Indiana Supreme Court Affirms Protection for Workplace Investigations

 

            The dynamic between defamation and legitimate workplace fact investigation remains vitally important for employers.  A recent Indiana Supreme Court decision provides important support for employees bold enough to report workplace misconduct.

 

            Most people know that making false statements about someone may lead to a claim of defamation or slander.  Traditionally, "slander" refers to spoken communications whereas "libel" refers to written communications of a false nature.  Both constitute "defamation."  Moreover, under Indiana law, accusing someone of criminal or occupational misconduct raises the specter of defamation "per se" under Indiana law.  Under the doctrine of defamation "per se" a wronged party need not prove actual damages, but instead the court will allow the jury to simply assess what damages they deem appropriate under the circumstances.  Hence, defamation "per se" constitutes an important weapon for wrongly accused employees, and a real danger for employees reporting workplace misconduct.

 

            In its recent decision, the Indiana Supreme Court affirmed that falsely accusing someone of misconduct as to their "trade, profession, office, or occupation" commits defamation "per se."  In the most recent case, a supervisor accused an employee of stealing time by working at the company with another supervisor as part of a scheme to steal an air compressor from the company.  The supervisor also accused the employee of theft of welding machines.  The supervisor made these accusations without direct observation of the employee actually committing these acts.

 

            The core question before the court focused on whether the employer and the accusing supervisor could defend themselves fully on the basis of the "common interest qualified privilege for intra-company communications."  This privilege provides a complete defense to both the company and the accusing employee.  To defeat the privilege, the plaintiff must present evidence showing that the speaker "lack[s] any grounds for belief as to the truth of the statements."

 

            Here, the speaker made the accusation after accumulating several years of personal observations of circumstantial facts, and gathering information from others with first-hand knowledge, which he then expressed to the security chief of the company in good faith.  The accused employee failed to identify any designated evidence showing that the speaker lacked grounds for his belief in the truth of his statements.  Under these facts, the Indiana Supreme Court concluded that the common interest qualified for intra-company communications applied, and granted all defendants summary judgment.

 

            The important news for employers stands in the reaffirmation of full support by the courts for a careful investigative process, even if it results in an employee losing his or her job.  Too often, employer investigations risk sabotage from bad acting employees threatening to sue for defamation.  This decision confirms the courts' utter lack of patience for such harassing and retaliatory litigation.  Armed with such decisions, employers possess the opportunity to provide real comfort to employees brave enough to come forward with good faith allegations of workplace misconduct.

 

            David Carr is a partner in the Labor and Employment Group of Ice Miller, focusing his practice in the areas of litigation of employment contracts involving trade secrets, confidential information and covenants against competition, complex wage and hour law issues, employment discrimination, and personnel policies.

 

Dec. 15, 2010

 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.