Regular examination of HR practices is critical to ensure compliance and to minimize exposure to very expensive lawsuits. But it’s risky business.
Collecting data about your workplace is an important part of HR management. For example, employers may want to scrutinize whom they classify as exempt, or may simply want to know how the organization is doing with diversity, equal employment, or safety.
But there is a potentially big pitfall. The results of these audits often show negative information. For example, results might show that your diversity program, affirmative action program, or safety program has produced substandard results. Or a climate survey might show that most employees think that management is discriminatory toward members of a protected group.
Unfortunately, these negative results are often discoverable in court by an employee in a discrimination or other employment lawsuit.
Whoops! The organization itself has created the evidence that will be used against it in court.
Using the “hope” system? (We “hope” we’re doing it right.) Check out every facet of your HR program with HR Audit Checklists. Try it for 30 days—on us!
Safeguards May Protect Your Results
The most important safeguard in doing an audit is to work closely and directly with an attorney. This provides, at least to some extent, legal privileges that could protect against public disclosure of the audit results. Company officials can and should be involved (e.g., the HR manager, the Equal Employment Opportunity (EEO) manager), but involve counsel intimately, not just as a reviewer but as a director of the audit.
The second important safeguard is to fix whatever is broken—to immediately begin to correct problems that are disclosed in the self-audit.
There are several legal safeguards protecting the information that comes from self-audits, but they are not foolproof, and in some jurisdictions or states, not recognized at all. The law in this area is definitely a mixed bag, with little agreement among federal and state courts.
Self-Critical Analysis Privilege
A “legal privilege” is a special advantage, immunity, or benefit in law not enjoyed by all. One example would be the right to refuse to divulge information obtained in a confidential relationship.
The self-critical analysis privilege is the employer’s most common defensive privilege. It says that the fruits of a self-audit may not be disclosed in court. However, the privilege is not absolute, or even certain to be recognized.
Some jurisdictions don’t recognize the privilege at all, and most limit its application, performing a balancing test to determine whether the need for confidentiality outweighs the other party’s need for evidence—so the protection is a case-by-case decision.
Don’t “just do it” … do it right. HR Audit Checklists ensures that you know how. Try the program at no cost or risk.
Today in making their rulings on self-critical analysis, courts typically look to see whether:
- The information sought in discovery results from a critical self-analysis by the party seeking protection.
- The public has a strong interest in preserving the free flow of the type of information sought.
- The free flow of information would be curtailed if discovery of the reports were allowed, and
- The information sought was intended to be confidential and has been kept confidential.
Important Distinction Between Subjective and Objective Data
Whatever a court’s decision regarding subjective material, all courts have ruled that even if subjective analysis is protected, the underlying material—that is, data, facts, objective information—is not protected.
Attorney-Client Privilege
The attorney-client privilege rests on the assumption that certain professional relationships require complete openness and would suffer if disclosure were compelled during litigation. To protect such relationships, courts recognize the attorney-client and work-product privileges, among others. But does the attorney-client privilege apply to internal company reports such as those discussed here?
The privilege applies only to communications between the client (a corporation is considered a client) and the attorney. Merely providing the attorney with copies of documents generated by an employer or having the attorney review the report will not invoke the privilege.
In the next Advisor, we’ll cover specific steps to take to protect the privilege, and we’ll explore an extraordinary audit checklist source.