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California Court Finds Good Faith Investigation Prevents Liability for Terminating Employee

Jan 30, 2013

By Amy Oppenheimer

A California Appeals court affirmed the granting of summary judgment in favor of an employer who terminated an employee based on findings from an investigation. In the investigation, an outside attorney/investigator found that the employee had violated the employer’s sexual harassment policy and had not cooperated with the investigation. Based on these findings, the employee was then terminated.
The case is McGrory v Applied Signal Technology 

The court found that the employee was terminated for legitimate nondiscriminatory reasons, and therefore his lawsuit could not go forward. In doing so the court cited the Cotran case, pointing out that this employer had a reasonable and good faith belief that the employee engaged in conduct that violated its rules. Therefore, whether or not harassment (or rule violations) actually occurred is irrelevant. The McGrory court also found, in deciding a defamation action in the case, that the employee would have to show more than mere negligence in the investigation in order for the requisite finding of malice.

What does this mean for investigators and employers? This is more assurance from the California courts that if an employer, acting in good faith, conducts a fair, thorough and impartial investigation, it will not be held liable for taking action based on that investigation.