May 1999

Private Investigator Act

QUESTION:

Our District recently hired a consultant to investigate allegations of harassment among District employees. Fortunately, the consultant was able to resolve potential disagreements before they grew into serious problems. when I recommended this investigator to another District, they asked me if the consultant was licensed as an investigator. I had no idea. Must a consultant be licensed to conduct workplace investigations?

ANSWER:

Under the provisions of California's Private Investigator Act, investigatory work such as a harassment investigation in the workplace, when performed by a consultant or outside entity, may only be performed by a licensed investigator. while there are exemptions, any employer who knowingly hires an unlicensed, nonexempt investigator may be guilty of a misdemeanor. Exemptions include attorneys, insurance adjusters and peace officers.

DISCUSSION:

In short, the Private Investigator Act requires that a licensed investigator be used whenever a consultant or other contractor is used to conduct an investigation. Indeed, the law specifically notes that such an investigation includes a situation where an individual or other entity gathers and reports "information concerning [an] employer's employees involving questions of integrity, honesty, breach of rules, or other standards of performance of job duties."  Clearly, an investigation into allegations of sexual harassment would trigger this requirement.

while the use of HR Consultants to perform such investigations is cornmonplace among Districts and other employers seeking to take a pro-active approach to their obligation to provide a workplace free of unlawful conduct, it is not known how many HR Consultants are licensed under this law. The licensing requirements are somewhat strenuous, and they involve thousands of hours of training at specific investigatory tasks.

Failure to comply with these rules can result in substantial penalties. The California Business & Professions Code specifies that both the unlicensed consultant and the entity which knowingly hires such an unlicensed investigator may be found guilty of a misdemeanor, punishable by a fine of $5000 or up to one year in jail. In addition, there may be additional repercussions, as well. For example, if an unlawful investigation uncovers misconduct by an employee, the evidence gathered by the unlicensed investigator may be subject to challenge. As a result, the failure to comply with this law may compromise a District's ability to effectively address misconduct.

To avoid potential trouble from this rule, Districts have several options. One, of course, is to ensure that outside investigators are appropriately licensed. Another is to conduct investigations using their own employees as this restriction only applies to outside consultants and not to regularly employed persons (unless they are employed as "investigators" to perform just this work). However, bear in mind that sometimes an in-house investigator lacks the "neutrality" of an outsider and this too can compromise a District's ability to effectively perform an investigation.

Perhaps the key exception to this requirement is that licensed attorneys are exempt from this additional licensing requirement. By using labor and employment attorneys to conduct the investigation, a District can avoid the "private investigator" problem entirely, as well as benefit from investigators who are well-schooled in the legal ramifications of what may be uncovered. Even though litigation that may arise from such an investigation may have to be handled by a separate set of lawyers, using attorneys as investigators is a valuable option for Districts when faced with the need for an independent investigation.

If you would like more information regarding this Private Investigator Act, or have any other needs with respect to workplace investigations, please call the Employment Practices Hotline at

(650) 592-6160.

CSRMA Employment Hotline provides free legal advice to all CSRMA members on various employment issue's For more information on the Hotline please call Lynn Lieber with Fisher & Phillips at (650) 592-6160.