No good deed goes unpunished.

That was surely the reaction of human resources director Karlean Victoria Grey-Allen when the 2nd Circuit ruled on May 9, in a case of first impression, that her participation in an internal investigation of a sexual harassment claim did not protect her from retaliation by her employer.

In Townsend v. Benjamin Enterprises Inc., Martha Townsend was a receptionist at the family-owned Benjamin Enterprises. She alleged that Corporate Vice President Hugh Benjamin sexually harassed her, first reporting the incidents to President Michelle Benjamin, Hugh’s wife, and then to HR Director Grey-Allen, who began investigating Townsend’s claims. After learning that Grey-Allen discussed the allegations with a management consultant, Michelle Benjamin fired her.

Of course, “we can probably surmise that the allegations that the husband was sexually harassing somebody else didn’t sit well with the wife/president,” says David Ritter, a partner at Neal, Gerber & Eisenberg.

Whatever the motivation, the district court found that Grey-Allen’s termination was not covered by Title VII of the Civil Rights Act of 1964’s anti-retaliation provision, because the internal investigation was not associated with a formal charge through the Equal Employment Opportunity Commission (EEOC). The 2nd Circuit upheld this ruling.

Bound by Language

Grey-Allen claimed that conducting an internal investigation into Townsend’s sexual harassment claims was protected activity under the participation clause of Title VII. Specifically, she referenced the language “participate in any manner in an investigation, proceeding, or hearing under this subchapter,” claiming that any investigation that is intended to remedy Title VII discrimination should be included in that definition.

However, as the 2nd Circuit pointed out, the “subchapter” the statute is referring to is subchapter VI of Chapter 21 of Title 42, which spends a long time describing the powers of the EEOC, leading the court to believe that “an investigation, proceeding, or hearing under this subchapter” means an investigation, proceeding or hearing that is connected with a formal EEOC proceeding. In response to Grey-Allen’s argument, the court wrote: “We decline to adopt such a strained interpretation of the language of the statute.” The 5th and 6th Circuits have ruled similarly regarding such claims.

“The decision makes sense according to the authority that they cite, what Congress has done and the definitions of the terms set forth in the statute,” says Kathleen Anderson, a partner at Barnes & Thornburg.

Judge Raymond Lohier concurred with the majority opinion, though he expressed disappointment that internal investigators aren’t afforded the same protection as those in conjunction with a formal EEOC charge. “There was strong evidence that [Benjamin Enterprises] fired Grey-Allen for no reason other than that she conducted an effective internal investigation of a sexual harassment claim against a corporate vice president,” Lohier wrote in his concurrence. “The distinction between investigations in which the government is involved and internal investigations strikes me as antiquated and arbitrary.”

But if the statute and the case law are clear, there’s not much that courts can do. “The answer to this conundrum is for Congress to amend the statute,” Ritter says.

Protecting the Workplace

On the surface, at least, this appears to be a decision that favors employers. After all, as long as there is no EEOC claim pending, employers “can act with a great deal of latitude in terminating someone involved in an investigation when there’s something about the conduct of that person that they don’t like,” says Richard Glovsky, a partner at Edwards Wildman Palmer.

If employers do decide to terminate an investigator, though, they should check their state laws first. There are some states, Glovsky says, such as Massachusetts, where Grey-Allen’s termination likely would have been considered retaliation.

Of course, the problem isn’t quite as simple as that. Any employer who takes discrimination and harassment claims seriously has to realize that this opinion is going to strike fear into human resources professionals tasked with doing an investigation. “It may put a chill on those doing the internal investigations because they realize they’re not protected if their boss doesn’t like how they’re conducting the investigations,” Glovsky says.

Employers that value a safe workplace want to get to the bottom of such allegations as quickly as possible, and internal investigations are often the best way to do that. But a fear of retaliation does not advance that goal. “This statute does not encourage or give an incentive to do the right thing, other than to be a professional and do what you’ve been hired to do,” Ritter says.

Ritter, Glovsky and Anderson all recommend launching internal investigations as quickly as possible when discrimination or harassment claims arise, even in light of this decision. So how can in-house lawyers help their HR personnel feel comfortable carrying out their intended function? “HR needs to be valued,” Ritter says. “[In-house counsel need to] have a relationship so the HR people know that they’re on the same team, and if they ever get into a situation where management wants to throw HR under the bus, the GC and other lawyers [will] step up and say, ‘No, they were just doing their job.’”