Workplace Investigations: How Attorney-Client Privilege and Work Product Protections Get Waived in California

Employers often walk a fine line when conducting workplace investigations—especially when those investigations are directed by an attorney. On the one hand, involving attorneys can strengthen the integrity of the process, especially if an outside counsel is hired by the company to conduct that investigation. On the other, it creates a latent risk: waiver of attorney-client privilege and work product protection if the employer later relies on the investigation as part of its defense to either justify the termination or demonstrate that they met their obligation of investigation the allegations made. 
That risk becomes very real in litigation involving claims of discrimination, retaliation, failure to investigate, or wrongful termination.
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The governing principle is this: an employer can't refer to the investigation as a defense in litigation and at the same time refuse to disclose the written materials relevant to that investigation.  The leading case on this issue is is Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, 128. There, the court held that when an employer affirmatively relies on an attorney-conducted investigation to defend its actions, it places the contents of that investigation “at issue,” thereby waiving privilege.
In practical terms, once an employer argues:

• “We conducted a thorough investigation,”
• “We relied on counsel’s findings,” or
• “We acted in good faith based on the investigation,”

…this opens the door to discovery of what would otherwise be a protected material not available to the plaintiff.  
As a result, the plaintiff may gain access to wintess statements, interview notes, draft reports, attorney impressions, and final investigation reports. This can fundamentally shift the leverage in a case, especially if any of these documents contain any "juicy" evidence showing that the employer had unlawful reasons for terminating you.  This damning evidence can include the following: flaws in the investigation, biased questioning, failure to interview key witnesses, pre-determined conclusions, and inconsistent documentation.

These types of issues with the investigation process can, along with other evidence, support or strengthen a potenital or existing case against that employer. Employer should keep this in mind when deciding to conduct an investigation and at a minimum ask themselves: what will be the exact purpose of this investigation? How likely is the company to use this investigation and its conclusion to defend any potential legal action by an employee? And, does the company feel comfortable disclosing all of these investiation materials if need be under the circumstances? 

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