HR Internal Investigations 2026 Comparisons

Investigation articles and trainings often focus on internal complaints by employees concerning harassment or discrimination. However, investigations may be prompted by numerous communications and events such as:

• written or oral complaints or other reporting from current or former employees;
• demand letters from law firms representing current and former employees;
• allegations of breach of company policy, such as theft of property;
• allegations of misconduct by competitors, suppliers or others in the industry;
• complaints to HR, legal, compliance or other internal departments;
• audit findings;
• media reports containing misconduct allegations; and
• inquiries from government officials concerning misconduct by current or former employees.

A constellation of federal, state and local laws and judicial decisions impose obligations on an employer conducting an internal investigation. 1.5 When Is an Investigation Required discusses the laws that trigger an employer’s obligation to conduct an internal investigation. However, as an employer is conducting an internal investigation, there are numerous laws that impact how the investigation can and should be conducted:

• case law, such as 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), discussed in 1.5 Obligation to Carry Out an HR Internal Investigation, establishes how an employer can assert an affirmative defence to liability for sexual harassment and other claims;
• the National Labor Relations Act (NLRA) and decisions of the National Labor Relations Board (NLRB) address confidentiality and other restrictions that employers impose during internal investigations, such as the confidentiality restrictions described in 2.3 Confidentiality Agreements and NDAs and prohibitions on audio recording discussed in 3.10 Recording;
• state law concerning the scope of the attorney-client privilege during internal investigations;
• state law restrictions on audio taping employees and conducting internal investigations, as discussed in 3.10 Recording; and
• federal, state and local laws addressing the claims that may be asserted by the complainant or the accused challenging actions taken during the investigation or in imposing disciplinary actions against the accused.

Every company should – and some must – clearly outline complaint procedures in their policies for reporting and addressing workplace misconduct. The employer’s policy should provide employees with multiple options for making reports, including an option that is anonymous. Although the policies will depend on the size and industry of the employer, policies typically offer the following options:

• an anonymous hotline or on-line reporting mechanism;
• specified employees in HR or the legal or compliance department; and/or
• the employee’s manager or supervisor.

There are laws in the USA that require employers in certain industries to have specified reporting mechanisms. For example, federal government contractors with contracts above a specified threshold are required to establish anonymous reporting programmes and publish their business ethics and reporting policies internally, and on their website.

When an investigation is warranted, employers should, depending on the type and severity of the allegations, consider involving legal, HR and/or compliance personnel in the investigation. Unless a senior officer is involved, allegations of discrimination or harassment are typically handled by HR or in-house or outside counsel. Allegations of fraud or impropriety are typically handled by compliance personnel and/or in-house or outside counsel. Of course, employees 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 investigator or decision-maker.

When the allegations are serious or involve officers of the company, employers often engage outside counsel to advise in-house counsel, compliance personnel or the HR department, or to conduct the investigation. Unless outside counsel has a long-standing relationship with the company or a family or other personal relationship with the employees accused of misconduct, outside counsel will likely be perceived as independent from the company. Outside counsel should be part of an investigation team including senior personnel in the legal, compliance and/or HR departments who will be responsible for obtaining information for and co-ordinating the investigation.

The determination of whether to use internal personnel or outside counsel to conduct an internal investigation depends on the type and severity of misconduct alleged and which employees are accused of wrongdoing. 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.

The failure to conduct an effective and timely investigation can expose a company, supervisors and directors to potential liability:

• when harassment is alleged, a timely, good faith investigation may support an employer’s affirmative 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 remedial actions and other effective compliance programmes 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 establishing 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 prevent 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 Regulation (FAR) Mandatory Disclosure Rules and to maintain effective compliance and reporting programmes, including conducting internal investigations.

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 investigation because it may interfere with an ongoing criminal investigation. Outside of this context, there are very limited situations where an employer is unable to conduct an internal investigation. Although a complainant does not have the right to control whether or how an investigation is conducted, his or her preferences should be considered, particularly if the violation 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 necessary, particularly if the employer is not required to report the violation.

Case law emphasises the importance of conducting “immediate” and “timely” investigations. In situations where a Faragher/Ellerth defence may be available, for instance, an employer may lose their ability to assert a defence if they delay undertaking or completing an investigation. However, it is important for employers to quickly undertake a pre-investigation to make certain that they are considering all relevant factors implicated by the complaint or report, particularly where the allegations are unclear or the employer needs additional information to design and plan the investigation.

A pre-investigation helps the employer understand the scope and topics of the complaint, the policies and laws that are implicated by it, the employees who must be recused from the investigation and whether remedial action needs to be taken before the investigation starts. This process can take as little as an hour or a period of days. The following factors are typically considered during a pre-investigation:

• what is the nature of the alleged misconduct (eg, sexual harassment, financial impropriety)?;
• do in-house personnel have the expertise to handle such an investigation?;
• what are the sources of evidence that should be marshalled, preserved and collected in conducting the investigation?;
• which employees may not participate in the investigation or decision-making because they are accused of misconduct or likely will serve as witnesses?; and
• whether protections for the complainant, such as moving the accused’s shift or putting him or her on administrative leave, are necessary.

By undertaking a pre-investigation, an employer will be in a better position to identify who should conduct the investigation, the evidence that needs to be collected and preserved, whether interim relief, such as a suspension, is necessary and the appropriate steps of the investigation.

There are limited situations where a respondent must be notified of allegations prompting an internal investigation. If the accused has an employment contract that allows the employer to terminate the accused for cause, the employer may be required to notify the accused of the allegations against him or her and provide him or her with an opportunity to cure the violation or misconduct. If the accused is a member of a union, the collective bargaining agreement (CBA) may require the employer to notify the accused of the alleged misconduct in a specified manner within a specified number of days and to take specific procedures in investigating or handling it. Typically, however, the accused should be notified of the accusations against him or her and strongly advised not to retaliate, interfere with the investigation or spoliate evidence.

Employers in regulated industries may have an obligation to report to regulators or prosecutors misconduct uncovered in internal investigations. The SEC, for instance, expects publicly traded companies to disclose securities laws violations uncovered in internal investigations. The SEC has identified criteria employers should consider in determining, on a case-by-case basis, whether, and how much, to credit a company’s self-policing, self-reporting, remediation and co-operation. Some of these considerations include:

• the nature of the misconduct involved and how it arose;
• where in the organisation the misconduct occurred;
• how long the misconduct lasted;
• how much harm the misconduct has inflicted upon investors and other corporate constituencies;
• how the misconduct was detected and who uncovered it;
• how long after discovery of the misconduct the employer implemented an effective response;
• the steps the company took upon learning of the misconduct;
• the processes the company followed to resolve these issues and ferret out necessary information, and whether it did a thorough review of the nature, extent, origins and consequences of the conduct and related behaviour; and
• whether the company promptly made available to SEC staff the results of its review and provided sufficient documentation reflecting its response to the situation.

Public companies may have the obligation to disclose to shareholders the results of internal and external investigations of workplace misconduct. In Press Release 2023-22, the SEC announced that it had entered into a USD35 million settlement with Activision Blizzard for failing to implement controls to collect and review employee complaints about workplace misconduct, resulting in the failure to disclose material information to investigators, and for requiring employees to sign separation agreements that prohibited them from disclosing securities law violations. Activision also faced a putative class action shareholder lawsuit for failing to disclose government investigations of alleged pervasive workplace misconduct.

In 2023, the SEC settled charges against McDonald’s and former CEO Steve Easterbook for making misstatements Easterbook made during an internal investigation in order to receive a USD105 million severance payment. The Director of Enforcement of the SEC explained that “[w]hen corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives… By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with – and ultimately misled – shareholders”. In addition to repaying the bonus, the SEC imposed a five-year officer and director bar and a USD400,000 penalty.

Many employers have adopted policies and practices protecting the confidentiality of workplace investigations. These rules encourage employees to make complaints and participate in workplace investigations without fearing retaliation or co-worker conflict. However, overly restrictive confidentiality rules may be viewed as restrictions on employees’ rights under Section 7 of the NLRA to discuss their concerns with co-workers or dissuade them from making complaints. Moreover, enforcement agencies such as the SEC have continued to enforce restrictions on employee confidentiality agreements.

The current standard applied by the NLRB is the Stericycle standard, which in 2023 replaced the more employer-friendly Boeing test. Under Stericycle, workplace rules, such as confidentiality rules, are presumptively unlawful if they have a reasonable tendency to chill employees from exercising their Section 7 rights, evaluated from the perspective of an economically dependent employee. Employers can rebut this presumption only by proving the rule advances legitimate business interests and cannot be more narrowly tailored.

In a 5 May 2025 ruling, an NLRB administrative law judge (ALJ) addressed an acknowledgment form Costco used during internal investigations, which prohibited employees from recording interviews and required confidentiality during ongoing investigations. The ALJ, applying the standard in Stericycle, concluded that the confidentiality provision had a reasonable tendency to chill employees’ Section 7 rights by preventing them from sharing information regarding harassment complaints and soliciting support from others. He also ruled that the savings clause was too vague to adequately inform employees of their protected rights, particularly given the threat of discipline for violations.

Although this decision is (as of January 2026) on appeal to the board, the board was unable to decide cases until additional members were appointed on 7 January 2026. It is anticipated that the newly composed board will overturn the Stericycle standard. On 16 January 2025, in Memorandum 25-04 departing NLRB general counsel Jennifer A Abruzzo offered employers a roadmap for balancing employment rules and employee rights in internal investigations under the Stericycle standard. Less than a month later, NLRB acting general counsel William Cowen issued Memorandum 25-05, which rescinded 29 policy memoranda issued by his predecessors, including 25-04. Although the Memorandum noted that additional guidance would be forthcoming, a new Memorandum has not yet been issued. With a quorum on the board and new general counsel (who was also sworn in on 7 January 2026), the NLRB will be poised to address this issue.

See 1.7 Other Cases.

Typically, the investigator will first interview the complainant to understand his or her concerns, answer any questions he or she has and assess whether interim relief is necessary. As the complainant describes the incidents and events, the investigator should ask the complainant for the names of all witnesses and evidence that supports his or her claims.

After the initial interview, the investigator should meet with the investigation team to discuss the witnesses identified by the complainant and other witnesses who may have information relating to the events at issue. Typically, interviewing the accused in the next step in the investigation. As with the complainant, the investigator should ask the accused to identify witnesses and evidence that support his or her position. Then, the investigator typically interviews the witnesses who are most critical to the events at issue.

There is no magic formula for conducting internal investigations. An effective investigation can involve two to over 200 witnesses. In any investigation, the investigator and the investigative team need to balance the confidentiality interests of the company and the complainant, accused and witnesses with the need for the statements and evidence necessary to make accurate factual determinations and, if necessary, determine effective remedial actions.

With ChatGPT and other AI resources at their fingertips, witnesses are increasingly asserting what they view as their “rights” during internal investigations. Increasingly, witnesses are refusing to participate in interviews, answer questions and identify “sources”, or provide access to evidence.

For each such refusal or request, the employer needs to consider company policy and prior practices, and the law of the jurisdiction in which the employee works. However, it is important for the investigator to consider why the witness is refusing to co-operate, asking him or her about the justification for their refusal. If they legitimately fear retaliation, the investigator and employer should explore alternatives that will make the employee feel comfortable participating in the investigation.

If the complainant refuses to participate in an interview or to provide relevant evidence, a court may find that he or she failed to act reasonably for the first prong of the affirmative defence in harassment situations. Also, an investigator legitimately may rely on the complainant’s refusal to participate in the investigation in making fact determinations. In these situations, it is important for the employer to:

• document the refusal or demand (eg, the refusal to appear for interview or to provide evidence);
• offer to provide the relief requested by the employee or a reasonable alternative, if required by company policy or applicable law;
• document the employer’s offer and the witness’s response; and
• if the witness continues to refuse to co-operate, clearly notify the employee of the consequences of their continued refusal to co-operate.

The investigators should determine the methods they will use to interview the complainant, other relevant witnesses and the accused. Virtual investigation methods are an important part of an investigators’ toolkit and offer significant advantages for clients, including allowing investigators to conduct interviews across time zones and work environments and giving clients more control over the format and cadence of an investigation. However, for investigations that involve serious issues, like criminal misconduct or misconduct that must be reported to the authorities, it is important for the investigator to meet with the key witnesses in person so that the investigator can judge the witnesses’ credibility.

It is often advisable to have two investigators attend each interview. By having a second person at the interview, the interviewer can maintain eye contact with the witness and move more quickly through the questioning. A familiar representative from the legal department or HR may make the interviewee feel more comfortable. Also, after the interview, the interviewer and the scribe can share information and perspectives concerning the interviewee.

There are no hard-and-fast rules concerning who should serve as an interviewer. Obviously, the accused and employees who are viewed as closely aligned with the accused should not conduct the interview or attend it. In selecting the interviewer, employers should consider two key factors. First, will the interviewer appear objective and make the witness feel comfortable providing information? Second, will the interviewer present well if the employer needs to offer evidence concerning the investigation or investigation findings at trial or to a government investigator?

See 3.4 Interviewers.

Increasingly, complainants, witnesses and the accused are requesting or demanding that their counsel or a representative be present during investigative interviews. Under Section 7 of the NLRA, employees have the right, upon request, to have a representative present during interviews that the employee reasonably believes could lead to discipline. Employers are not required to inform employees that they have the right to a representative during an investigatory interview. However, once an employee has requested a representative, the employer may violate the NLRA if they proceed with the interview.

It is imperative that, at the start of each interview by or at the direction of the employer’s counsel, counsel provides Upjohn notifications to the witness. These notifications alert the witness that:

• the interviewer represents the employer or the board (and not the individual witness); and
• any privileges belong to the employer or the board, which may choose to waive the privilege and disclose information provided during the interview to others.

The interviewer should be prepared to answer questions from witnesses concerning this notification, including whether a witness needs his or her own lawyer and how the information shared with the interviewer may be used by the employer.

If the witness stops the interview, the interviewer should ask the witness why they are stopping the interview and address any concerns expressed by the witness. After the interview, the interviewer or an employee on the investigation team should send a communication to the witness confirming that he or she stopped the interview and stating the justification provided by the witness for ending the interview. If the witness has raised a legitimate concern, such as a request for a representative, the employer should explain how the employer will try to resolve the employee’s concerns.       

It is effective to have a scribe present during the interview to take notes so that the investigator can develop a rapport with the witness and maintain eye contact. In most cases, the interviewer or note-taker should reduce the notes of the interview into a privileged summary shortly after the interview is complete. Cost and time considerations will often determine the type of summary prepared by the interview team.

In many cases, it will be helpful to prepare a formal interview memorandum summarising the interview, but a simpler bullet point summary may be appropriate. The summary should identify who attended the interview, the instructions given to the witness, the witness’s responses to questions, and any documents shown to the witness and witnesses identified during the interview. Investigators have the option of providing the summary of the interview to the witnesses and asking him or her to confirm that the summary is accurate and, if there any inaccuracies, to identify them. If the witness signs and/or corrects the summary, it will provide persuasive evidence if the witnesses tries to change his or her story.

Before recording an interview, the interviewer should notify the interviewee that the interview is being recorded and, in most situations, ask for their written consent. Only 11 states require both parties to consent to a recording. However, to increase the likelihood that the recording will be admissible and viewed favourably by the judge or arbitrator, it is advisable to obtain the written consent of the interviewee.

If an investigator wants to record an interview, he or she should consider whether recording the interview will negatively impact the interviewer’s rapport with the witnesses or intimidate the witness. Some of the impact of recording the interview may be mitigated by explaining to the witnesses that the interview is only being recorded to ensure that the interviewer takes accurate notes and/or by offering to provide a copy of the audio recording to the witness.

Many employers prohibit recording by employees in the workplace. And, as noted in 2.3 Confidentiality Agreements and NDAs, some employers require witnesses to sign acknowledgements during investigations that include prohibitions on recording investigative interviews. Although, particularly with remote interviews, it is impossible to determine whether a witness is recording the interview, interviews can reduce the risk by conducting the interviews in person, requiring the witnesses to leave their phone in a separate room, and sign a certification that the witness is not and will not record the interview. As with all restrictions imposed on witnesses, the employer will need to weigh the impact of taking these steps against the quality of information they will receive through the interview.

When the complaint is received, the investigation team should determine the sources of proof to which they will need access for the investigation. The team should consider all of the categories of evidence that may be relevant to resolving disputed issues in the investigation, preserve them and review them for relevant evidence. The employer’s IT department should be involved in suspending any regular document deletion programmes and creating backups of relevant databases and systems and, where appropriate, individual devices. The company should carefully consider when and how to obtain forensic images of employees’ company-issued and, where appropriate, personal devices, which may potentially contain critical information.

The evidence relevant to each individual investigation will differ significantly. As part of the pre-investigation described in 1.7 Other Cases, the investigation team should discuss the different sources of information available through the company and through witnesses. For each category, the team should identify the “owners” of the evidence at the company and how it can be preserved and reviewed. During witness interviews, the interviewer should ask witnesses how the investigators can confirm the information the witness is providing or how they can obtain information concerning the incident. Often, witnesses will voluntarily offer evidence from their personal cell phones, including text messages, emails, audio recordings and photographs that can, with the witness’s permission, be preserved for the investigation.

Employers should undertake surveillance of employees with caution. Several states have adopted off-duty discrimination statutes that prohibit employers from observing employees during non-working hours. These statutes generally prevent employers from taking adverse job actions against employees and applicants as a result of lawful activities off the employer’s premises during non-working hours.

Employers have a duty to protect employees from known hazards in the workplace. If they fail to notify employees of hazards and take steps to protect employees from them, they may be held liable under the doctrine of respondeat superior or for negligent supervision.

In situations involving allegations of physical contact or other gross misconduct, employers should take measures to protect the complainant. Depending on the nature of the conduct, an employer may place the accused on paid or unpaid leave or take other measures, such as a schedule or shift change, to reduce contact between the complainant and accused. However, the employer should make certain that protective measures are not viewed as retaliatory. Before changing the schedule of or placing the complainant to leave, the employer should co-ordinate with him or her and obtain his or her consent.

If the employer decides to place the accused on leave, it should notify him or her of the reason for the leave, the anticipated period thereof and the expectations of the employer while the accused is on leave. If the employer is concerned about any retaliation against the complainant, it should direct the accused employee on leave not to contact the complainant or any other employee and to remain off the premises.

In any investigation, employers should take steps to protect the accused, who may or may not have engaged in the misconduct alleged in the complaint. The first step is to notify the accused of the accusations against him or her and provide him or her with a fair opportunity to rebut and present evidence responding to the allegations. The accused should also be advised of his or her obligations (i) not to engage in any conduct that could be viewed as retaliatory and (ii) to preserve all evidence relating to the allegations.

If the investigation of the allegations is not handled properly, the accused assert claims against the employer or individual employees. Employees accused of wrongdoing have asserted claims against their former employers for defamation under state law. To reduce the risk of a defamation claim, an employer and its investigators should avoid sharing information concerning the investigation outside of the company, clearly refer to the complaints against the accused as allegations and use neutral questions (eg, “Has anyone ever...?”) during interviews.

Also, the accused may assert a claim against the employer for discrimination, claiming that employees accused of similar misconduct outside of his or her protected class were treated more favourably. However, as with other discrimination claims, the employer’s determinations in the investigation generally will be upheld if the decision-maker reasonably relied on the information uncovered in its good faith investigation of the allegations.

Any action taken against an accused during the investigation, such as a leave of absence while the investigation is being conducted, may qualify as an adverse employment action or as an implicit defamatory statement. It is important for the employer, as part of its pre-investigation described in 1.7 Other Cases, to determine whether interim measures are necessary to protect the complainant or witnesses from retaliation or further mistreatment. In situations where there has been physical contact or threats of retribution, it is important, as described in 4.1 Protection of the Reporter, to take steps to protect the complainant and witnesses.

Those steps may include:

• placing the accused on administrative leave;
• changing the accused’s shift so that he or she does not come into contact with the complainant or other witnesses;
• allowing the complainant or other witnesses to work remotely during the investigation;
• hiring security personnel to supervise and monitor the workplace;
• notifying the local authorities of security concerns; and/or
• supporting the criminal complaints of complainants or witnesses.

As with a remedial action at the end of an investigation, an employer’s decision to take an interim measure will be assessed under the business judgment rule, which considers whether the employer’s decision was justified based on the information known to the employer through its good faith investigation.

The same considerations apply to the protection of other employees, including those who are not involved in the investigation. If the accused is alleged to have engaged in conduct that is dangerous or threatening, the employer should consider expanding the protections described in 4.3 Measures Against the Respondent to all employees or all employees who work in the same area. Employees who are injured because the employer did not take reasonable precautions to protect employees from threats in the workplace can face civil claims for negligent supervision, workers’ compensation claims, and claims and penalties under federal and state workplace safety laws.

Other than contractual rights available to employees under individual employment contracts, employer policies and CBAs, employees of private employers have limited rights during internal investigations:

• as described in 3.7 Information, attorneys conducting witness interviews must notify the witness that they are counsel for the employer, they do not represent the witness and confidential information they disclose during the investigation may be shared with the company;
• as discussed in 3.6 Support Person and/or Lawyer, employees may have the right under Section 7 of the NLRA to have counsel or another employee present during investigative interviews;
• 2.3 Confidentiality Agreements and NDAs addresses the fact that employees may have the right to discuss the concerns that are the subject of the complaint with co-workers and encourage other employees to speak up; and
• if the employer’s policies describe the procedures that the employer will follow during internal investigations, employees may claim that these policies form a contract that requires the employer to comply with them.

An employer may adopt procedures or internal regulations that go beyond the limited rights described in 5.1 Requirements. Many larger employers have detailed procedures for conducting investigations to ensure that employees are treated fairly and consistently, reducing the likelihood of discrimination claims. If these procedures are viewed by a court as forming a contract or establishing a practice for handling complaints, failure to comply with them could trigger discrimination or breach of contract claims by employees.

Discrimination, Retaliation and Whistle-Blower Claims

Under what is referred to as the business judgment rule, if a plaintiff challenges an employer’s decision during or based on the results of an internal investigation, the decision will be upheld if the employer made a reasonable, good faith decision based on the information before it at the time of the decision. A plaintiff may not challenge the decision based on evidence that he or she did not present in connection with the internal investigation, such as a new witness or exhibit.

In the McDonnell Douglas burden-shifting framework, the employer has an obligation to proffer admissible evidence showing that it made the challenged employment action because of the results of an internal investigation. The employee then bears the burden of proving by a preponderance of the evidence that the justification is untrue or a mere pretext for discrimination.

Faragher/Ellerth Defence

When an employer relies on this defence in a supervisor harassment claim, it bears the burden of proving by a preponderance of the evidence that (i) it took reasonable steps to prevent and correct the harassment and (ii) the employee unreasonably failed to use the steps available to him or her to avoid the harassment.

Contract Claims

Because employees are presumptively employees “at will”, to prevail in a breach of contract claim, a plaintiff must show that he or she entered into an enforceable contract with the employer, such as an offer letter or employment agreement. If a plaintiff claims an employer breached an employment agreement in conducting an internal investigation, the plaintiff must show by a preponderance of the evidence that (i) the parties formed an enforceable contract; (ii) the employer breached a term of that contract; and (iii) the plaintiff suffered damages because of that breach.

There are no hard-and-fast rules as to when an investigation must end. If the accused admits the conduct or there is conclusive evidence that he or she engaged in the misconduct alleged, the investigation may close quickly. However, if the investigation involves serious disputed misconduct involving multiple witnesses or the employer has a reporting obligation, the employer should conduct an investigation until it can make reasonable, good faith decisions regarding whether the misconduct occurred and how it should be addressed.

After the investigation is closed, the employer should follow any procedures required by an employment agreement, such as an employment contract or CBA. For example, the termination for cause provisions of an executive agreement may require the employer to provide a cure notification prior to a termination for cause. If contractual requirements are not implicated, it is advisable for the employer to notify the employees who participated in the investigation that it has concluded. In confirmed harassment situations, employers should explain the results of the investigation and the steps that are being taken by the employer to address it to the complainant.

Again, unless a report is required by a CBA or other contract, the employer has the discretion to determine the form, if any, of the report of the investigation. If it is likely that the investigation will be challenged by the complainant or the accused, it is advisable for the investigator to draft a written report and for the employer to explain to impacted employees the justifications for the actions it is taking in response to it. As discussed in 6.4 Reports, to show the evidence considered by the employer, the written report should describe the steps of the investigation, the evidence considered and the basis for the findings in it.

The last step in the investigative process is to prepare a report and close the investigation. Depending on the circumstances, a report can be a formal written document, a bulleted summary, a slide deck or an oral presentation. Regardless of format, the report typically should address:

• the allegations investigated during the investigation;
• the steps taken in the investigation;
• the evidence collected and considered;
• factual findings concerning the key disputed issues;
• any limitations on the investigation (eg, witness resistance or unavailability); and
• where appropriate, any remedial actions recommended.

Unless required by a contract, an employer does not have to provide information to the complainant or the accused concerning the results of the investigation. However, discussing the results of the investigation with the complainant will increase the likelihood that he or she will accept the results, regardless of the employer’s findings. If the employer is taking action against the accused, the employer should, at a minimum, explain the justification for the termination. In reporting on the results of investigations, however, employers need to be sensitive to the confidential information of other witnesses included in the report.

As explained in 2.2 Communication to Authorities, employers may have an obligation to report the results of investigations to authorities. If the investigation identified potential criminal misconduct (eg, a sexual assault), the employer may have an obligation to report the conduct and should advise the victim of their right to report. Also, regulated employers, such as federal government contractors, may have an obligation to report conduct uncovered in an investigation to authorities or regulators.

Given confidentiality concerns, employers should carefully restrict communications concerning the results of the investigation. However, depending on the circumstances, employers should consider the following communications:

• notifying witnesses interviewed during the investigation that the investigation has concluded and that they should immediately report any retaliation to a designated official;
• notifying the board of the results of investigations involving key company executives;
• notifying senior executives of the results of the investigation;
• notifying the managers of the accused of any remedial measures that were taken, particularly if the accused still works for the company; and
• conducting training for the managers involved in the challenged conduct to reduce the likelihood that misconduct will occur in the future.

If the allegations of the complaint are confirmed, the employer may take a range of appropriate disciplinary actions, from a verbal warning to a suspension or termination. In determining the appropriate action to take, employers should consider its policies and prior practices, the nature and severity of the conduct, the accused’s position and responsibilities, and the accused’s history of prior violations. The decision-makers should document the justifications for its decision and, where appropriate, be prepared to explain why it handled the situation differently than others.

After an investigation, it is critical for the employer to assess the policies, practices and circumstances that may have contributed to the misconduct of the accused. Employers often find that certain departments or areas of its operations trigger more complaints or that certain managers are not effectively enforcing its equal employment opportunity (EEO) policies. Or, there may be a widely held belief, true of not, that employees who complain will face retaliation.

Particularly if there is a pattern of complaints, the employer should consider whether it should adopt additional mechanisms to prevent future misconduct by the accused and other employees, such as:

• enhanced workplace monitoring and oversight;
• flexible work schedules, such as remote work;
• building EEO compliance into managers’ performance evaluations;
• more frequent or more effective manager and employee training; and
• limiting access to alcohol at company events.

The confidentiality of employee personal data is governed by a web of federal, state and local laws. Although a detailed discussion of these laws is beyond the scope of this article, employers and investigators should understand and comply with the following categories of laws.

• Medical information: The Health Insurance Portability and Accountability Act (HIPAA) and the Americans with Disabilities Act (ADA) and its state and local counterparts require employers to store medical records in a confidential location that is accessible only by specified company personnel, such as employees responsible for working with employees with disabilities in identifying accommodations.
• Banking information: The Gramm-Leach-Bliley Act requires employers to maintain the confidentiality of financial and banking information.
• Background checks: The Fair Credit Reporting Act and state laws regulate background checks by employers.
• Personal identifiable information (PII): Information like social security numbers, addresses and birth dates are governed by state privacy laws.
• Employment records: State law governs the maintenance and accessibility of personnel records of employees.
• Biometric data: Several states, including Colorado and Illinois, have adopted statutes that restrict an employer’s right to seek and/or use the biometric data of employees.
• Data breach notification: State-level breach notification laws impose obligations on employers to keep the personal information they collect and maintain concerning employees and applicants secure.
• State privacy laws: All of the state privacy laws, other than the California Consumer Privacy Act (CCPA), generally exclude data collected by employers from their scope. The CCPA requires employers to extend the same privacy rights to the personal data of employees and applications as are extended to data collected from consumers.
• CBAs: CBAs may address the collection, use and disclosure of personal data of members of the union.

Any investigator retained by an employer to conduct an internal investigation must comply with the restrictions set forth in 7.1 Collecting Personal Data. Before an investigator is allowed to access confidential personal information, such as health information or background checks, that is protected by these laws and provisions, the employer should determine whether employees’ consent covers the access, an additional consent is necessary and accessing the personal information is justified, given the scope of the investigation. Also, any protected personal information collected by an investigator must be maintained, consistent with applicable privacy laws.

Generally, outside of an arbitration or litigation, an employer should not provide access to personal data collected in an internal investigation. Under state law, a current or former employee may have access to his or her own personnel file. However, other than a personnel action form identifying any discipline issued in connection with the investigation, the investigation file is unlikely to be included in a personnel file. If the investigation file is requested through a document request or subpoena in arbitration or litigation, the employer should object to production of the file until they enter into an appropriate protective order protecting the disclosure and use of the file.

Employers are starting to use generative AI in conducting internal investigations, particularly to synthesise and analyse data. AI allows investigators to quickly review and synthesise data, prepare timelines, find patterns and summarise evidence. It can summarise witness interviews, eliminating the need to record interviews. However, given the risk of bias, hallucinations and admissibility problems, the results generated by AI must be reviewed and confirmed by investigators. Also, investigators should not use publicly accessible AI, such as the free version of ChatGPT, which could expose personal and other confidential information to the public.

In the United States, there is a veritable alphabet soup of federal and state whistle-blower statutes.

• Section 806 of the Sarbanes-Oxley Act (SOX) – protects whistle-blowers at covered employers who report conduct they reasonably believe constitutes mail, wire, securities or bank fraud or a violation of any rule or regulation of the SEC.
• Dodd-Frank – although the statute does not provide a private right of action, whistle-blowers who report original information to the SEC or Commodity Futures Trading Commission (CFTC) may be eligible to participate in a reward of 10–30% of any recovery obtained by the SEC or CFTC.
• False Claims Act – provides a private right of action to whistle-blowers who suffer an adverse employment action for reporting non-public information about fraud against the government.
• Whistle-blower claims administered by OSHA – OSHA administers a whistle-blower protection programme that protects employees from retaliation for raising or reporting concerns about workplace safety and worker protection programmes.
• State whistle-blower statutes – most states have whistle-blower protections that prohibit retaliation against employees for refusing to engage in and reporting illegal actions. New York, for example, protects employees from retaliation for reporting activities they reasonably believe violate public health, safety, fraud and environmental statutes and regulations.

Title VII and state and local statutes and regulations protect employees from sexual harassment. During the past year, there have been significant changes in the scope of protection available for sexual harassment at the federal level. An Executive Order issued in January 2025 – called “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” – limited the protections available for discrimination based on gender identity, transgender status and sexual orientation. In May 2025, a federal court vacated portions of the 2024 “Enforcement Guidance on Harassment in the Workplace” (the “Guidance”) of the EEOC, finding that the EEOC exceeded its statutory authority by expanding the definition of sex under Title VII “beyond the biological binary”. Shortly after the decision was issued, the EEOC deleted the parts of the Guidance on their website vacated by the decision. In December 2025, the EEOC took steps rescind the Guidance entirely.

Meanwhile, states have expanded the protections available to sexual harassment claimants under state law. In 2025, California substantially expanded the scope of its statute, including increasing the statute of limitations to ten years and adding another two-year look-back window for claims. Also, Colorado added to its anti-discrimination laws provisions relating to the use of a person’s correct name and pronouns, regardless of gender identity. State laws have also continued to expanded employers’ obligation to conduct mandatory sexual harassment training.

There are no comprehensive federal or state laws that provide a cause of action based on bullying in the workplace. However, if the bullying is based on a protected characteristic and is severe and pervasive, it may be protected by federal or state anti-discrimination statutes. In addition to the protections provided by federal, state and local anti-harassment statutes:

• California requires training on “abusive conduct” as part of harassment prevention training;
• New York requires anti-bullying training for certain industries;
• Tennessee enacted a law encouraging public employers to adopt anti-bullying policies, offering them protection from lawsuits if they comply;
• Virginia and Maryland require anti-bullying training for certain state employees; and
• Utah mandates training for state agencies related to abusive conduct.

As noted in section 2.2 Communication to Authorities, if an employer believes in good faith that a current or former employee has engaged in a criminal act, it should consider taking action to protect employees. To reduce the risk of claims of malicious prosecution or defamation claim, before making a report to authorities, the employer should collect and review evidence of the potential criminal violation to ensure that it has a good faith, reasonable basis for making a report. If the authorities investigate the complaint, the employer may need to curtail its internal investigation until the criminal investigation is completed.

Employers should consider additional steps in protecting employees from an employee who has engaged in a criminal act in the workplace, namely:

• notifying the police so that they can monitor the area or provide support during a termination meeting;
• supporting the potential victim of the crime in making a criminal complaint against the accused;
• hiring private security to monitor the workplace;
• notifying the accused that he or she may not come into the workplace or any worksites or contact any employees;
• providing a description and picture of the accused to security personnel and directing them not to let the accused on the premises; and
• allowing the victim to work remotely during the investigation.

When employers are investigating complaints that involves multiple countries’ laws, they must navigate varying and conflicting laws and cultural norms. Employers should adopt a co-ordinated approach with local counsel to ensure that they comply with legal standards and properly handle cross-border data transfers. The employer should first determine the jurisdictions implicated by the investigation, including where the employees work, where the company is located and the incidents that occurred. The employer should then assess, in consultation with local counsel, the laws that apply in each jurisdiction. Among other issues, employers should determine before they undertake the investigation the scope of protections, such as the attorney-client privilege, which are available for the investigation in each jurisdiction.