Quell the rumor mill while internal investigations progress

Do you have safeguards to protect confidentiality while you conduct internal investigations of sexual harassment and other employee complaints? If not, you should.

Here’s why: Employers have a duty to respond to employee complaints. They also have a qualified privilege to discuss those complaints internally. Yet, sometimes allegations amount to nothing, and the accused employee may be entirely innocent of the charges against her. If the employer is careless and allows word of the allegations to get out to people who have no reason to know about them, the employer may face defamation claims.

Your best bet is to let everyone involved in the investigation know—in writing—that all discussions are confidential. The investigation’s only purpose is to figure out the truth.

Recent case: Darlene Crouch sued her employer, J.C. Penney, after a subordinate complained to upper management that Crouch had allegedly threatened him with a knife, acted rudely and unprofessionally and told sexually oriented jokes. Crouch denied the allegations but began to hear rumors in the workplace about her alleged violent threat.

Crouch later sued, alleging defamation. A court has addressed whether J.C. Penney defamed Crouch by letting details of its investigation leak out. It was a close call for the company.

The court dismissed Crouch’s lawsuit, but only after she was unable to show exactly how her co-workers found out about the allegations. Because she could not identify the leak, the company wasn’t held responsible for the gossip.

The court said an employer has the right to—in fact, it must—investigate allegations of wrongdoings, and its internal investigations are privileged. But the employer still has to limit the investigation to those who have a legitimate business reason to know. (Crouch v. J.C. Penney Corporation, No. 4:06-CV-113, ED TX, 2008)