Scenario: The vice president of human resources reports to you that she received a complaint of sexual harassment from an employee against a senior executive. Due to the sensitive nature of the allegations, the parties involved, time restraints and budget issues, you are asked to investigate the complaint. Because you serve as in-house counsel and periodically advise the company on employment law issues, the vice president believes you can easily conduct the investigation and then guide the company through the potential legal issues that follow.

With the significant changes in the economic climate and decreased budgets, more in-house counsel are faced with this scenario: to serve as both the investigator of and advisor on employee complaints of discrimination or harassment. While this decision may be economically wise at the outset, it could create a potential problem for the company if litigation occurs. Specifically, the plaintiff or governmental enforcement agency, such as the Equal Employment Opportunity Commission (EEOC), may argue the corporation waived the attorney-client privilege once in-house counsel assumed the role of investigator. As a result, all of the investigatory evidence, including the investigator's handwritten notes, emails and communications with the employer about action to take in response to the investigation findings, may be discoverable.

Waiver arguments typically occur after an employer seeks to introduce evidence that the investigator gathered during the investigation either in response to litigation or a charge of discrimination.[i] Several courts have stated that employers cannot assert the attorney-client privilege while simultaneously relying on the investigation evidence and/or findings in defense of a discrimination or harassment claim. Instead, many courts have held that the attorney-client privilege is waived once the employer takes the position that it took “prompt and corrective action” based on the investigation findings and recommendations made by its in-house counsel.[ii] Indeed, these courts have taken the position that the employer “cannot have it both ways,” when it seeks to present evidence that it investigated an employee's complaint and took corrective action based on the investigation findings, but claims the attorney-client privilege when the plaintiff or enforcement agency makes discovery requests regarding the investigator's communications with the employer regarding his or her findings and recommendations.[iii]