Kenneth Jull has done them. So have Paul Klasios and Philippe Dufort-Langlois. All are or have been in-house counsel who have had to conduct internal investigations, an unpleasant exercise described by some as a bit of a dark art with a unique set of challenges.
By all accounts, internal investigations have become more prevalent in recent years. While they may be triggered by audit and compliance reviews, regulatory investigations and media reports, misconduct is most commonly revealed through complaints or anonymous tips or simply discovered by accident.
“There are so many different types of laws that apply,” observes Kirsten Hume Scrimshaw, Founder at Ally Workplace Law. “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 HR departments, who in turn may refer people to employee assistance programs, coaching or training.
Keep in mind this approach can be risky. The case law surrounding workplace investigations barely existed some 15 years ago but is quickly emerging. 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 as General Counsel with the Competition Bureau.
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 Walmart Canada in 2015. In depicting Walmart’s conduct as reprehensible in Boucher v. Wal-Mart Canada Corp., the Ontario Court of Appeal 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 a plan that sets out the scope of the investigation, establishes 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, Senior Counsel at Intact Insurance. “A lot of these internal investigations just fall on your desk and need 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 process each and every time, points out Klasios, Head of Legal and Compliance at DuPont Canada. “Your roadmap may look differently for different types of investigations. It depends on what it is.”
Regardless of the plan laid out, the project management exercise should begin with ascertaining whether there is a legal obligation to investigate and where that obligation arises, advised Kelly Harbridge, Global Director of Labour Relations and Associate General Counsel at Magna International, at a CBA conference on workplace investigations. Understanding where the obligation arises will help frame the scope of the investigation, which in turn will help to determine how expansive the investigation needs to be.
It’s equally important for employers to adhere to workplace or collective agreement policies, as they may impose procedural requirements—something that the courts, tribunals and arbitrators pay attention to, as Walmart discovered when it was castigated by Ontario’s appeal court for paying only “lip service” to its internal written policies.
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.
“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 rests with 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. However, 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. They are, after all, 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. Then there is the possibility that if in-house counsel act as the lead investigator and a legal proceeding is instituted after the investigation, they may 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 retain external counsel is, “It depends.” Essentially, it 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, 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 staff and resources to conduct interviews and review the documentary evidence, that too would be a situation where external counsel would be called to take over the investigation, he adds.
Even then, in-house counsel should play a central role in the internal investigation. If outside counsel has been retained, chances are in-house counsel will be the key contact for the investigation team. Besides helping smooth the flow of information to the external team, in-house should be acting as the gatekeeper by documenting the process, controlling legal spend and ensuring timelines are respected.
If in-house counsel are retained as lead investigator, there are practical considerations they must keep in mind, pitfalls they should avoid and skills they should develop.
To begin, 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, 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) 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, 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 agrees 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. 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 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.”
In-house counsel should also contemplate honing their soft skills, as interviews are often the most crucial stage of the investigation. 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 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. 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 the 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 an 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 is normally circulated only 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 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 lead to additional harm to relationships in the workplace.
As Dufort-Langlois puts it, it is the “elephant in the room.” He suggests in-house counsel work with the HR department to help right the ship. “Just thinking that 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,” he says.
However, 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 but also the bigger picture.
“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.