HR Management & Compliance

Internal Investigations—The Cornerstone of Compliance Programs

The Feds are always on the lookout for administrative, civil, and criminal infractions. However, Attorney Christine D. Mehfoud says an organization needn’t worry as long as it has an effective compliance program supported by thorough internal investigations. Is your company prepared?

In a recent webinar presented by BLR® and HR Hero®, Mehfoud, a director at Spotts Fain PC, shared what she’s learned through her considerable experience in conducting internal investigations and representing clients facing federal and state litigation.

What Constitutes an Effective Compliance Program?

Mehfoud says that regardless of size, a company must have a compliance program in place. In order for a company to get credit (in the government’s eyes) for having an effective compliance and ethics program, the program must have two key components:

  1. The program must exercise due diligence to prevent and detect criminal conduct; and
  2. It must otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.

Mehfoud also notes that in today’s age, companies are quite often judged more by their response to a compliance issue than by the underlying actions that may have caused it. And what is the appropriate response should an issue arise? The answer is a well-executed internal investigation.

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When Is an Internal Investigation Necessary?

Employers are obligated to respond appropriately and effectively to both internal complaints and external government enforcement, says Mehfoud. Sometimes it’s extremely clear when investigative action is necessary, such as when the organization receives a government subpoena for company records.

Other times it’s more subtle—for example, an investigation should be conducted if your HR department receives a tip regarding unethical activity via a complainant hotline, such as allegations that some employees are falsifying their data to meet performance goals. Other possible examples that may be cause for an internal investigation include:

  • An environmental incident at your company’s location (e.g., a fire, spill, or explosion)
  • Seemingly innocuous queries or phone calls from external parties (such as regulatory agencies) requesting documents or posing questions
  • Anonymous, possibly vague complaints that come from inside the organization
  • Allegations of sexual harassment or discrimination

Whenever you need to conduct an investigation, analyze the risk, says Mehfoud—is this a high-stakes, “bet-the-company” issue that involves serious financial, criminal, or reputational risks to the company and will most likely include outside counsel and government involvement, or is it a routine internal issue of misconduct that can be addressed by your own HR compliance team?

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Complexities Abound—Stay Flexible

Conducting internal investigations can be very complex and with many pitfalls, often starting with only vaguely defined complaints and proceeding on little information. It’s always challenging when you have a case that is sort of blurry and you don’t know the parameters, says Mehfoud. The key to success is to be flexible—a quality that is sometimes difficult for compliance-minded individuals.

An investigation may begin with the appearance of a high-stakes issue and end up being a routine HR issue and vice versa. Any witness interviews need to be tailored not just to the situation at hand but to the witnesses themselves. Mehfoud likens the unpredictability of internal investigations to a juggling act, wherein you must gather information while also heading off any potential future litigation, respecting individual employee rights, keeping up with reporting obligations, and, of course, managing the workforce during the investigation’s course. While an investigation has its necessary steps to be completed accurately, flexibility is important to maintain sight of the big picture.

In tomorrow’s Advisor, we present the five basic steps to follow when conducting an effective investigation, plus an introduction to the new guide, HR Playbook: HR’s Game Plan for the Future.