In-House or Outside Workplace Investigator: When Each Makes Sense

What the Choice Is Really About

Three things make an investigation useful to the organization: it has to be prompt, competent, and impartial—in fact and in appearance. The EEOC's Promising Practices for Preventing Harassment puts it this way: those responsible for handling complaints should be well-trained, objective, and neutral, and should have the authority, independence, and resources required to receive, investigate, and resolve complaints appropriately.

In-house investigators usually win on speed and knowledge of the organization. Outside investigators usually win on independence and, for unusual subject matter, expertise. The decision is a matter of asking which of those the particular case needs most.

When an In-House Workplace Investigator Is the Right Choice

Keep it inside when all of these are true:

• The accused is not in the investigator's reporting line and does not outrank the HR leader.
• The investigator has no personal relationship with, or history involving, either party.
• The investigator is trained and has capacity to start now.
• The subject matter is within HR's normal competence: conduct, policy, attendance, and most harassment and discrimination complaints.
• Litigation is possible, as it always is, but is not already underway or threatened.

That describes the large majority of complaints. An internal investigator knows the policies, the systems, where records are kept, and who actually works with whom. They can begin the same day. They also build institutional memory: patterns across complaints that an outsider hired for one matter never sees.

The condition is training. An untrained internal investigator is the weakest option on the list. If you are building that capability, Workplace Investigations 101 is a starting point, and the Internal Investigations Certificate Program is a three-day program that teaches a step-by-step process with forms, templates, and practice scenarios.

When an Outside Investigator Is the Better Choice

The accused is senior

If the complaint is against an executive, an owner, a board member, or anyone who can affect the investigator's job, go outside. The EEOC's 1999 harassment guidance, which has since been superseded, stated the principle plainly: the alleged harasser should not have supervisory authority over the individual who conducts the investigation. That document no longer represents current agency guidance, but the logic has not changed, and it is the first thing a plaintiff's lawyer will test. See our article on anonymous complaints, accused executives, and reluctant witnesses.

HR is involved

If the complaint is against someone in HR, alleges that HR mishandled an earlier complaint, or involves an HR employee as a key witness, the department cannot investigate itself.

There is a conflict or a credible appearance of one

Friendships, prior disputes, earlier discipline the investigator issued to one of the parties, or having advised the manager on the very decision now being challenged can all create a conflict. If you would have to explain why it was not a problem, it is a problem.

The stakes or complexity are high

Examples include multiple complainants, allegations across locations, possible criminal conduct, forensic accounting or digital evidence, or matters likely to draw public or regulatory attention. Where conduct may be criminal, also read when to involve law enforcement agencies.

A lawsuit or agency charge is pending or threatened

Once a demand letter or charge arrives, counsel should decide who investigates and how. See EEOC Complaint Process: How Employers Should Respond.

You lack capacity

A prompt investigation by a competent outsider beats a delayed one by an overloaded insider. Under Faragher v. City of Boca Raton, the employer's affirmative defense to supervisor harassment depends in part on showing that it exercised reasonable care to prevent and promptly correct harassing behavior. Delay undermines that.

Attorney or Non-Attorney, and the Privilege Question

Outside investigators come in two kinds, and the choice has consequences.

An attorney investigator may conduct the investigation in a way intended to be protected by attorney-client privilege or the work product doctrine. That can matter when the organization wants candid legal advice about exposure. Interviews by counsel bring their own formalities, covered in Upjohn warnings in internal investigations.

Privilege involves a trade-off that should be decided at the start, with counsel:

• If the organization later wants to rely on the investigation to show it responded reasonably, it will generally need to disclose the investigation. An employer usually cannot use the investigation as a defense and withhold it as privileged at the same time. The scope of privilege and waiver varies by jurisdiction; confirm the approach with counsel.
• If the investigation is meant to stay privileged, be clear that it is being conducted to obtain legal advice, and understand that it may not be available as evidence of the employer's good-faith response.
• Many employers separate the roles: one attorney or firm investigates as a neutral fact-finder, and different counsel advises and defends. An attorney who investigates may become a witness, which can limit that attorney's ability to also act as trial counsel.

A non-attorney investigator, such as an HR consultant or a licensed investigator, produces a factual report without the privilege overlay. That is often what you want when the purpose is a fair, usable finding. The licensing issue below applies.

State Licensing: Who May Investigate for Hire

Some states regulate who may conduct investigations for compensation, typically through private investigator licensing statutes. These laws were not written with HR consultants in mind, but their definitions can be broad enough to reach them.

California is a clear example. Its Private Investigator Act defines a private investigator to include a person who, for any consideration, engages in business or accepts employment to make any investigation for the purpose of obtaining information about, among other things, the identity, habits, conduct, honesty, integrity, credibility, or character of any person (Business and Professions Code section 7521). The Act exempts an attorney at law performing the attorney's duties as an attorney, and a person employed exclusively and regularly by an employer in connection with the affairs of that employer only (section 7522). On those terms, an in-house HR employee and an attorney investigator fall within stated exemptions, while an outside non-attorney consultant has to consider whether a license is required.

Other states have their own statutes, and the definitions and exemptions differ. Check private investigator or similar licensing requirements in the state where the investigation will take place, and confirm with the state licensing board or counsel.

What to do with this:

1. Before engaging a non-attorney outside investigator, ask what license they hold and in which states.
2. If the investigation crosses state lines, check each state.
3. Do not assume that a training certificate or HR credential satisfies a licensing statute. It does not.

A related federal point: the Fair Credit Reporting Act contains an exclusion for certain communications made to an employer in connection with an investigation of suspected misconduct relating to employment or of compliance with laws and the employer's preexisting written policies. The exclusion has conditions, and after taking adverse action based on such a communication, the employer must disclose to the employee a summary containing the nature and substance of the communication (15 U.S.C. § 1681a(y)). Raise this with counsel whenever a third party investigates.

Decision Guide

How to Engage an Outside Investigator Well

• Check qualifications. Ask about experience with this type of allegation, licensure or bar admission, references, and sample redacted reports.
• Check independence. An investigator who depends on your organization for most of their income, or the firm that will defend the case, is less independent than they appear.
• Write the scope. Specify the allegations to be investigated, what is out of scope, the standard of proof, the deliverable, and whether the report will include recommendations.
• Name the point of contact. Choose one person who is not a witness and does not report to the accused.
• Keep HR's role clear. HR typically supplies policies, records, and scheduling, and manages interim measures and retaliation monitoring. HR should not edit findings.
• Own the outcome. The investigator finds facts. The employer still decides what to do about them and follows through.

The Hybrid Model Most Employers Need

Outside investigators are for exceptions. The day-to-day capability has to be internal, because most complaints arrive without warning and need a competent response within days. A practical arrangement:

• Train at least two people internally, so one is always free of conflict.
• Write down the criteria for going outside, using the decision guide above, before you need them.
• Identify outside investigators and counsel in advance.
• Have internal investigators handle intake, preservation, and interim measures even on cases that go outside.

Internal training is what makes the hybrid work. Teams that want a common process can use custom on-site training, and individuals comparing credentials can read our workplace investigator certification options comparison. Trained investigators are also better buyers of outside services, because they can judge the quality of the report they are paying for. For how investigation quality fits into wider risk control, see How HR Prevents Legal Risk.

Frequently Asked Questions

The Bottom Line

Decide by independence first, then expertise, then capacity. Send conflicted and high-stakes matters outside, to someone properly licensed or admitted, with a written scope. Keep everything else in the hands of trained internal investigators, and write down why you chose as you did.

Use the Workplace Investigations Checklist and the Workplace Investigations Guide to structure the process either way. To build the in-house side, see the Internal Investigations Certificate Program and upcoming dates on the HR seminar calendar.