In Olivas, the Superior Court of Connecticut held an employee could sue his employer for emotional distress on the grounds the discharge taken with the accusation of theft and forgery could amount to “extreme and outrageous conduct.”136
Here, after a paycheck was stolen and cashed at a liquor store, an employee of the company made comments to the liquor store owner that the employee plaintiff stole the check and committed forgery. Allegedly, other employees accused the plaintiff and told his landlord. Later, the criminal charges against the plaintiff were dismissed.
In Tenold, the Court of Appeals of Oregon affirmed $2.4 million against the company for defamation, malicious prosecution, and intentional infliction of emotional distress, and $150,000 in damages against the site security supervisor for defamation and intentional infliction of emotional distress.137 This case involved the employee who was arrested for stealing company railroad ties. The criminal
charges were dropped after the company could not show evidence of ownership
and the employee was able to produce receipts for some of the ties. The employee claimed he had been given permission to take the ties and pay for them later. There was evidence a site security supervisor and another manager bore ill will toward the employee. The manager had stated he wanted his job, and the security supervisor accused him of being a drunk and drug user, and operating a methamphetamine
lab. The company investigative reports did not accurately reflect the exculpatory statement of the accused employee. The appeals court held these facts were sufficient evidence for a jury to conclude the defendants had engaged in an extraordinary and intolerable campaign to defame, terminate, and prosecute the plaintiff.
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Disciplinary actions based on unreasonable investigative methods and inter-
rogations expose businesses to the increased risk of lawsuits for infliction of emotional distress. Fair disciplinary actions that are based on reasonable inquiry are far less likely at the disciplinary phase to expose employers to claims of emotional distress.
7.10.5 Unemployment Claims
Unemployment compensation is a state-administered program designed to provide
temporary financial relief for workers who lose their jobs through no fault of their own. If an employer wishes to challenge an employee’s claim for benefits, the burden is generally placed on the employer to prove the employee’s actions constituted misconduct, willful misconduct, or similar disqualifying conduct as defined by
state statute.
For example, Florida defines misconduct as:
(a) Conduct demonstrating willful or wanton disregard of an employer’s
interests and found to be a deliberate violation or disregard of the stan-
dards of behavior, which the employer has a right to expect of his or her
employee; or
(b) Carelessness or negligence to a degree or recurrence that manifests culpability, wrongful intent, or evil design or shows an intentional and substantial
disregard of the employer’s interests or of the employee’s duties and obliga-
tions to his or her employer.138
In Illinois, misconduct is defined as “the deliberate and willful violation of a reasonable rule or policy by the employing unit.”139
The degree of evidence required to be produced by an employer varies by state.
A frequently referenced standard is substantial evidence.140 Substantial evidence is sufficient to support a decision even though others might reach a different conclusion. Some courts will not overturn an unemployment board’s decision unless it
is clearly contrary to the overwhelming weight of the evidence141 or against the manifest weight of the evidence.142
In Cabreja, the claimant was a hospital janitor.143 A security officer observed her accepting an empty bag from a subject ex-employee under surveillance, going into a locker room, and returning the bag filled with hospital cleaning supplies to the subject. She was terminated and denied unemployment benefits. An appeals court
affirmed there was substantial and credible evidence to support the unemployment board’s decision that the claimant employee engaged in misconduct and was disqualified from collecting benefits. In the words of the board, as affirmed by the Supreme Court, Appellate Division, New York: “We find significant the credible
eye-witness testimony of the security guard who personally observed the transfer of the shopping bag, which contained the stolen hospital property.”
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In Hurlbut, the Missouri Court of Appeals ruled a convenience store manager violated the reasonable rules of her employer when she and her subordinates failed to include a cash register tape with the daily count of the cash box.144 The absence of the detail tape impeded the company from determining the actual date and time of a cash shortage. The appeals court affirmed there was sufficient evidence to support the denial of benefits.
Similarly, in Frey, the Commonwealth Court of Pennsylvania affirmed there was substantial evidence of willful misconduct by an employee who left a piece of paper with the combination on top of the office safe.145 The fact she claimed that she left it for another employee and asked it be placed in her mailbox did not relieve her of her duty.
7.10.5.1 Off-Duty Misconduct
The general rule is that off-duty conduct of employees is not relevant to employers. But, when there is a nexus or connection with the duties of the employee, the off-duty conduct may be grounds for denial of unemployment benefits. These cases normally involve conduct that breaches a necessary trust or reflects negatively upon the reputation of the company.
In Montellanico, the claimant was the supervisor of hourly workers.146 He scheduled workers and processed unemployment and other claims. He was also treasurer of the employees’ credit union where he was arrested for making fraudulent loans.
The credit union operated completely independent of the company. Upon hearing
of his arrest, the company suspended and later terminated him before there was a conclusion of the criminal proceeding. Based on his admission to the authorities that he had made fraudulent loans, the unemployment board found this conduct
related directly to his duties as hourly employee supervisor. Applying a two-prong test where the employer must show the employee’s off-duty criminal conduct was
inconsistent with acceptable behavior and it reflected upon his ability to perform his duties, the Commonwealth Court of Pennsylvania held that the claimant’s conduct threatened, if not totally destroyed, the requisite trust between himself and the hourly employees. It affirmed the denial of benefits.
In Conseco, the employer, in response to thefts in the workplace, instituted a criminal records check of employees.147 The claimant signed the authorization. She worked the midnight shift and had unrestricted access to five buildings. Her job entailed the printing of customer claim checks. Later, she was arrested for shoplifting. She pled not guilty. The company discovered the arrest when it conducted
her background check. It terminated her employment. She filed for benefits. The company argued the employee breached a necessary trust. The hearing deputy
denied her benefits. An administrative law judge reversed on the grounds there
had not been a final adjudication and, therefore, no proven disqualifying conduct.
The company appealed. It introduced evidence that the employee later pled guilty.
Nonetheless, the board found the company’s evidence was too attenuated to prove
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she was terminated for just cause related to work. The company appealed. The
appeals court found there was substantial evidence to support the board’s decision.
It affirmed the company did not establish work-related just cause.
7.10.6 Workers’ Compensation
The purpose of workers’ compensation is to provide financial benefits and m
edical care for victims of accidental injuries arising out of and during the course of employment. At the time of discipline, employers should determine whether they will contest the awarding of benefits. If they do, the burden is general y upon an employer to establish that the injury did not arise out of and in the course of employment, an employee is malingering and able to return to work, or employee fraud. One popular investigative method in workers’ compensation cases is surveil ance with video cameras. Employers and investigators must recognize that, although video evidence is often invaluable, there are restrictions upon its use and limits to inferences that might be drawn from the evidence.
For example, in Combined Insurance Company of America, the employer had photographic evidence of an employee jumping into a pool and bending over a
lounge chair.148 This video evidence was reviewed by the employer’s medical expert.
He testified the employee was able to return to work. This evidence, however, was stricken from the record when the employer failed to authenticate it by having the photographer testify as the parties had agreed.
In Anthony, a private investigator observed a widow beneficiary of a deceased worker had an overnight male visitor.149 A second investigator placed surveillance on the home and videotaped the widow (she was 60 years of age and her husband
had died approximately 10 years prior) and the male early in the morning standing on the front porch hugging twice and kissing once. The employer requested the
discontinuance of death benefits on the grounds she had entered into a meretricious relationship. The claimant testified that the male lived in her home while he was remodeling his home, a period that lasted for approximately 20 months, and that they did not have a sexual relationship. Further, medical testimony was introduced that the male was a diabetic and suffered from erectile dysfunction. The workers’
compensation judge cut off benefits on the grounds the two lingering kisses were
“not the type of kiss the majority of Pennsylvanians give to their platonic friends.”
Noting the parties did not admit to the relationship and there was no child conceived out of the relationship, the court held the video evidence was insufficient to establish substantial evidence of a carnal relationship. Even though it recognized employers were in a difficult situation, finding substantial evidence of such a sensitive nature without invading the privacy of the persons, it reversed the board’s denial of benefits.
In seeking to use video evidence, investigators must be prepared to authenti-
cate the evidence. They may enhance the strengths of their cases, although it may not always be practical or possible, by obtaining multiple videotapes of subjects engaged in disqualifying behavior before seeking to disqualify them.
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In conclusion, the primary liability issues that arise from employee discipline are defamation including compelled self-published defamation, emotional distress, wrongful discharge, and malicious prosecution. Further, at this stage of the investigation, the burden is on the employer to produce evidence to prove disqualifying employee conduct to deny or terminate the awarding of workers’ compensation and unemployment benefits.
Employers may minimize the liability risks and enhance their successes in
administrative hearings by sharing adverse information in good faith on a need-to-know basis only, administering fair and impartial discipline, properly documenting all evidence and making full and timely disclosure to law enforcement authorities when filing criminal charges, and obtaining documentation of repeated or serious disqualifying behavior when challenging unemployment and workers’ compensation benefits.
7.11 Prevention and Education
The final phase of the investigative process is prevention and education. When
reaching out to inform and change employee behavior, an important question for
employers is how much information regarding an investigation and disciplinary
action should be shared with co-workers? The primary liability concerns are lawsuits for defamation, false light invasion of privacy, and emotional distress.
7.11.1 Defamation and False Light Invasion of Privacy
Both of these actions have been discussed earlier. In review, defamation occurs when one party publishes a false statement of fact to a third disinterested party and the statement is injurious to the community, business, or professional reputation of the named party. False light invasion of privacy involves the emotional distress suffered by the party based on the publicity of a false statement.150 A false statement is one made with reckless disregard for the truth that attributes highly objectionable characteristics, beliefs, or conduct to an individual and places him before the public in a false position.151 Publicity means the statement was made before the public or shared with a sufficient number of persons that it is likely to become public knowledge.
In Bine, previously discussed, the plant manager, in order to deal with rumors, told a number of employees the plaintiff was fired for vandalism. Plaintiff filed suit, in part, for false light invasion of privacy. The trial court granted summary judgment to the company. The Supreme Court of West Virginia held there was a dispute of material fact as to the truth of the allegation. It noted: “The spreading of such information, if false, could constitute a valid false light claim.” The Supreme Court reversed and remanded the case to the trial court.152 In Garcia, the human resource manager held two staff meetings and told co-workers of plaintiff that, based on a
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“thorough investigation” [an anonymous phone call], the plaintiff was observed
shooting up cocaine. Plaintiff sued for both defamation and false light invasion of privacy. The jury found in her favor on both counts. The trial judge vacated the judgment. U.S. Court of Appeals reversed. It affirmed there was sufficient evidence to support both claims.153
Where these cases involved oral statements made by management, Stock
involved two written statements released by management to employees. As
noted earlier, plaintiffs were new contract security officers who were accused
of cheating in their basic training class. They were denied access by the electric company to the nuclear facility where they were to be assigned. The company
investigation did not conclusively prove which employees had cheated. Yet,
the company released two statements to its employees. The first memo by
the plant manager stated the 10 officers were denied access because they were
involved in cheating while in training. It also stated the company would not
tolerate such conduct and that this incident did not reflect upon the current
security staff. The second statement appeared in the monthly nuclear depart-
ment newsletter. It stated the company had rescinded the unescorted access of
10 security guards because they broke the bond of trust by violating the testing code. It added that it was a difficult situation for all; the company felt sympathy for the officers and families, but the rescission of access privileges was the right thing to do. The officers sued the company for defamation. Because the
communications made it appear as if all the officers were cheating, the jury
found the officers were defamed and awarded each officer $46,500. The Court
of Appeals of Wisconsin affirmed the judgment.154
The risk for companies that attempt to explain or justify specific disciplinary actions to co-workers is that the underlying investigations will not support the alleged defamatory and false light statements. A safer alternative is to not make any internal public statements. For example, in Smith, the U.S. District Court rejected plaintiff’s claim that she was put in false light when she was escorted off company property and the company “left her co-workers free to speculate that Smith had
been disciplined for something more egregious than vacation day violation
, such as fraud or graft.” Similarly, in Szot, an insurance agent, who was terminated for falsification of applications for insurance coverage, claimed, in part, defamation based on the “rumor mill” among other agents regarding her termination. Because the plaintiff did not produce any evidence the company told the other agents of the reason for her discharge, the U.S. District Court granted summary judgment to the defendant company.155
It is more difficult to sue an employer for not saying anything than it is to sue for the confidential remarks published beyond a need-to-know basis. In the alternative, if an employer feels the information must be shared, before sharing it, the employer should carefully consider:
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◾ Why it is necessary to share this information?
◾ Who will be told?
◾ What is the legitimate business reason for sharing this information with
each employee?
◾ How will it enable each employee to better perform his duties?
◾ Will the investigative facts support the truth of any statements made?
From a business perspective, the employer should also ask: Will the benefit
from this sharing exceed the liability risks to be incurred? In the final analysis, it is more difficult to sue for silence than for words spoken.
7.11.2 Emotional Distress
When organizations openly discuss employee misconduct and name the parties
involved or give facts sufficient that co-workers may identify the involved employees, there always exists the possibility the named employees will claim defamation, false light invasion of privacy, and infliction of emotional distress. The claims may be for negligent infliction or intentional infliction. Assuming the plaintiffs can offer proof of severe emotional distress with physical manifestations if required, the focus at trial will be on the defendant’s conduct and whether it was outrageous in nature. A determination of outrage might include review of the defen-
dant’s motives for releasing the information, the integrity and reliability of the information discussed, and the parties to whom it was released. Malicious or reckless motive, known falsity or reckless disregard for the truth of the information, and overly inclusive sharing of information are factors that may support findings of employer outrage. Good faith intent to educate employees to prevent future similar incidents, reliable and documented information, and focused training programs for concerned employees are factors that will mitigate the risks of adverse judgments for infliction of emotional distress.
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