Agency investigations often take companies by surprise, putting frontline employees at risk of making a mistake that can hurt them and the organization, so it can help to normalize a process for responding ahead of time, says Abigail Hazlett, a partner at Troutman Pepper.
“The FBI loves to show up when people are having their morning coffee,” Hazlett said in a podcast hosted by the law firm. “They try to talk to an employee or two. That's how the company learns they're under investigation.”
An unexpected inquiry can rattle the receptionist or other frontline employee, who can’t be expected to know whether to let the investigators look around or push back.
“It is very, very frightening,” said Hazlett. “People lose sight of what they should and shouldn't do. So, having a plan is important; any interactions with law enforcement are risky.”
By going over a plan upfront, in-house counsel can prevent missteps by giving employees a routine to follow.
“No receptionist wants to be hung out to dry dealing with the FBI,” she said. “[The FBI] doesn't want that, either.”
Among other things, the plan can outline who the appropriate contact is in the event investigators show up unannounced.
If the investigators have a warrant or subpoena, there’s little an employee can do but hand over what’s being sought. But if the investigators are still in the exploratory stage and trying to get information informally, there’s a way to push back without employees risking charges of obstruction against themselves or the organization.
“What you can say is, ‘Do you have documentation?’” said Hazlett. “‘What are you here for? Can I see that documentation?’ If they don't have a search warrant, if they don't have a subpoena, then the line that we tell people is, ‘Thank you for stopping by. Can I have your business card? I'm going to contact my lawyer, and he or she will be in touch.’ That should suffice.”
It’s not unheard of for investigators to use misdirection when they’re in the early, informal stage of an investigation.
“It’s crazy,” said Hazlett. “A lot of people think that the agents are always going to be truthful and forthcoming and say what they're there for. I have heard from many clients that agents show up and they say, ‘We just want to talk. Nobody's in trouble here. We just want to talk,’ [but] the FBI doesn't just want to have coffee with anybody. That is just not what happens.”
Before investigators conduct their search, it can make sense to send some employees home if the search is expected to be disruptive.
“I had a client where a senior executive thought it would be a good idea to take certain employees for long walks during a search warrant,” she said. “That was not viewed favorably by the government and there was a concern that perhaps that executive was obstructing justice. Don't do that. It might be best to send people home until that process is finished unless the agents need, or say that they need, everybody there.”
If investigators want to question employees, that doesn’t mean employees must do it right then and there.
“You can tell them [employees] what their constitutional rights are, which is talking to the government at a time and place that they want and with a lawyer,” she said.
Whether an employee should be represented by a company lawyer or their own lawyer would depend in part on whether the investigation is of an individual or the organization.
“If the government agents want to talk to an employee about something that relates to their employment, we often … get them individual counsel,” she said.
If it’s clear the investigation is focusing on an individual and not the organization, it can be appropriate for the company to put them on a leave of absence.
“If they've got [paid time off] stored up or whatever, let's put them on a paid administrative leave for the time being until we understand exactly what's going on and then liaise with the U.S. attorney's office or whoever's conducting the investigation to see what information we can find out and then make a determination from there,” Evan Gibbs, a partner at Troutman Pepper, said in the podcast.
Each situation must be taken on a case by case basis, but if an investigation is into an employee for something they did outside of work, it can be appropriate to let them go.
“We see situations where … it's serious conduct, even if it's totally unrelated to work,” said Gibbs. “You can absolutely let somebody go. Pretty much every state is a right-to-work state. Pretty much everybody's employment is at will, so you could fire them for conduct that's even unrelated to their job. And if you've got an executive who's got an employment agreement, pretty much every executive agreement I've ever drafted, and I've ever seen drafted, includes a for-cause termination that includes criminal conduct.”
The legal issues of bringing someone back, if that person was released while charges were pending, have to be weighed carefully, Gibbs said.
“Just because someone is ultimately acquitted, it's not going to give them, for example, a wrongful discharge type of claim against the company,” he said. “You have to be careful, and if it's an executive, you've got to look at that for-cause language in the agreement.”