A new California Court of Appeal decision highlights just how crucial it is to carry out workplace misconduct investigations in good faith. We’ll explain what happened.
Investigation Discloses Other Wrongdoing
Robert Graves was a tool inspector for Northrop Grumman Corp. His responsibilities included evaluating employees in a training program for accuracy in taking aircraft measurements within company guidelines. An African-American employee, Harold Lowe, accused Graves, who is white, of treating him more severely than co-workers during one of the training programs because of his race.
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Northrop investigated Lowe’s allegation and found no evidence of race discrimination by Graves. However, the investigation uncovered other misconduct by Graves, such as stamping work as being approved that he didn’t personally inspect. As a result, Northrop issued a final warning notice to Graves outlining a corrective plan.
Workers’ Comp Awarded for Psychiatric Injury
Graves eventually filed a workers’ compensation claim for depression, which he claimed stemmed from the investigation. He also claimed that, after the investigation, his supervisor harassed him.
A workers’ compensation judge found that Graves suffered a compensable injury arising from a false accusation of racial bias and an investigation conducted in bad faith.
Northrop challenged the workers’ comp award. The employer relied on an exception in the workers’ compensation law that says an employee can’t recover benefits for a psychiatric injury that was substantially caused by a lawful, nondiscriminatory, good-faith personnel action.
No Evidence of Bad Faith
On appeal, the Ninth Circuit Court of Appeals threw out Graves’ workers’ comp award. The court explained that the exception for psychiatric injuries applies when a regular and routine personnel decision is made and carried out with subjective good faith. Good faith means that the personnel action must be done in a manner that is lacking outrageous conduct, is honest and with a sincere purpose, is without intent to mislead, deceive or defraud, and is without collusion or unlawful design.
The court went on to say that Northrop was legally required to investigate Graves when he was accused of violating federal anti-bias laws. What’s more, no evidence supported the workers’ comp judge’s conclusion that Northrop’s investigation was undertaken in bad faith. However, the court returned the case to the Workers’ Compensation Appeals Board to determine whether Graves’ psychiatric injury was substantially caused by alleged harassment following the investigation.
Conducting a Good-Faith Investigation
Although the employer prevailed, this lawsuit demonstrates how critical it is to carry out workplace investigations in a reasonable manner to avoid workers’ comp claims for psychiatric injuries arising from an investigation. Here are some tips:
- Have an objective reason. Be sure you have a lawful, nondiscriminatory reason to single an employee out for an investigation, such as a complaint of discrimination or harassment.
- Document the investigation. Document your reasons for undertaking the investigation and the investigation process, including who you spoke to, what you learned and your conclusions. Also document the reasons for any disciplinary action you take because of the investigation.
- Be fair and reasonable. Treat the accused employee fairly during an investigation. Make sure the investigator doesn’t ask questions or engage in other conduct that could be considered outrageous or in bad faith.
- Don’t retaliate. In this case, the employer could still be on the hook for damages if the Workers’ Compensation Appeals Board finds that Graves suffered a psychiatric injury because his supervisor harassed him after the investigation. Be sure your management team understands that, apart from imposing reasonable discipline when an investigation concludes that wrong-doing has occurred, they should not treat employees who were accused of misconduct differently following the investigation.