Shooting-Self-in-Foot.jpgInvestigating employee misconduct is, unfortunately, a common occurrence companies and their HR professionals experience. But if the investigation is not properly handled, it could expose the employer to liability, including being sued for defamation.

Consider for example a recent lawsuit in which an employee sued her employer and its supervisors because of the manner in which an investigation and subsequent termination were handled (Duma v Carson City Hospital 1/21/2016). Specifically, Carson City Hospital terminated the employment of Plaintiff based on allegations that she violated various hospital procedures to misappropriate prescription painkillers. Further, Defendants claimed Plaintiff was altering patient files to redirect prescription drugs for her personal use.

However, Plaintiff denied these allegations and later sued her employer and three supervisory employees for defamation. She further claimed that one supervisor, Diaz, notified every employee in the emergency room and even a former ER supervisor as to why plaintiff was terminated. These reasons included she (i) had wrongfully diverted medications; (ii) had wrongfully diverted medications; (iii) had stolen narcotics; and (iv) was fired for altering charts and stealing narcotics. These statements are considered defamatory per se, meaning that she committed a theft crime.

Defendants argued that the Complaint should be dismissed for various procedural reasons, including because the statements were made in the course of investigating employee misconduct and, therefore, privileged. Plaintiff countered that Defendants shared the account with too many individuals and only to stop rumors.

The trial court agreed with the Defendants’ argument and dismissed the case. However, the Court of Appeals disagreed and reversed the decision. In doing so, the Court cited numerous Michigan Court decisions contrary to Defendants’ position:

… caselaw is contrary to the circuit court’s conclusion that defendants had a qualified privilege to defame [Plaintiff] to the entire ER staff, other hospital employees, and a former CCH employee. These employees were not supervisors and had no role in hiring or firing. Defendants could have reinforced its policies by providing a more general communication about procedures and grounds for termination.

Take Aways

Michigan recognizes that an employer has a qualified privilege when it comes to making statements that may otherwise be defamatory towards an employee. But an employer cannot make such defamatory statements to employees who have no supervisory role and no duty that should interest them in the subject matter of the misconduct. Simply put, an employer’s privilege does not extend to stopping “the rumor mill,” restoring morale, or satisfying the curious, whether they be employees or customers.

Accordingly, employers conducting any investigation into employee misconduct need to plan carefully. This includes deciding what should be communicated and to whom. And if the investigation for the next piece of the puzzle, Dan Schwartz of the Connecticut Employment Law Blog has an insightful article for terminating an employee. See How to Fire Your Employee Without Getting Sued.

For more information about this article or conducting workplace investigations, contact employment attorney Jason Shinn. Jason has worked with employers since 2001 to investigate a range of workplace issues, including discrimination, harassment, computer/Internet misconduct, and misappropriation of company assets.