Illegal Conduct at Work
What is the right thing to do when you become aware that your employee has done something illegal at work? Some employers may be reluctant to tell law enforcement authorities what their employee did out of fear of being sued for defamation by the employee. A very recent case decided by the Indiana Court of Appeals gives comfort to employers faced with that issue.
Blowing the Whistle – A Qualified Privilege
Employers need not be concerned about defaming an employee and getting sued because a Qualified Privilege protects employers or anyone for communicating in good faith with others who have a legitimate legal, ethical moral or social interest in receiving the communication. The facts of the recent case illustrate the point.
The Indianapolis Housing Agency had an employee whose job it was to inspect Section 8 housing in and around the city. The inspector also owned several rental properties of his own and this is where he got into some trouble. When the inspector was supposed to be working he was sometimes attending to his own rental properties and dealing with small claims court hearings. The Housing Agency was tipped off and conducted an internal investigation, using GPS devices and time records and concluded that the inspector was falsely reporting his time and misusing equipment. For that he was fired and the prosecutor was notified because this was public money and equipment that was being misused.
The prosecutor filed criminal charges against the inspector but later dismissed them because of problems with some of the evidence. Then the inspector sued the Housing Agency for malicious prosecution and intentional infliction of emotional distress. The Housing Agency claimed it had a Qualified Privilege to report the inspector’s misconduct and should not be held liable. The court agreed. Here’s why:
What Is a Qualified Privilege?
- According to the court, a Qualified Privilege “applies to communications made in good faith on any subject matter in which the party making the communication has an interest or in reference to which he had a duty, either public or private, either legal, moral, or social, if made to a person having a corresponding interest or duty.”
- Communications made to law enforcement to report criminal activity are qualifiedly privileged because such communications enhance public safety by facilitating the investigation of suspected criminal activity.
- The party claiming the qualified privilege has the burden of proving that the statements fall within the privilege.
- The qualified privilege will be lost if it has been “abused“.
When Is a Qualified Privilege Abused?
According to the court, the Qualified Privilege will be deemed to have been abused when:
- The communicator was primarily motivated by ill will in making the statement;
- There was excessive publication of the defamatory statements; or
- The statement was made without belief or grounds for belief in its truth.
In this case the Housing Agency really did a good job to protect its qualified privilege in making the criminal report to the prosecutor. Clearly, there was no abuse or malice in what it did. Indeed, what the Housing Agency did before it made the decision to fire the inspector and report the illegal conduct is an object lesson in how an effective investigation should be handled.
The Steps in an Effective Investigation to Preserve the Privilege
Here is what the Housing Agency did – before taking action:
- reviewed GPS data from the inspector’s vehicle;
- researched the inspector’s criminal record;
- reviewed previous incidents that resulted in corrective administrative action against the inspector;
- confirmed that the inspector had signed a form indicating that he had received the Housing Agency’s employee policies and procedures manual;
- confirmed that the inspector had signed a form indicating his understanding that Housing Agency vehicles were not to be used for personal purposes;
- reviewed a complaint against the inspector made via the Agency’s fraud hotline;
- confirmed by obtaining court records that the inspector had been in court on those days he claimed to have been working;
- reviewed the inspector’s time cards;
- reviewed inspection log reports to determine which properties he had inspected;
- reviewed inspection status reports to determine which properties the inspector was assigned to inspect;
- reviewed sign-in sheets;
- attempted to locate the leave request form that the inspector claimed that he submitted; and
- reviewed a complaint made against the inspector via the Mayor’s Action Center.
All of these steps ensured that not only the Housing Agency was on solid ground in taking action but also ensured that it was doing the right thing – without fear of losing a lawsuit for defamation or malicious prosecution.
Lessons for all Employers
Despite the existence of the qualified privilege, too often out of fear of lawsuits employers hold back in making reports of illegal conduct when there is a legal, ethical, moral or social duty to make a report. Understanding the reasons for the privilege and how not to abuse it will ensure that employers will do the right thing and take appropriate action when appropriate action is called for.
Reference: Brown v. Indianapolis Housing Agency, (Ind. App. No. 40A05-1111-CT-648, July 24, 2012)
If you have any questions please contact Steve Lyman at slyman@wp.hallrender.com or your regular Hall Render attorney.
