With businesses under more scrutiny than ever before as a result of more frequent allegations of wrongdoing, and such cases increasingly becoming public, internal investigations are taking on an unprecedented level of importance. Globalization has increased the onus on individual companies to self-regulate, to step in to prevent unlawful behavior or misconduct, and for such processes to be conducted in a transparent manner. However, with increasing number of investigations also comes numerous challenges that can exhaust a company’s time and resources.
Challenges in Internal Investigation Procedures
1. Compliance Under Protective Labor Laws
In conducting an internal investigation, a company must balance its right as an employer to investigate and take disciplinary action against potential infringement of an employee’s rights. At the same time, it is necessary and important for the company to obtain all of the relevant factual information and conduct an investigation promptly and thoroughly. Therefore, when commencing an investigation in Korea where employees enjoy strong protections under Korean labor laws, it is imperative for companies to find a way to conduct its investigation while abiding by the relevant rules and regulations. These issues are particularly important at the stage where the company decides to take a disciplinary measure against an employee, as it will need to satisfy the strict procedural and substantive requirements under Korean labor laws.
Failure to exercise caution throughout the course of conducting an investigation may lead to an employee filing a workplace harassment claim against the investigator or HR manager in charge of the investigation. In some instances, an employee may even escalate the matter and file a complaint with the Labor Office or the Regional Labor Relations Commissions (the “RLRC”). We have seen an increasing number of such filings especially when an employee does not agree with the findings of the investigation or the subsequent measures implemented against him or her. Therefore, in order for companies to avoid getting dragged into potentially long and drawn out legal proceedings, the company must have a definitive investigation protocol and procedure in place while formulating an effective and efficient investigation plan from the very beginning of the case.
2. Compliance Under Privacy Laws
An employer must also respect employees’ privacy rights when conducting an internal investigation. Under the Personal Information Protection Act (the “PIPA”), an employer is required to obtain prior written consent from the employee whose personal information may be pulled and reviewed during the investigation. Failure to do so would constitute a PIPA violation, which the employee can use to further his or her own interest.
Furthermore, companies should also be mindful that when initiating subsequent civil and/or criminal proceedings as a follow-up measure after the investigation, submitting any personal information to a government agency or the court will require an additional separate consent from an employee.
Abuse of the Whistleblower Protection Act
1. Claim of Whistleblower Protection by Investigation Subject
The Whistleblower Protection Act strictly prohibits anyone from retaliating against a whistleblower for filing a whistleblower’s report. While there is no question as to the importance of whistleblower protection, there has been a steady rise of cases of self-proclaimed whistleblowers raising baseless retaliation claims against others in order to protect themselves.
For example, in a case involving a company which was about to initiate an internal investigation regarding Employee A’s misconduct, Employee A filed a whistleblower report implicating Employee B in an effort to self-proclaim himself as a whistleblower and therefore receive whistleblower protection. When the company sought to conduct an investigation and impose disciplinary measures against Employee A, Employee A alleged that such actions constituted illegal retaliation against Employee A for his whistleblowing. Employee A went as far as filing a petition with the Anti‑Corruption and Civil Rights Commission seeking whistleblower protection and also filing claims with the Labor Office and RLRC implicating the company for violating the Labor Standards Act.
2. Appropriate Response by the Company
In order to respond to these types of allegations, the company will need to be in a position that it appropriately separated “allegations by Employee A” and “allegations about Employee A” and took appropriate measures to review each set of allegations. Therefore, if the disciplinary actions taken against Employee A are based on an appropriate investigation of Employee A, then they would not amount to retaliatory actions against Employee A. At the same time, the company will need to show that appropriate actions, such as a separate internal investigation, was undertaken with respect to Employee A’s allegations regarding Employee B, and to document these steps in case of a later challenge.
Internal investigations are fraught with pitfalls if they are not handled properly. Therefore, we recommend companies to check and reinforce their compliance systems to ensure that they can appropriately address and handle these types of matters.