USA – DISTRICT OF COLUMBIA Law and Practice Contributed by: Connie N. Bertram, Bertram LLP
who allegedly engaged in the misconduct or could be impacted by the results of the investigation should not be involved in the investigation, either as an investiga - tor or decision-maker. When the allegations are serious or involve officers of the company, employers often engage outside coun - sel to advise in-house counsel, compliance personnel or the HR department, or to conduct the investigation. Unless outside counsel has a long-standing relation - ship with the company or a family or other personal relationship with the employees accused of miscon - duct, outside counsel will likely be perceived as inde - pendent from the company. Outside counsel should be part of an investigation team including senior per - sonnel in the legal, compliance and/or HR depart - ments who will be responsible for obtaining informa - tion for and co-ordinating the investigation. The determination of whether to use internal personnel or outside counsel to conduct an internal investiga - tion depends on the type and severity of misconduct alleged and which employees are accused of wrong - doing. If a CEO is accused of wrongdoing, a board or compliance committee should consider hiring outside counsel because all of the employees involved in the investigation report to the CEO, directly or indirectly. If there are accusations of criminal misconduct or the allegations are being investigated by federal, state or local authorities, the participation of outside counsel will be essential. The retention of outside counsel is also necessary where the company does not have attorneys or compliance personnel with sufficient expertise in the allegations involved. 1.5 Obligation to Carry Out an HR Internal Investigation The failure to conduct an effective and timely investi - gation can expose a company, supervisors and direc - tors to potential liability: • when harassment is alleged, a timely, good faith investigation may support an employer’s affirma - tive defence to liability under the Supreme Court’s decisions in Burlington Industries, Inc. v Ellerth , 524 U.S. 742 (1998) and Faragher v City of Boca Raton , 524 U.S. 775 (1998);
• Section 10A of the Securities Exchange Act requires auditors to implement procedures to detect illegal acts, such as reporting mechanisms and investigation procedures, report such acts to management and the audit committee or board and, if the company does not act, report directly to the SEC; • Chapter 8 of the Federal Sentencing Guidelines promotes internal investigations, effective reme - dial actions and other effective compliance pro - grammes by including them among the factors considered in sentencing decisions; • under corporate law, the fiduciary duties of officers and directors include acting loyally and prudently in managing a company’s assets, including estab - lishing reporting mechanisms, conducting prompt and effective internal investigations and addressing wrongdoing uncovered through them; and • Occupational Safety and Health Administration (OSHA) rules require employers to investigate safety incidents to identify the cause of workplace accidents, identify and address hazards and pre - vent future injuries to employees. Government contractors and other employers in other regulated industries have an obligation to investigate and self-report fraud, criminal violations and significant overpayments under the Federal Acquisition Regula - tion (FAR) Mandatory Disclosure Rules and to main - tain effective compliance and reporting programmes, including conducting internal investigations. 1.6 Prohibition on Carrying Out an HR Internal Investigation In some situations, however, an investigation may not be necessary or even advisable. An employer may be directed not to conduct or to delay an internal investi - gation because it may interfere with an ongoing crimi - nal investigation. Outside of this context, there are very limited situations where an employer is unable to conduct an internal investigation. Although a com - plainant does not have the right to control whether or how an investigation is conducted, his or her prefer - ences should be considered, particularly if the viola - tion is less serious and the complainant has privacy concerns. Also, if the conduct is admitted and the accused agrees to resign, an investigation may not be
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