Investigating Employee Complaints – An Employer’s Double Bind

by Pullman & Comley - Labor, Employment and Employee Benefits Law

An employee, having been notified of his impending termination, complains to his employer of discrimination.  A human resources professional retained by the employer to investigate the complaint concludes that the employee was treated fairly with respect to the termination of his employment.  At trial in the employee’s subsequent lawsuit, may the employer introduce evidence of the investigation and its findings?  A recent decision by a federal Magistrate Judge in Connecticut answers this question in the negative.

Note that this is not a case where the employer had an attorney investigate the complaint, and now seeks to keep the evidence out on the basis of attorney-client privilege (an argument likely to fail in most circumstances).  Here, the investigator wasn’t a lawyer, and the employer is trying to get the evidence in to demonstrate to the jury that it had no discriminatory motive when it decided to terminate the employee, and to show that it carefully investigated the employee’s complaint and acted based on a good faith belief that the employee had not been a victim of discrimination.

The court dealt first with the plaintiff’s hearsay objection to the report.  (For non-lawyers, the report could be considered hearsay because it contains unsworn out-of-court statements of witnesses who were not subject to cross-examination, and the employer seeks to introduce those statements for the truth of what they say.)  Citing a number of cases, the court found that the report would probably satisfy the business records exception to the rule against hearsay evidence, and that even if it was not a business record, the court had the discretion to admit the report to establish the employer’s motive for the termination.

But the court nonetheless decided that the report should be excluded from evidence because its probative value was substantially outweighed by the danger of unfair prejudice to the plaintiff.  The investigation was conducted by an individual selected by the employer, and that individual decided whom to interview and what evidence to consider.  Statements were not made under oath.  The employee had no opportunity to respond to the criticisms leveled against him, or to examine the witnesses.  The court observed that the report did not include the employee’s annual performance reviews, and that certain witnesses the court apparently thought should have been interviewed (clients for whom the employee had worked, a previous supervisor) were not.

Moreover, the court seems to have thought the investigation was a bit of a whitewash.  The investigator said he would have discontinued the investigation if the employee signed a release.  The court declared:  “Had the purpose of the … investigation been truly to determine if [the] employee was treated unfairly, the investigation would have been borne to its natural conclusion irrespective of the specter of litigation.”

This leaves employers in a bind.  It seems that you can’t keep the report of an investigation of an employee complaint out of evidence when you want to, but you can’t get it admitted into evidence when you want to, either.  What’s the solution?  An investigation should be thorough, wide-ranging, and comprehensive.  It may be advisable to get sworn statements from witnesses.  And the complaining employee should be given an opportunity to respond to the evidence gathered from others before the report is finalized.  If the result is bad, resolve the matter.  If the result is good, the report should be admissible if the investigation was conducted properly.

The case is Castelluccio v. IBM Corp., 2013 WL 6842895 (D.Conn. December 23, 2013) (Smith, Magistrate Judge), and a copy of the decision is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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