The pros and cons of internal investigations vs. outside investigators
Question: What are the risks of an employer conducting its own investigation into employee misconduct or harassment versus using a third-party investigator?
Answer: Employers frequently encounter situations where there is a need to investigate issues in the workplace, such as employee misconduct or alleged harassment. It is important to ensure that managers are properly trained to conduct these investigations, especially where an investigation may be required by a collective agreement, statute or policy.
While many kinds of investigations can be conducted effectively in-house, circumstances can arise where it is advisable to consider an independent third-party investigator — such as situations that are factually or legally complex, politically sensitive, or where the outcome might result in dismissal.
There are trade-offs that should be considered when an employer is deciding whether to use an internal or external investigator. Cost can be a significant factor, because external investigators charge for their services. However, an external investigator will typically be a trained and experienced individual, who is seen as being independent, who knows how to conduct an investigation properly, and who will prepare a report that is likely to be more legally defensible, and perhaps more internally acceptable, than a report of an internal investigator. Also, busy managers may not have the time or the training to conduct an investigation effectively.
An employer can face risks in choosing to conduct its own investigation rather using an external investigator. Common mistakes made by internal investigators include: failing to conduct a timely investigation; failing to maintain objectivity; failing to conduct proper or thorough interviews; failing to give the respondent proper notice of the allegations in a reasonable opportunity to respond; failing to record the investigation findings properly; failing to maintain confidentiality; or failing to communicate the findings appropriately. Mistakes such as these may result in the outcome of the investigation being set aside by a court or tribunal, and can expose the employer to liability.
An employer that fails to conduct an adequate and fair investigation into an allegation that leads to dismissal runs the risk that it may not be able to establish just cause for dismissal in court: see van Woerkens v. Marriott Hotels of Canada Ltd. The risks arising from a flawed investigation process increase where the allegations are serious, such as criminal conduct or sexual harassment.
Courts have awarded significant punitive damages where employees have been wrongfully dismissed based on the results of an improper internal investigation. In Elgert v. Home Hardware Stores Ltd., the Alberta Court of Appeal awarded a terminated employee $75,000 in punitive damages (reduced from a jury award of $200,000 in aggravated damages and $300,000 in punitive damages), because the employer conducted its internal investigation in bad faith. The employee was accused of sexually harassing two co-workers. Notwithstanding the serious allegations of sexual harassment, the manager asked his friend, who was also his superior but had no experience or training in investigations, to investigate. The court found that the investigator failed to conduct an adequate investigation and the employer had not proven just cause for dismissal. The employee was awarded 24 months’ damages in lieu of notice, $60,000 for defamation, and $75,000 punitive damages.
Investigating allegations involving sexual harassment or other human rights issues may also risk damages for injury to dignity arising from a flawed investigative process. In Chuvalo v. Toronto Police Services Board, the tribunal found that the employer’s internal investigation of sexual harassment was flawed and placed an unnecessarily high burden of proof on the complainant. The tribunal noted that the internal investigator “had not investigated an allegation of sexual harassment and appeared not to have been given any special training in such matters.” The tribunal awarded the employee an additional $8,000 for injury to dignity based on “the emotional damage arising from the flawed investigation.”
In a unionized environment, an employer that conducts a biased and improper investigation leading to discipline or dismissal may risk having its disciplinary response overturned by an arbitrator. In Regional Municipality of Wood Buffalo v. Canadian Union of Public Employees, Local 1505, the arbitrator reinstated an employee who was dismissed based on the findings of an internal investigation. The arbitrator noted that the employer had a “seeming predisposition to find that (employee) almost entirely at fault” and that “the investigation was particularly flawed because it was incomplete.”
Employers who conduct their own investigations may also face concerns about the fairness and impartiality of the process. The parties involved — particularly the accused employee — may be less willing to accept the results of an internal investigation if there is an actual or apparent bias. Employee morale within the organization could be affected by perceptions of an unfair internal investigation. The use of an experienced, neutral third-party investigator may help to preserve procedural fairness and avoid such accusations.
For more information see:
• van Woerkens v. Marriott Hotels of Canada Ltd., 2009 CarswellBC 195 (B.C. S.C.).
• Elgert v. Home Hardware Stores Ltd., 2011 CarswellAlta 1263 (Alta. C.A.).
• Chuvalo v. Toronto Police Services Board, 2010 HRTO 2037 (Ont. Human Rights Trib.).
• Regional Municipality of Wood Buffalo v. Canadian Union of Public Employees, Local 1505 (Feb. 19, 2017), Alan V.M. Beattie — Arb. (B.C. Arb.).
