Allegations of wrongdoing, even those that are falsified or unsubstantiated, can have a damaging impact on the accused. As such, information gathered during an internal investigation should be shared on a need-to-know basis only, and all those participating in the investigation should be told to keep the investigation, and any information learned as part of the investigation, strictly confidential to the extent possible and permitted by law.
Choosing an Investigator
The choice of investigator is often paramount for establishing credibility. While many investigations can be handled internally by seasoned Human Resources professionals, sometimes that’s not always the best solution to avoid potential future liability. For example, senior executives in the retail industry tend to have significant influence and broad access to resources within the company, as we saw in the case of the former CEO of Abercrombie & Fitch. As such, retail employers should consider hiring an external investigator to conduct a workplace investigation of a senior executive, regardless of the issues raised, to preserve the credibility of the investigation.
Further, to preclude any accusation of partiality, retailers should consider hiring an investigator who does not have a close or ongoing relationship with the individual (which may give reason to question whether any unsubstantiated allegations were due to personal loyalty to the executive). Impartiality is a crucial aspect of workplace investigations. Even the perception of personal or other bias, which taints the integrity of the investigation, can have a negative effect on the company’s image and culture.
Electing to retain outside counsel to conduct workplace investigations will also serve to potentially cloak the investigation findings with both attorney-client privilege and work product protections. Unless the company decides to use those findings later as a defense to any potential litigation claims asserted against the employer, any investigator notes or materials would be considered privileged and protected from disclosure. External attorney investigators also typically possess beneficial skills and training related to workplace investigations.
Of course, if an attorney is conducting the investigation, the attorney should be sure to explain to any witnesses that the attorney represents the company, not the individual, in what is commonly referred to as an Upjohn warning. This way, the employee can best understand the role of the investigator and appreciate that the privilege belongs to the employer, and that anything the employee discusses with the investigator may be shared with the company.
Conducting the Investigation
Investigators should conduct each investigation as if it may later be disclosed or used in litigation or made public. Whether it is an allegation of harassment, discrimination or otherwise, given the heightened scrutiny and potential consequences of an investigation becoming public, especially as it relates to alleged conduct of company executives, employers must approach such investigations with care to safeguard the reputation and legal standing of the company. In that regard, investigations should be handled in a prompt, impartial and thorough manner. Retail employers should also make sure that their investigation is consistent with their written policies and applicable law.
While workplace investigations can be conducted in different ways, speaking with the complainant first, is generally a best practice in order to understand what exactly is being alleged, the identities of potential witnesses, whether there is any relevant documentation, and the desired outcome. In other words, speaking with the complainant will help clarify and define the scope of the investigation, although retail employers should be mindful that legal, business and/or ethical considerations might differ from the complainant’s desired outcome.
For example, an employee might report harassment and request that the alleged harasser not be fired, but if the company determines after an investigation that termination is the best course of action to address the situation or to safeguard the workplace, the company has the legal right to and should do so.
After commencing a workplace investigation, retail employers should carefully consider who to interview, balancing the need to obtain relevant information with the appropriate scope of the investigation, especially prioritizing speaking to those with first-hand-knowledge of the alleged events as opposed to relying on second-hand information, and ensuring that the privacy/confidentiality of the investigation is not jeopardized.
Investigators should carefully prepare questions aimed at both gathering helpful big picture information along with specific questions about each of the allegations raised, although investigators should be careful to avoid overly suggestive or leading questioning. Investigators may wish to begin with open-ended questions, such as “What is your relationship like with Employee A?” and then drill down to specifics about the allegations. Investigators should also seek to gather any documentary evidence that corroborates or refutes the allegations and consider that information as part of the investigation.
Documentation
Investigators should ensure that they collect and review all relevant facts, documents, communications, and records related to the scope of the investigation. Investigators should request copies of any relevant emails, text messages, surveillance footage, notes, reports, etc. as part of the process of conducting the investigation, including requesting such information during witness interviews. The investigator should take notes or have someone taking notes during witness interviews and retain the documented witness interview notes to be used in potentially drafting an investigation report or recommendation. For potential evidence that might have limited availability, such as surveillance footage that is only stored for a certain period of time, investigators should take immediate steps to quickly collect and preserve such records, especially if there is a reasonable anticipation of litigation.
Retail employers should determine what type of report is desired, if any, and what information should be included in that report. Consistent with the investigation, any report issued should be objective and supported by the witness statements and any documentary evidence. The report, which should convey the investigators’ analysis of the facts and evidence provided, should reflect the timing and completeness of the investigation. The report should generally include the background and methodology of the investigation, a discussion of relevant evidence reviewed, assessments related to witness credibility and a well-reasoned examination of the allegations and findings. If the allegations turn out to be unsubstantiated, the report should say that.
Post-Investigation
Findings should be reported to management or to the appropriate other stakeholders, which, for investigations of company executives, is often the board of directors. Retail employers should consider who should present the report and how it should be presented to the stakeholders. Based on the findings and severity of the conduct, the stakeholders can then determine appropriate disciplinary action, assess any related risks and administer corrective actions, as needed. Retail employers may also want to consider monitoring the workplace after the investigation has concluded to prevent any potential retaliation against those employees who participated in the investigation.
To the extent the allegations against an executive become public or are reported in the press, retail employers should carefully consider the message being disseminated both internally and externally in order to mitigate any reputational harm to the company. As retail employers are likely to receive demands for information from various parties (i.e., board of directors, the media, employees, clients, etc.), retail employers should ensure consistent messaging, especially where allegations have not been substantiated or are still under investigation.
Retail employers should also control the messaging to confirm it is accurate and reflects the company’s views, and employees should be prohibited from speaking on behalf of the company without permission.
THE BOTTOM LINE: Conducting a prompt, thorough, and impartial investigation of internal complaints is critical for maintaining trust and integrity within any retail organization, especially when the investigation relates to alleged misconduct by senior executives. It is always a good idea for retail employers to evaluate their current investigation policies, procedures and trainings and determine whether there are any areas that can be improved upon or updated in accordance with applicable law and best practices.
To effectively address misconduct and mitigate potential legal risk, retail employers should maintain clear policies and protocols for promptly and appropriately investigating misconduct in the workplace. And, when in doubt, retail employers should reach out to competent employment counsel to discuss best practices for conducting workplace investigation.
Keith A. Markel is a Partner and Co-Head of the Labor & Employment Department and Co-Head of the Luxury Brands Group at Morrison Cohen LLP.
Alana R. Mildner Smolow and Kayla N. West are Associates in the Labor & Employment Department at Morrison Cohen LLP.
Share
