The Not-So-Simple Employee Disclipline Matter

Now, though, in the Sarbanes-Oxley (SOX) era, 'bad attitude' is being subsumed by other, similarly vague and unhelpful labels. The employment law-yer's antennae need to be raised, for example, when it is said that the employee is not a 'team player.' What team is the employee being asked to join? Is the employee a target for discipline because he or she does not go along to get along? Maybe there's a good reason for the employee's reluctance to join the 'team.'

Employment lawyers are trained to ferret out critical evaluative information when advising on an employee termination or discipline. Sometimes even before getting to the substantive reasons for the decision, we ask: Is the employee a member of a protected group? Has the employee complained in the past about discrimination or harassment? Has he/she recently returned from a disability or maternity leave? What about the person recommending termination or discipline? Have there been complaints about that person's lack of sensitivity to minorities? Is he or she a bully?

Relevant Questions

Other relevant questions include: What is the age of the targeted employee? Is he/she over 40? Has the employer made a decision to replace him/her? If so, what is the replacement's profile? In addition to this long list of questions, though, it is now critical to explore other areas of concern: Has the employee made a complaint about possible waste, unnecessary spending, or other allegedly inappropriate practices in the organization? Indeed, one of the first questions now should be: Does the employee work in the controller's office? Does he or she have access to sensitive financial records? Have you checked his or her personnel file, or e-mail, for a record of complaints about financial practices in the company? Is the decision maker under a cloud of his (or her) own, for conduct or performance practices in this area?

Parsing this information requires a good deal more than a cursory review of the employee's status as a member of a protected group. Sometimes, a complaint is hidden in the employee's comments on a past performance appraisal. Buried in the middle of a multi-paragraph memo, the employee may have made vague comments about tolerating waste or mismanagement, or similarly ambiguous concerns. These comments may loom large in the mind of the complaining employee, but be so subtle as to have been missed by the employee's supervisors or the personnel department in reviewing these forms.

The reasons for concern about comments of this nature are numerous. One is the possibility that the employee will assert that he or she is a whistleblower, and that the real reason for the discipline or discharge is not the substantive one relating to job performance that has been offered to him or her, but is, rather, the one that he or she raised, perhaps obliquely, in a past e-mail or memo. Of equal or greater concern, though, is the possibility that the employee has knowledge of questionable company practices that have previously gone unnoticed and undetected. As fantastical (and, perhaps, undefined) as the employee's complaints may have been, it is possible that there is something to them.

Sources of Information

The first and most logical source for information about the allegedly unethical practices will be the employee (or alleged whistleblower) who makes the complaint. If the employer is lucky, that employee will be available and willing to respond to questions about his or her allegations. Indeed, a current employee has an obligation to participate in an investigation of his or her claims, and should be quite willing to do so. Often, though, the whistleblower is a former employee who has retained counsel, and may not be available to assist in an investigation. Moreover, his or her claims may be so nonspecific in nature that the employer who, in good faith wishes to investigate them, may not know where or how to start.

The employer's conduct will be guided by the severity and nature of the allegations and the credibility of the source. Should the assertions of wrongful conduct come from an individual with access to critical company data, whose allegations are sufficiently specific to indicate knowledge of critical facts (and, although less critical, who does not appear to have an ax to grind), then the employer will be well served by conducting a complete investigation. This may ultimately turn into a multi-disciplinary exercise. Often, the best persons to conduct an investigation of financial data will be an independent third party, such as an accounting firm, that can work with the employer's counsel. If counsel directs the investigation in anticipation of litigation or for the purpose of providing legal advice, if the investigator reports to counsel, and if the investigation is kept confidential, it becomes more likely that the results will be shielded by the attorney-client or work product privileges ' which could protect the company if the investigator's recommendations are rejected by company officials. (Naturally, it may become necessary or desirable to waive the privilege after the employer receives the results of the investigation, in responding to regulators or otherwise asserting that the company took appropriate steps to root out wrongdoing.)

Experts

However, an accounting firm may not be the only expertise that is needed. For example, computer experts may be necessary to assure that the employer has gained access to critical e-mails or other electronically maintained records. It may also be appropriate to seek assistance from individuals with backgrounds in conducting criminal investigations. It is always helpful for an employment lawyer to consult with counsel with special expertise in criminal investigations. Your white-collar-crime partner will provide invaluable assistance, as well as an added level of comfort to your client.

Further, employees engaged in an internal fraud may have used code words or otherwise taken steps to encrypt their communications. While computer professionals may be able to assist the employer and its counsel in tracking down these communications, an expert in criminal fraud ' such as, for example, a private investigative agency with former law enforcement officials on its staff ' can provide invaluable advice in understanding information that you unearth.

The employer may also need to consider the possible impact on the company's image if word of the complaint is made public, is made the subject of a lawsuit or government investigation, or if the results of the investigation confirm wrongdoing. For this reason, the employer should have a crisis management plan in effect. Working either with the employer's internal corporate communications group, or with an experienced and reputable public relations firm, the company should identify one or more spokespeople. Those individuals should be chosen carefully for their ability to provide measured, calm responses to press inquiries and to present the company's position, as well as their knowledge concerning the issues.

The company should also be sure that those individuals receive appropriate training in talking to the press, that they are knowledgeable and articulate with respect to the key issues in the case, and that they have talking points that correctly reflect the company's position in the matter. That should, of course, include a strong commitment to understand and take appropriate measures to correct any wrongdoing that the investigation uncovers.

Thus can a routine request for advice on an employee discipline or discharge evolve into a more significant investigation of alleged corporate wrongdoing.

Philip M. Berkowitz, a member of this newsletter's Board of Editors, is a partner at Nixon Peabody, where he heads the international labor and employment law practice team. This article originally appeared in the New York Law Journal, a sister publication.

In the new age of the whistleblower, an employment lawyer who one day advises on a routine employee discipline or discharge may the next day find him- or herself directing a multi-disciplinary investigation of alleged corporate malfeasance, guiding a team of forensic accountants, private investigators, and public relations experts.

Employment lawyers have long understood that they need to look behind complaints that an employee has a 'bad attitude,' since a nonspecific, highly subjective criticism of this nature may not tell the whole story. In determining the risk of taking disciplinary action against an employee ' and particularly with regard to an employee who is protected by the array of federal, state, and local employment discrimination laws ' we look for objective information that evidences specific difficulties with the employee's job performance. With only an amorphous claim about 'attitude' and without solid, objective evidence, there is a risk that the employee may be able to claim that the real reason he or she is being disciplined is his or her protected status, not job performance problems.

'Bad Attitude' Out, Other Labels In

Now, though, in the Sarbanes-Oxley (SOX) era, 'bad attitude' is being subsumed by other, similarly vague and unhelpful labels. The employment law-yer's antennae need to be raised, for example, when it is said that the employee is not a 'team player.' What team is the employee being asked to join? Is the employee a target for discipline because he or she does not go along to get along? Maybe there's a good reason for the employee's reluctance to join the 'team.'

Employment lawyers are trained to ferret out critical evaluative information when advising on an employee termination or discipline. Sometimes even before getting to the substantive reasons for the decision, we ask: Is the employee a member of a protected group? Has the employee complained in the past about discrimination or harassment? Has he/she recently returned from a disability or maternity leave? What about the person recommending termination or discipline? Have there been complaints about that person's lack of sensitivity to minorities? Is he or she a bully?

Relevant Questions

Other relevant questions include: What is the age of the targeted employee? Is he/she over 40? Has the employer made a decision to replace him/her? If so, what is the replacement's profile? In addition to this long list of questions, though, it is now critical to explore other areas of concern: Has the employee made a complaint about possible waste, unnecessary spending, or other allegedly inappropriate practices in the organization? Indeed, one of the first questions now should be: Does the employee work in the controller's office? Does he or she have access to sensitive financial records? Have you checked his or her personnel file, or e-mail, for a record of complaints about financial practices in the company? Is the decision maker under a cloud of his (or her) own, for conduct or performance practices in this area?

Parsing this information requires a good deal more than a cursory review of the employee's status as a member of a protected group. Sometimes, a complaint is hidden in the employee's comments on a past performance appraisal. Buried in the middle of a multi-paragraph memo, the employee may have made vague comments about tolerating waste or mismanagement, or similarly ambiguous concerns. These comments may loom large in the mind of the complaining employee, but be so subtle as to have been missed by the employee's supervisors or the personnel department in reviewing these forms.

The reasons for concern about comments of this nature are numerous. One is the possibility that the employee will assert that he or she is a whistleblower, and that the real reason for the discipline or discharge is not the substantive one relating to job performance that has been offered to him or her, but is, rather, the one that he or she raised, perhaps obliquely, in a past e-mail or memo. Of equal or greater concern, though, is the possibility that the employee has knowledge of questionable company practices that have previously gone unnoticed and undetected. As fantastical (and, perhaps, undefined) as the employee's complaints may have been, it is possible that there is something to them.

Sources of Information

The first and most logical source for information about the allegedly unethical practices will be the employee (or alleged whistleblower) who makes the complaint. If the employer is lucky, that employee will be available and willing to respond to questions about his or her allegations. Indeed, a current employee has an obligation to participate in an investigation of his or her claims, and should be quite willing to do so. Often, though, the whistleblower is a former employee who has retained counsel, and may not be available to assist in an investigation. Moreover, his or her claims may be so nonspecific in nature that the employer who, in good faith wishes to investigate them, may not know where or how to start.

The employer's conduct will be guided by the severity and nature of the allegations and the credibility of the source. Should the assertions of wrongful conduct come from an individual with access to critical company data, whose allegations are sufficiently specific to indicate knowledge of critical facts (and, although less critical, who does not appear to have an ax to grind), then the employer will be well served by conducting a complete investigation. This may ultimately turn into a multi-disciplinary exercise. Often, the best persons to conduct an investigation of financial data will be an independent third party, such as an accounting firm, that can work with the employer's counsel. If counsel directs the investigation in anticipation of litigation or for the purpose of providing legal advice, if the investigator reports to counsel, and if the investigation is kept confidential, it becomes more likely that the results will be shielded by the attorney-client or work product privileges ' which could protect the company if the investigator's recommendations are rejected by company officials. (Naturally, it may become necessary or desirable to waive the privilege after the employer receives the results of the investigation, in responding to regulators or otherwise asserting that the company took appropriate steps to root out wrongdoing.)

Experts

However, an accounting firm may not be the only expertise that is needed. For example, computer experts may be necessary to assure that the employer has gained access to critical e-mails or other electronically maintained records. It may also be appropriate to seek assistance from individuals with backgrounds in conducting criminal investigations. It is always helpful for an employment lawyer to consult with counsel with special expertise in criminal investigations. Your white-collar-crime partner will provide invaluable assistance, as well as an added level of comfort to your client.

Further, employees engaged in an internal fraud may have used code words or otherwise taken steps to encrypt their communications. While computer professionals may be able to assist the employer and its counsel in tracking down these communications, an expert in criminal fraud ' such as, for example, a private investigative agency with former law enforcement officials on its staff ' can provide invaluable advice in understanding information that you unearth.

The employer may also need to consider the possible impact on the company's image if word of the complaint is made public, is made the subject of a lawsuit or government investigation, or if the results of the investigation confirm wrongdoing. For this reason, the employer should have a crisis management plan in effect. Working either with the employer's internal corporate communications group, or with an experienced and reputable public relations firm, the company should identify one or more spokespeople. Those individuals should be chosen carefully for their ability to provide measured, calm responses to press inquiries and to present the company's position, as well as their knowledge concerning the issues.

The company should also be sure that those individuals receive appropriate training in talking to the press, that they are knowledgeable and articulate with respect to the key issues in the case, and that they have talking points that correctly reflect the company's position in the matter. That should, of course, include a strong commitment to understand and take appropriate measures to correct any wrongdoing that the investigation uncovers.

Thus can a routine request for advice on an employee discipline or discharge evolve into a more significant investigation of alleged corporate wrongdoing.

Philip M. Berkowitz, a member of this newsletter's Board of Editors, is a partner at Nixon Peabody, where he heads the international labor and employment law practice team. This article originally appeared in the New York Law Journal, a sister publication.