Kenneth Jull has done them. So has Paul Klasios and Philippe Dufort-Langlois. All are or were at one time in-house counsel who have conducted internal investigations, an unpleasant exercise described by a lawyer as being a bit of a dark art that presents unique challenges. Nearly every general counsel too will sooner or later face the need to conduct an internal investigation into events at an organization. At a time of greater scrutiny by regulators, stakeholders and the general public, organizations of all sizes and across all sectors are dealing with growing calls demanding greater disclosure and transparency.
By all accounts, internal investigations have become more prevalent in recent years. Once the domain of the most egregious cases, there now appears to be no shortage of incidents that may spur a workplace investigation. While internal investigations may be triggered by audit and compliance reviews, regulatory investigations and media reports, most misconduct is revealed through complaints, anonymous tips or simply discovered by accident. Employees, far more aware of their rights, have also become emboldened to come forward with complaints while employers are more mindful of their obligations and the need to quell financial and reputational risks, limit legal liability and address potential systemic workplace issues, affirm employment and labour lawyers. The #MeToo movement has amplified the uptick but so too have legislative developments across the country, such as Ontario’s Occupational Health and Safety Act or Quebec’s Labour Standards Act, which imposes a positive duty on employers to investigate allegations of workplace harassment.
“There are so many different types of laws that apply,” observes Kirsten Hume Scrimshaw, founder of Ally Workplace Law in Vancouver. “Common law in terms of how you treat your employees, human rights law, privacy law, and occupational health and safety law – they all intersect in very specific ways when it comes to workplace investigations.”
There is however no bright line test that determines when a workplace investigation should be instigated.
Along with the growing numbers of internal investigations launched by corporate Canada, there is a parallel trend taking root in which employers are looking for ways to deescalate regrettable situations to avoid initiating formal workplace investigations, particularly with less grievous interpersonal issues between employees. Such matters tend to be referred to human resource departments who in turn may refer people to employee assistance programs, coaching or training.
“The way we usually handle matters is if it’s a relatively minor HR issue, so some low level of discomfort with a manager and not any kind of traumatic harassment, that’s a matter where HR has the expertise to deal with these matters,” says Dufort-Langlois, senior counsel at Intact Financial Corporation, Canada’s largest property and casualty insurer. And it has the added bonus of shaving costs and reducing administrative burden compared to an investigation, adds Scrimshaw.
But while there are circumstances in which employers can skirt internal investigations, it can be risky. The case law surrounding workplace investigations is emerging and barely existed some 15 years ago. But it seems clear that employers who fail to respond to complaints leave themselves open to costly legal liability. In what an arbitration panel described as a “tragic case,” an employee of the City of Calgary was awarded $800,000 in damages in 2013 after her employer failed to adequately investigate a sexual assault complaint. In another case, the Human Rights Tribunal of Ontario confirmed that it is “well-established jurisprudence” that failure to investigate discrimination claims can attract liability, even if the tribunal ultimately dismisses the underlying allegations of discrimination.
“You have to apply a level of risk analysis when you discover these things to determine what you are dealing with here,” says Jull, counsel at Gardiner Roberts LLP, who recently completed a two year interchange with the Competition Bureau in Ottawa.
An organization that has determined an internal investigation is warranted should lay the groundwork before getting started as employers have also been held accountable for shoddy workplace investigations. That’s what happened to Wal-Mart Canada in 2015. In depicting Wal-Mart’s conduct as reprehensible, the Ontario Court of Appeal in Boucher v. Wal-Mart Canada Corp. 2014 ONCA 419 issued a stern reminder to employers that failing to properly investigate allegations of harassment in the workplace can be costly, and ordered the retailer to pay $410,000 plus 20 weeks’ salary to a former employee.
The lessons are clear: a properly conducted internal investigation seeking to uncover credible information about alleged significant wrongdoing or ethical lapses must be taken seriously as well as be organized, complete, fair and impartial. Since investigations can be complex, time-consuming and disruptive, it is essential that general counsel or the head of the investigation create an investigation plan that sets out the scope of the investigation, establishes investigation protocols, and appoints competent investigators.
“You really need to have a roadmap, an idea of where you’re going and in which direction you’re heading,” says Dufort-Langlois. “A lot of these internal investigations just falls on your desk and needs to be handled quickly. The tendency can be to just go into five directions at once and just grab pieces of information, bits and pieces here and there. That’s not going to lead you to an optimal result.”
But not all investigations are going to have the same roadmap each and every time, points out Paul Klasios, head of legal and compliance at DuPont Canada. “Your roadmap may look differently for different types of investigations,” says Klasios. “It depends on what it is.”
Regardless of the roadmap that is laid out, the project management exercise should begin with ascertaining whether there is a legal obligation to investigate and where that obligation arises, Kelly Harbridge, global director of labour relations and associate general counsel at Magna International, said at a CBA conference about workplace investigations. Understanding where the obligation to investigate arises will help to frame the scope of the investigation which in turn will help to determine how expansive the investigation needs to be, added Harbridge.
It’s equally important for employers to adhere to workplace or collective agreement policies as it may impose procedural requirements, something that the courts, tribunals and arbitrators pay attention to as Wal-Mart discovered when it was castigated by Ontario’s appeal court for paying only “lip service” to its internal written policies.
But labour lawyer Emma Phillips of Goldblatt Partners LLP says it would be “helpful and constructive” if more employers either developed their own internal investigation protocols or negotiated protocols with unions “to have some clear sense” of what constitutes a fair investigation. The protocols, she adds, should have flexibility built into them because every set of facts is different. “To have a general protocol that lays out what kind of steps might normally be followed gives employees a greater sense of what the process will look like, what their rights are and makes for a transparent process. It gives employees greater faith in the integrity of the investigation,” says Phillips, who acted as counsel to the External Review on Sexual Misconduct and Sexual Harassment in the Armed Forces, and to an independent review commissioned by the UN on sexual abuse by peacekeepers.
Much of the integrity of the investigation also rests over the selection of the investigator. Ideally, “the investigation should be conducted by somebody who is free of actual or perceived bias and who has the necessary competencies to conduct the investigation and perhaps the experience on the particular subject matters,” says Gail Gatchalian, a trained workplace investigator who practices employment, labour and human rights law at Pink Larkin in Halifax.
But the natural inclination is to rely on in-house counsel who have an inherent understanding of the organization, have the ability to assess the strength of evidence, and can potentially maintain solicitor-client privilege — and perhaps even litigation privilege — over the investigation. Some though question the merits of selecting in-house counsel to lead the investigation. In-house counsel after all are employees of the organization and may end up reporting to individuals who eventually may become central figures of an investigation. On top of that, employees may be less obliging with someone they may perceive as being part of management, thereby hampering the fact-finding mission of the investigation. Then there is the possibility that if in-house counsel acted as the lead investigator and a legal proceeding was instituted after the investigation, chances are that in-house counsel would no longer be able to represent the interests of the organization if called as a witness.
The lawyerly response to the conundrum of whether to appoint in-house counsel as lead investigator or to retain external counsel is that it depends. It essentially hinges on the nature of the allegations, the person who allegedly committed the transgression, and the kind of investigation that has to be conducted. If the allegations of wrongdoing or ethical breaches target someone who works closely with in-house counsel, then the matter would be sent to external counsel because “we wouldn’t have the independence and the objectivity to conduct the investigation,” says Dufort-Langlois. Or if the allegations are so widespread that it would take an inordinate amount of manpower and resources to conduct interviews and review the documentary evidence, then that too would be a situation where external counsel would be called to take over the investigation, adds Dufort-Langlois.
Even then, in-house counsel should play a central role in the internal investigation. If outside counsel has been retained, chances are that in-house counsel will be the key contact for the investigation team. Besides helping smooth the flow of information to the external investigation team, in-house should be acting as the gatekeeper by documenting the process, controlling legal spend and ensuring that timelines are respected.
Phillips laments however that there are many occasions where it seems employers are “rushing” to outsource investigations, almost as if they are trying to send the message that the inquiry is now out of their hands. “We’ve written the cheque, signed the retainer contract, and now it’s somebody else’s problem until the fact-finding report lands on the desk however many months from now, and I would say that is not actually the employer’s obligation under the legislation,” says Phillips.
But if in-house counsel is retained as lead investigator then there are practical considerations they must keep in mind, pitfalls they should avoid and skills they should develop. To begin with, in-house counsel must be aware of the reach of privilege, an issue that the courts themselves are still grappling with. In Howard v City of London 2015 ONSC 3698, the court held that the terms of the retainer may attract solicitor-client privilege in an investigation conducted by a lawyer. On the flipside the Federal Court of Appeal held in Slansky v Canada (Attorney General) 2013 FCA 199 that “while a retainer is important evidence of whether a solicitor-client relationship has been established, the terms of the retainer are not necessarily conclusive and must be construed in light of all the relevant circumstances.”
More recently still, the Alberta Court of Appeal weighed in on the intersection between privilege and internal investigations and held that the contents of an internal investigation may be privileged, but the basis for the claim may be scrutinized. In Alberta v. Suncor Energy 2017 ABCA 221, the appeal court held that a statutory obligation to carry out an investigation and prepare a report does not preclude from asserting privilege over the documents and records stemming from the internal investigation. The Supreme Court of Canada dismissed the leave to appeal.
It remains that “privilege in and of itself is very difficult, and it is certainly something very difficult to internal investigations,” says Dufort-Langlois. Klasios too admits that it can be a challenge to protect privilege, particularly with emails. “Not everything we’re going to get is going to be protected by privilege,” notes Klasios. “A lot of it will depend on the nature of what you’re dealing with. If it’s something that’s quite significant, every in-house counsel will want to make sure early on at the outset that they put their own protocols in place to make they sure they can preserve as much privilege as they can without restricting the ability to communicate and get to the facts.”
The issue becomes even more convoluted when dealing with multi-jurisdictional internal investigations. The European Union, for instance, does not protect communications between in-house counsel and corporate employees. That can create a significant issue for multinational companies, says Klasios. “That may change the dynamic in terms of how information is shared and how communications flow so a lot of organizations involved in cross-border investigations need to have proper safeguards in place,” says Klasios.
In-house counsel also need to know when outside assistance is required. Though many situations can be investigated capably by legal professionals, there are instances when investigations will require the assistance of experts, including advice by external counsel if in-house counsel is in charge of the investigation. “Any lawyer that goes in and thinks they can do this all by themselves is making a big mistake,” says Jull. In investigations dealing with sexual harassment, for instance, in-house counsel should seriously consider hiring somebody with training or experience in these matters “because these are skills that lawyers don’t necessarily have,” adds Jull.
In-house counsel should also contemplate honing their soft skills as interviews are often the most crucial stage of the investigation. With good reason. It is typically the occasion where investigators obtain most information. While knowing the right questions to ask is critical and part of the skillset that litigators in particular develop over the years, a good investigator also has the know-how and sensitivity to establish the “right climate” that puts people – who are usually very anxious — at ease to disclose what they know, says Dufort-Langlois. “Regardless of whether you’re interviewing a complainant, a respondent or an independent witness, these people are going through a hard time,” says Dufort-Langlois. “There are ways of going through that process in a tactful manner. So even if people might ultimately not be satisfied with your conclusions, you want some buy-in as to the manner in which the investigation was conducted.”
Some maintain that providing the complainant and the respondent a copy of the full report – or at least aspects of the report that pertain to the allegations — also leads to buy-in of the investigative process. Full disclosure is an important part of the process for both the complainant and respondent to feel that they have been fairly heard, that the allegations have been carefully and thoughtfully considered, and the evidence judiciously cogitated, says Phillips.
While by and large that is something that public sector organizations tend to do, it’s altogether different story in the private sector. Employers are generally not obligated to provide a full copy of the final report to the parties. In fact, the report normally is circulated among decision-makers.
“It’s important to do an analysis of how much information is shared at what level,” says Scrimshaw. “Ensuring that confidentiality and privacy laws are complied with internally is absolutely an important part of the role of the in-house counsel.” But there are circumstances when private organizations believe that it would be in their best interests to share the results of the investigation. That is particularly the case when dealing with regulatory authorities. “You may be able to get some benefit from showing that you reacted appropriately to a difficult situation, and avoid an external investigation from a regulator,” says Dufort-Langlois.
But the matter doesn’t end with the final report. More often than not, says Gatchalian, an internal investigation will have a significant impact in the workplace. They are unpleasant, stressful and usually leads to additional harm to relationships in the workplace. Or as Dufort-Langlois puts it, it is the elephant in the room. He suggests in-house counsel work with the human resource department to help right the ship. “Just thinking it’s a self-contained issue, that it’s a legal problem, that it’s an HR problem that will go away afterwards is putting your head in the sand,” says Dufort-Langlois.
But as difficult as internal investigations may be, it can also be an opportunity to set things right. Investigations should not only focus on the specific incident that led to the inquiry. “You want to make sure that there’s not a larger problem in the organization, and if there’s a gap in your processes or your policies, you want to identify them at that time so that you can make broader changes to address any gaps down the road,” says Klasios.
This story was originally published in CCCA magazine.