If your employer is investigating possible criminal wrongdoing by you or others and asks you to answer some questions or provide information, what should you do? You need to act in your own best interests (after talking to legal counsel), because if you don’t cooperate, you could be fired.
As bad as this situation is, if you do cooperate, you may (rightly or wrongly) face criminal prosecution based on your statements. This is a uniquely bad situation to be in, so you need to talk to an attorney before you talk to anyone else.
Damned If You Do, Damned If You Don’t
If you work for a private employer, failing to cooperate with an investigation could potentially result in being fired. (Note that public employees have more legal protections.) In 2015, the U.S. Court of Appeals for the Second Circuit decided in Gilman v. Marsh & McLennan Cos. that the employer was within its rights to fire an employee in this situation.
In 2004, then-New York Attorney General Eliot Spitzer started to investigate Marsh (an insurance broker) along with a number of insurers. Marsh started its own internal investigation into the matter. As time passed, one insurer’s employees pled guilty to felony bid-rigging charges. They accused Marsh employees William Gilman and Edward McNenney of participating in the scheme.
Spitzer filed a civil complaint against Marsh, Gilman, and McNenney. Marsh suspended both employees with pay and asked them to attend interviews with its own investigators. Gilman’s lawyer scheduled an interview, but on the day before it, Gilman submitted his retirement paperwork. His attorney told Marsh that he wouldn’t participate in the interview. Marsh rejected Gilman’s attempt to retire and fired him the following day. McNenney’s attorney simply informed Marsh that he would not be interviewed, and McNenney was fired the next day.
The terminations affected both Gilman and McNenney’s benefits. Because they were fired “for cause,” they couldn’t obtain severance or vesting of stock options or bonus units. The two former employees sued Marsh, but the case was dismissed, and the dismissal was upheld on appeal. The appellate court wrote that these wer the two key issues:
- whether the orders to cooperate with the requested interviews were reasonable, and if so,
- whether employees could properly be terminated for cause for refusing to “obey a direct, unequivocal, reasonable order of the employer.”
The court stated that if an employee is accused of a crime, the accusation alone is just cause for a firing. Therefore, both employees could have been immediately terminated due to the accusations of bid-rigging, regardless of whether the allegations were actually true. The fact that they weren’t automatically fired showed that Marsh acted reasonably by giving them a chance to explain themselves.
This case shows the difficult choice faced by employees dealing with possible criminal and/or civil legal actions where their employer asks them to participate in an internal investigation. If the company had interviewed Gilman or McNenney, their statements could have been used against them in court. While they had a right to refuse those interviews, that didn’t shield them from the consequences of their refusal.
Constitutional Protections: When Does a Private Employer Act for the Government?
The Fifth Amendment to the U.S. Constitution states, in part, “No person…shall be compelled in any criminal case to be a witness against himself.” And the Sixth Amendment states, in part, “In all criminal prosecutions, the accused shall enjoy the right to…have the assistance of counsel for his defense.” The Constitution protects us against acts of the government. But if there’s no government actor involved, these amendments don’t apply.
If, however, a private employer becomes sufficiently entangled with the government when investigating possible criminal wrongdoing, the private employer could be considered a government actor. In September 2015, Deputy Attorney General Sally Quillian Yates released the “Yates Memo,” outlining how the Department of Justice (DOJ) would place a greater focus on individual responsibility for corporate wrongdoing. This put those who could commit corporate crimes on notice not only that their employers could be in trouble under criminal law but that more individuals could have criminal charges brought against them.
What If Companies Cooperate With the Government?
No one, including corporations, wants criminal charges hanging over them. Companies could get “cooperation credit” from the DOJ if they work with the government to ferret out any bad actors and help fully expose their illegal actions and their damages. With enough credit, the DOJ may not file criminal charges against the corporation, or it may reduce any penalties imposed. This policy has the effect of driving a wedge between the employer and the employee suspected of criminal wrongdoing.
But it also has the effect of potentially providing employees with Fifth and Sixth Amendment protections in the employment investigation setting. In another Second Circuit decision, United States v. Stein, the accounting firm KPMG was under investigation for its involvement with an allegedly illegal tax shelter. Prosecutors used “overwhelming influence” on the firm to get it to adopt a policy where it refused to pay for the legal defense of employees who failed to cooperate with its internal investigation. Thirteen former partners and employees were indicted.
The trial court later dismissed those indictments, with the appellate court upholding the dismissal. The court wrote, “KPMG’s adoption and enforcement of a policy under which it conditioned, capped and ultimately ceased advancing legal fees to defendants followed as a direct consequence of the government’s overwhelming influence.” Therefore, “KPMG’s conduct…amounted to state action.” The Second Circuit held that “the government thus unjustifiably interfered with defendants’ relationship with counsel and their ability to mount a defense, in violation of the Sixth Amendment” and affirmed the dismissal of the indictments against every defendant.
Summing It Up
If your employer is investigating you for possible criminal wrongdoing, you have some tough decisions to make.
- You could cooperate, but the information and statements you make could be provided to law enforcement, which could interpret them, rightly or wrongly, as evidence supporting an arrest. The prosecution could then use this information and your statements against you.
- You could refuse to cooperate, risking termination, but eliminating the risk of your statements being used against you in a criminal proceeding.
- Unless there is strong cooperation between law enforcement and your employer during the investigation, constitutional protections concerning the presence of an attorney or the right not to self-incriminate during your employer’s investigation will not apply.
If your employer told you that you are the subject of an investigation, call our office. You need to talk to an attorney to learn about your rights and legal protections so that you can weigh your options and make an informed decision as to what you should do next.