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How to Conduct an Employee Misconduct Investigation: A 13-Step Guide

When you suspect an employee of misconduct, use this 13-step guide to ensure your investigation is timely, well-documented and consistent with protocol.

Posted by Ann Snook on September 9th, 2021

In March 2019, a former employee was awarded $1.7 million in a wrongful dismissal lawsuit. His employer terminated him, alleging he had committed fraud. However, the court found the employer couldn’t prove the allegations and that the countersuit they’d filed against the former employee was a form of intimidation.

In fall 2020, a former employee was awarded $17.2 million for wrongful termination and defamation. He was fired for discriminating against his subordinates and committing other misconduct, but the court found that the employer terminated him to avoid paying out his annual bonus.

These cases proves how important a strong employee misconduct investigation can be. When you suspect an employee of misconduct, make sure your investigation is timely, well-documented and consistent with protocol. Use this 13-step guide for help.

 

Our eBook Conducting Effective Workplace Investigations details the steps you need to take for fair, thorough employee misconduct investigations. Download it for free here.


Contents

Whether you’re investigating fraud, harassment, IP theft or some other form of misconduct, the fundamentals of your investigation should be the same.

  1. Be prompt. A timely investigation shows your commitment to preventing retaliation and future incidents.
  2. Maintain confidentiality to dispel employees’ fears and protect your organization from lawsuits.
  3. Be thorough and impartial. Treat the accused person with respect, but do everything in your power to find the truth.

 

1. Investigate with Purpose

 

An employee misconduct investigation can be chaotic and stressful, especially if you are investigating a complex or sensitive issue. That’s why you need to keep the big picture in mind at every state.

Before you take a step, think about the purpose. Consider:

  • Will this action help reveal the truth?
  • Will it lead to a strong resolution to the issue?
  • Could you defend it in court if the accused challenged you on it?
  • Would documentation of this action help you investigate similar occurrences in the future?

 

2. Respond Quickly But Be Prepared

 

A quick response shows the complainant that you’re serious about the investigation and gives the accused fair notice of the allegations. However, don’t go into an employee misconduct investigation blind.

Review your workplace’s policies, procedures and protocols every year (and after incidents). If you find something that needs updating, work with a committee to correct it. Assess (or write) your policies regarding:

  • Harassment, bullying, and discrimination
  • Fraud and theft (including cybersecurity)
  • Health and safety measures
  • Use of company property
  • Acceptance of gifts
  • Conflicts of interest

 

When you know what your organization stands for and how to react to situations ahead of time, your investigation will be well-organized and prompt from the start.

detecting deception in investigation interviews

3. Create an Investigation Plan

 

Now that you know where you’re going, you need to plan how to get there. Create an investigation plan to get your team all on the same page. Your plan may change as you collect new information or evidence, but having a framework keeps you on track.

The plan will help you answer the following questions:

  • What is the nature of the misconduct?
  • Should an internal or external investigator handle the case?
  • What investigation methods should you use?
  • What resources should you use for evidence?
  • Are there any witnesses? When, how and why should each one be interviewed?
  • When should tasks (e.g. evidence collection, interviews, investigation, reporting) be completed?

 

First, log the high-level information about the case. What issue are you investigating? How did you find out about it? Who will investigate it? What is the budget for the investigation? Note the names of the complainant (if applicable), the accused employee, and any witnesses, as well as their contact information.

Next, determine the scope of your investigation. This refers to the places and people you will use to gather evidence.

Finally, plan out all the activities that need to be performed (e.g. interviews, reports, document review). Determine who will carry out each one and when it needs to be completed.

 

Need help organizing your plan? Download our investigation plan template to use as a guide.

 

4. Take Interim Action

 

Next, take appropriate steps to prevent retaliation and further misconduct in the interim. You may need to change an employee’s work hours, work area, or even ask them to take paid leave during the investigation.

Whatever you do, keep the investigation confidential. Gossip poisons a work environment and can compromise the investigation’s integrity.

Remember that if a complainant is involved, only take interim actions that they approve. Changing their hours or work area without their consent could be seen as retaliation, allowing them to file a lawsuit against you.

For the accused employee, you may change their work conditions, up to and including scheduling paid administrative leave. According to lawyers Stephanie Lowe, Brett A. Overby, and Peter J. Brown:

“During paid administrative leave, the employee is typically relieved of all duties and responsibilities . . . [but] remains employed by the agency and continues to receive full pay and benefits. During the leave, an agency may prohibit the employee from entering agency-owned property or facilities and can order the employee to surrender all agency-provided property . . .  The agency can also require the employee to remain available during regular business hours to answer any and all work-related inquiries.”

To avoid a lawsuit from the accused employee, be sure to emphasize that these actions are not disciplinary or retaliatory and are temporary until the investigation has concluded. In addition, you can avoid an adverse employment action claim by:

  • continuing to provide the employee’s full pay and benefits
  • ensuring the leave doesn’t hinder the employee from engaging in a protected activity (e.g. whistleblowing, free speech, requesting accommodation, etc.)
  • adhering to an investigation process consistent with your internal policies and similar past incidents
  • allowing the employee to apply for advancement opportunities while on leave

 

5. Protect the Complainant

 

Correcting the issue shouldn’t be your only goal during an employee misconduct investigation. You should also strive to protect the complainant, especially in sensitive or violent cases. Offer them support. Allow them to take time off, work from home or switch their schedule to reduce contact with the accused person.

Don’t force them to make changes they don’t want to. A complainant shouldn’t have to suffer because of another employee’s actions.

 

RELATED: How to Complete Employee Disciplinary Forms (or Write-Ups)

 

6. Protect the Accused

 

While you need to protect your company and employees, don’t automatically assume an accused person is guilty.

Employee relations expert Simon Sapper explains, “You can’t second-guess the evidence. Don’t leap to conclusions that may not be supported by fact.” If you find the employee to be innocent, conducting the investigation as though they’re guilty could not only damage relationships, but could even lead to a discrimination lawsuit.

“You need to investigate the specific complaint or allegation,” Sapper says. “The employee may be loathed, but you can’t let unpopularity persuade you to find against them on an entirely unrelated charge.”

7. Document Everything

 

From the complaint or discovery of the misconduct to the final investigation report, document everything thoroughly. This way, you won’t lose any important evidence or information. If the complainant or accused denied something that’s true and you couldn’t prove otherwise, create better documentation.

Strong documentation also protects your organization in the event of a lawsuit. If you take disciplinary action, even a verbal warning, document what you did and why.

Case management software makes this step easier. Interview notes, photo and video evidence and other related documents live right in the case file so you don’t have to hunt them down in Excel files or Word documents. Role-based access keeps everything confidential, too. Learn how i-Sight’s case management solution can improve your employee misconduct investigations here.

 

8. Get External Help

 

Sometimes using an internal investigation team isn’t appropriate. According to president of SACS Consulting & Investigative Services, Inc. Timothy Dimoff, a number of factors go into this decision, including:

  • Cost/budget
  • Internal and external control issues
  • Investigation timeline
  • Objectivity
  • Seriousness of allegations
  • Capabilities and skill sets of investigators

 

When you can’t find an impartial investigator in-house, or in legally complex cases, you may need to seek external help. External investigators ensure your investigation is objective, fair and free of conflicts of interest.

Even if your internal investigators feel they could be completely neutral, they or the employees involved in the investigation could be biased. For instance, say your well-liked CFO is accused of sexual harassment. Because they respect and personally like the person, the investigator might unknowingly presume their innocence.

Or, says Dimoff, “witnesses who may be afraid to speak candidly to an in-house investigator often feel free and comfortable speaking to an outside investigator.”

In addition, “outside firms often have subject matter experts and specialized skill sets,” Dimoff says. “They also may have legal counsel on staff to assist, as well as a depth of staff to bring in if needed.”

 

 

Did your investigation determine that the employee committed misconduct? Document next steps using our employee disciplinary action form template.

 

9. Involve the Union

 

If your workplace is unionized, the accused employee has the right to union representation during interviews. Complainants have the choice to let their employer or the union investigate misconduct. Should they choose a union investigation, offer to conduct your own investigation if they don’t like the outcome.

If you’re investigating misconduct that involves two unionized employees, such as harassment or discrimination, “regardless of what happens, one of the Union’s members will be unhappy with the Union, feeling unsupported and not represented,” explains Cate Moss, National Human Rights Coordinator, Unifor Local 2002.

“Avoiding a fight over the findings and focusing on solutions instead is perhaps a positive way forward . . . Although members expect the Company to not weigh in their favour, they don’t expect it from their Union. But when two members are in conflict, the Union must choose. It will be easier when the facts are agreed upon and the Union believes in the fact gathering process that was undertaken.”

 

 

10. Communicate Well

 

Don’t keep accused employees or complainants in the dark during an employee misconduct investigation. Before you start the investigation, meet with those involved and detail the investigation process. Explain the steps and encourage them to ask questions along the way.

Transparency and frequent updates about your investigation keep all parties in the loop. They’ll feel more at ease when they know what’s going on “behind the scenes” which benefits both them and you as an employer. When the parties feel that you’re going about your investigation in a fair way, the odds of future incidents and retaliation, discrimination, and defamation lawsuits go down.

Provide regular updates about the status of the investigation to each party as it applies to them. When you’ve reached a decision, meet with the accused and the complainant (if applicable) separately to go over next steps.

 

11. Don’t Lead Interviewees

 

To maintain the investigation’s integrity, be mindful of your verbal and body language during interviews. For example, don’t use language that assumes something to be true. Instead of asking “Did you see Joe punch Jack?”, ask “What did you see?”

Similarly, keep your body language objective. While it feels natural to smile or nod to show you’re listening, this could indicate to a witness that they’re saying something you want to hear. As a result, they might change their story to fit what they think is your approved narrative.

To keep your interview neutral, try these other tips, too:

  • Listen more than you talk.
  • Speak in plain language and avoid jargon.
  • Ask short, simple questions.
  • Avoid verbal and non-verbal cues that affirm or reject the interviewee’s statement (e.g. grunts, “huh”, etc.).
  • Repeat answers back verbatim to confirm the information.
  • Ask the interviewee to share facts, not opinions or conclusions.

 

RELATED: Engagement Strategies to Reduce Employee Misconduct

 

12. Assess Credibility

 

As you work towards a resolution, determine the credibility of the interviewees. Ask these questions when reviewing interview notes:

  • Would the person’s story makes sense on its own?
  • Did they exhibit verbal or physical signs of deception or truth?
  • Is there evidence to corroborate their story?
  • Does their story make logical sense?
  • Are other interviewees saying the same things?
  • Do they have any reason to lie?
  • Does the accused have a history of similar misconduct?

 

13. Avoid Bias

 

Everyone has biases, even if they don’t realize it.

To keep bias out of your internal investigations, as well as the rest of your processes, require all employees to take unconscious bias training. This will help your team recognize biases they hold and teach them how to keep bias from taking over their actions.

During an employee misconduct investigation, investigators should work to combat confirmation and memory biases.

Confirmation bias occurs when you look for evidence to confirm your initial thoughts about the case. To reduce this, list the reasons that your hypothesis could be wrong. This ensures you look at all of your evidence objectively and equally.

Memory bias changes the way you perceive a piece of information after time passes or you discuss it at length. Taking notes can keep your evidence in perspective so you don’t over- or under-value details from interviews or document review.

 

Download our employee misconduct investigation guide to ensure you don’t miss any key steps.

 

Following the proper steps for an employee misconduct investigation can save you money, reduce stress and disruption and protect you from reputation damage.

Yet, according to an i-Sight poll, 11 per cent of companies don’t have set steps in place for internal investigations. Being respectful, thorough, and transparent, and following a consistent process minimizes the incident’s effect on your organization as a whole.


Ann Snook
Ann Snook

Marketing Writer

Ann is a marketing writer at i-Sight Software. She writes about issues related to investigations of fraud, employee misconduct, corporate security, Title IX, ethics & compliance and more.

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