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The decisions of the U.S. Supreme Court in Burlington Industries v. Ellerth [FOOTNOTE 1] and Faragher v. City of Boca Raton [FOOTNOTE 2] establish an affirmative defense in some circumstances for employers seeking to avoid vicarious liability for sexual harassment by supervisors. [FOOTNOTE 3] Specifically, these 1998 cases encourage employers to exercise “reasonable care” in preventing sexual harassment and promptly correcting harassment discovered in the workplace. In response to these rulings, the Equal Employment Opportunity Commission (EEOC) issued revised enforcement guidelines in 1999 emphasizing the importance of prompt, thorough, and impartial investigations conducted by well-trained investigators. [FOOTNOTE 4] Just prior to the issuance of the EEOC’s revised guidelines, however, a private sector attorney queried the Federal Trade Commission (FTC) staff as to whether the 1996 amendments to the Fair Credit Reporting Act [FOOTNOTE 5] (FCRA) applied to workplace investigations. This seemingly innocent inquiry set in motion a series of events that today significantly complicates an employer’s efforts to exercise reasonable care in investigating allegations of workplace harassment. The position developed by the FTC appreciably changed the calculus of workplace investigations, and gave rise to Congressional efforts aimed at easing the burden on the employer desiring to follow EEOC guidelines and the provisions of the FCRA, strange bedfellows indeed. This article examines the unlikely intersection of a public policy directive aimed at ridding the workplace of egregious harassment and a legislative mandate attempting to protect the privacy rights of consumers. First, we briefly review the key elements of the Ellerth and Faragher decisions. Next, we summarize the EEOC’s enforcement guidelines, with particular emphasis on the importance of conducting reasonable investigations and the advantages associated with outsourcing this vital task. The significant unintended consequences will become clear when we turn to a discussion of the FTC’s interpretation of the FCRA’s applicability to workplace investigations. Finally, in addition to providing advice on how to manage the existing dilemma faced by employers seeking to rid the workplace of harassment, we also review three recent Congressional proposals for minimizing the conflict between Title VII of the Civil Rights Act of 1964 [FOOTNOTE 6] (Title VII) and the FCRA, two essential and long-standing expressions of public policy. ELLERTH AND FARAGHER The companion cases of Burlington Industries v. Ellerth and Faragher v. City of Boca Raton, both decided by the Supreme Court on June 26, 1998, addressed the same issue. Under what circumstances are employers responsible for sexual harassment involving a hostile work environment created by supervisors, and of which the employer had no knowledge? The Supreme Court clarified that employers are vicariously liable for the unlawful harassment perpetrated by supervisors. Writing for the majority of the Court, Justice Kennedy stated that “an employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate (or successively higher) authority over the employee.” [FOOTNOTE 7] The Court also ruled that, in the absence of a tangible employment action (e.g., firing, failure to promote, demotion, undesirable reassignment, and significant changes in benefits) by the supervisor, however, employers may raise an affirmative defense to liability. This defense comprises two necessary elements: (1) “that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior,” and (2) “that the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer … .” [FOOTNOTE 8] Therefore, employers are encouraged to establish policies and procedures that would help to prevent harassment from occurring, or that will allow the employer to promptly correct such behavior if it did occur. Employees, conversely, are expected to avoid or limit the harm caused by harassment by taking advantage of anti-harassment policies and procedures provided by the employer. The Supreme Court quite correctly allocates responsibility for preventing and correcting harassment to both the employer and the employee. THE EEOC’S RESPONSE The Supreme Court’s rulings in Ellerth and Faragher provide employers with incentives for exercising reasonable care in preventing or correcting instances of workplace harassment. In response to these decisions, the EEOC promulgated revised enforcement guidelines addressing an employer’s vicarious liability for unlawful harassment by its supervisors. [FOOTNOTE 9] The guidelines outline what employers should do to demonstrate the exercise of reasonable care. Section V, subsection C, of the guidelines suggests the need for an employer to establish, publicize, and enforce an anti-harassment policy and complaint procedure. Elements of such a policy and procedure include: – a clear prohibition of harassment by anyone in the workplace; – protection from retaliation for employees who report harassment, or aid in the investigation; – a complaint reporting procedure that encourages victims to come forward and is easy to follow; – assurances of confidentiality (to the extent possible); – an effective investigative process; and – assurances that immediate and appropriate corrective action will be taken. Of particular relevance to this article are the provisions detailing the characteristics of an effective investigation. The employer must take care that the individual responsible for conducting the investigation is objective and competent, well trained in the skills required for interviewing parties and witnesses, and for evaluating their credibility. [FOOTNOTE 10] CONDUCTING AN EFFECTIVE INVESTIGATION The decision to investigate claims of harassment, and to do so reasonably, is no longer a matter of managerial discretion. Consider, for example, the implications of the following assessment: “The message from judges and juries across America is clear: faulty investigation of sexual harassment claims can lead to judgments in favor of sexual harassment victims and alleged harassers whose terminations are based upon insufficient evidence.” [FOOTNOTE 11] The employer may be forced into an untenable position of having to defend, from two almost diametrically opposing viewpoints, harassment-related claims arising out of one alleged incident or set of circumstances. On the one hand, the person alleging harassment may have a claim against the employer under Title VII if the allegations are not competently investigated. The Ellerth and Faragher decisions provide further guidance as to the elements of a harassment claim and clarify the importance of conducting an investigation into allegations of workplace harassment. Failing to investigate competently may very well be regarded as strong evidence that the employer approves, albeit implicitly, of the harassment. On the other hand, a less obvious reason supporting the employer’s decision to fully investigate any harassment claim is that those accused of sexual harassment increasingly are suing their former employers for emotional distress, defamation, and wrongful discharge. [FOOTNOTE 12] The California Supreme Court, however, has provided at least a modicum of assistance to management. It held in 1998 that the termination of an employee for sexually harassing a co-employee is not wrongful under state law if the investigation into the veracity of the allegations occurred in good faith and the investigation generated reasonable grounds to believe that harassment did occur, even if the plaintiff in the original sexual harassment suit was unsuccessful. [FOOTNOTE 13]While the exact parameters of the employer’s defense remain unknown, it is clear that any such defense likely will be premised on the fact that the employer undertook an investigation that was both reasonable and competent. The EEOC guidelines are emphatic that any complaint, regardless of the manner in which the employer learns of possible impropriety, must be investigated. Effective investigations should exhibit three attributes: (1) thoroughness, (2) promptness, and (3) impartiality. [FOOTNOTE 14] Thorough investigations involve interviewing the complainant, the alleged harasser, and relevant witnesses. Investigators must distinguish statements of fact from mere conjecture. Finally, the investigator must make determinations regarding the credibility of the parties and witnesses. The duration of the inquiry should be as short as possible. Claims of impropriety from more than a single person toward one individual (or other circumstances) may necessarily negate the possibility of an investigation proceeding quickly to fruition. Nevertheless, courts have ruled that reasonable investigations are normally completed within a few days to a couple of weeks. [FOOTNOTE 15] Perhaps the most important component of an effective investigation is impartiality. The most reliable way of achieving actual and perceived impartiality is to use an investigator who is independent of the organization. While a person from the organization’s human resources department or a member of management from another division is sometimes sought to conduct the investigation, only very large organizations can afford to create a cadre of proficient investigators who might be perceived by all parties as truly impartial. Additionally, investigators may find that what originally was viewed as being a small problem is actually much larger. An outside investigator is often more likely to let the facts control the direction of the inquiry. Not surprisingly, the demand for outside professionals, as a result of the 1998 Supreme Court rulings and the revised EEOC guidelines, is growing. [FOOTNOTE 16] FCRA & WORKPLACE INVESTIGATIONS Until recently, employers contracting with knowledgeable outside investigators could operate with confidence that a “reasonable and competent” investigation would forestall legal liability under both harassment and wrongful discharge law. But a 1999 development has created a need for employers to rethink using outside investigators. Employers may be shocked to discover that their well-intentioned actions now subject them to selected requirements of the Fair Credit Reporting Act. PURPOSE OF THE FCRA In response to consumer complaints about the inaccuracies in, and the improper use of, credit records, Congress enacted the FCRA in 1970. Congressional intent was to require the credit reporting industry to adopt reasonable procedures for meeting the business community’s need for accurate information in a manner that was fair, impartial, and respectful of the consumer’s right to privacy. The FCRA regulates the compilation, distribution, and use of information by reporting agencies, financial institutions, employers, and others. For three decades, employers have complied with FCRA rules governing the use of credit or background checks on job applicants and requiring certain disclosures if such information was used by employers as the basis of an adverse employment action. KEY DEFINITIONS AND BASIC PROVISIONS A number of definitions form the basis of the FCRA’s regulatory framework, and some are essential to understanding the linkage between the FCRA and sexual harassment investigations. [FOOTNOTE 17] For example, a consumer is defined simply as “any individual,” which includes, of course, employees. Two kinds of reports may be compiled. A consumer report contains information bearing on, among other things, an individual’s “character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for … employment purposes.” Many employers are already familiar with this type of report. A second kind of report, an investigative consumer report, is a consumer report where the information is obtained through personal interviews. It is reasonable to assume that most reports compiled in workplace harassment investigations will be of this type. A report becomes a consumer report or an investigative consumer report only if it is prepared by a consumer reporting agency, defined as “any person which, for monetary fees, dues, or on a cooperative non-profit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties,” but the word “regularly” remains undefined. The phrase employment purposes means “for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.” The term adverse action is defined as “a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.” Under the FCRA, any consumer reporting agency may furnish a consumer report to a person it has reason to believe intends to use the information for employment purposes, provided that the information from the consumer report will not be used in violation of any applicable Federal or State equal employment opportunity law or regulation. The FCRA specifies what information may be included in the report, and what information must be excluded. Consumer reporting agencies are obliged to follow reasonable procedures to assure the maximum possible accuracy of the information concerning the individual about whom the report relates. The FCRA precludes the consumer from bringing an action alleging defamation, invasion of privacy, or negligence when adverse action has been taken based on the report, except when false information was furnished with malice or willful intent to injure the consumer. Nevertheless, an employer’s negligence in failing to comply with FCRA requirements may lead to liability for actual damages, as well as court costs and attorney’s fees. Willful noncompliance may also lead to an award of punitive damages. [FOOTNOTE 18] The Federal Trade Commission is responsible for exercising procedural, investigative, and enforcement powers, including the power to issue procedural rules in enforcing compliance. 1996 AMENDMENTS TO THE FCRA When Congress amended the FCRA in 1996, it significantly expanded the disclosure mandates and imposed new consent requirements on employers who use consumer reports for employment purposes. These amendments sought to provide current and prospective employees with an opportunity to refute incorrect information that may be furnished about them. While well-intentioned, these new consent and disclosure requirements now create substantial compliance dilemmas for managers attempting to investigate harassment in the workplace in a manner consistent with both FCRA rules and EEOC guidelines. THE VAIL LETTER & FTC POSITION The surprising revelation that the FCRA may include harassment investigations under its provisions first came to light in April of 1999. An informal opinion letter issued by the FTC staff in response to a question posed by a Washington state attorney (Vail letter) found that “outside organizations utilized by employers to assist in their investigations of harassment claims ‘assemble or evaluate’ information.” It was the FTC’s staff opinion that these outside investigators are considered consumer reporting agencies involved in producing investigative consumer reports. [FOOTNOTE 19] Whether this extension of the FCRA to investigations of harassment or other forms of employee misconduct was intended or anticipated by Congress is debatable, but we strongly doubt that Congress foresaw this specific result. Nevertheless, one year later, the FTC officially adopted the position expressed in the Vail letter. [FOOTNOTE 20] Until Congress or the courts resolve the issue, the FTC’s stance has major implications for employers choosing to outsource investigations of workplace wrongdoing. As interpreted by the FTC, the 1996 amendments to the FCRA greatly increased the burdens on businesses using an outside investigator to conduct workplace investigations in two areas. First, employers are now required to provide multiple notices to the person accused of harassment or other workplace misconduct. Second, because the FCRA attempts to provide individuals with an opportunity to correct inaccurate or incomplete information, the investigator’s report must be disclosed to the accused if the employer plans to discipline the employee or take any other adverse employment action. NOTICES AND DISCLOSURES Employers wrestling with the implications of the Vail letter must be aware of three different disclosures required by the FCRA. The first disclosure requires employers to notify present or prospective employees and to obtain their consent that a consumer report may be obtained for employment purposes. Such written notification must be clear and conspicuous, and made before the report is procured. Moreover, the notification must be made in a document that consists solely of the disclosure itself. The employee or job applicant must authorize in writing (which may be made on the disclosure document) the subsequent procurement of the report. [FOOTNOTE 21] Investigative consumer reports prepared by outside investigators are the subject of two additional disclosure requirements. No investigative consumer report can be procured unless the person who is to be the subject of the investigation receives a clear and accurate disclosure that an inquiry may be made into the subject’s character, general reputation, personal characteristics and mode of living, whichever are applicable. This disclosure must be made in writing and mailed (or otherwise delivered) to the subject no later than three days after the date on which the report was first requested. The disclosure must include a statement informing the subject of the investigation of the right to request additional information regarding the nature and scope of the inquiry, along with a written summary of other applicable rights. In turn, the employer must certify to the investigator that all disclosures have been made to the subject of the investigation, and that the employer will comply with all other applicable FCRA requirements. If the subject of the investigation does, in fact, choose to make a written request for more complete information about the nature and scope of the investigation, and if the request is made within a reasonable period of time, the employer must comply with that request. The employer must deliver (by mail or otherwise) a complete and accurate disclosure of the nature and scope of the investigation within five days of receiving the employee’s request (or within five days from first requesting the investigative report, whichever is later). The FCRA exempts employers from liability for violating these disclosure requirements if the employer is able to show by a preponderance of the evidence that, at the time of the violation, the employer maintained reasonable procedures to assure compliance. Nevertheless, for a business community already over-burdened with the reporting and compliance costs of a multitude of governmental regulations, these added disclosure requirements further complicate the delicate task of conducting harassment investigations. ADVERSE ACTION Prior to using an outside investigator’s report to take an adverse employment action against an employee, the employer must provide the employee with (1) an unedited copy of the report received from the investigator, and (2) a copy of the employee’s rights under the FCRA (an FTC publication entitled “A Summary of Your Rights Under the Fair Credit Reporting Act”). This is a “pre-adverse action disclosure.” An informal opinion letter issued by the FTC indicates that there should be a five-day waiting period between the time the employee receives notice of intended adverse action and actually taking action. [FOOTNOTE 22] Such a delay seems prudent and reasonable. It allows the employee sufficient time to contemplate the nature of the problem, and it affords an opportunity to respond to the employer before the employer commits to taking the adverse action. Once the adverse employment action has been taken, however, the employee must receive notice of such action. The adverse action notice includes the name, address, and telephone number of the outside investigator who compiled the report. Also included in the notice is a statement that the outside investigator did not make the adverse employment action and is unable to provide the employee with the specific reasons why the adverse action was taken. The employee must also be provided with notice of his or her rights under the FCRA to obtain another (and free) copy of the report from the outside investigator within 60 days, and that the accused has the right to dispute the accuracy or completeness of the information contained therein. The FCRA requires that the consumer reporting agency, upon request from the employee, provide the employee with all information in the employee’s files, the sources of such information, and the identification of each person who procured a report for employment purposes during the two-year period preceding the date on which the request was made. [FOOTNOTE 23] OUTSOURCING INVESTIGATIONS: FTC COMPLIANCE ISSUES The use of outside investigators immediately complicates the employer’s ability to ensure, to an extent that is both reasonable and practicable, that the workplace is safe. For example, the FCRA’s requirement that sources of information, both favorable and unfavorable, be disclosed to the employee under investigation would likely have a chilling effect on the willingness of employees to cooperate in the investigation for fear of retaliation. Employers may think twice about using outside investigative services, but this would only increase the attendant risks associated with performing in-house investigations conducted by non-specialists. Alternatively, while the employer may be tempted to avoid the requirements of the FCRA altogether by simply dismissing an alleged harasser upon first hearing of the allegation, this tactic ignores fundamental principles of fairness and due process. That approach also fails to provide the employer with a means for protecting itself against wrongful termination, defamation, or other tort claims relating to a discharge. Ultimately, employers may very well come to the conclusion that outsourcing investigations is the best choice. If this is the case, then an organization using outside professional investigative services must understand completely and implement carefully the provisions of the FCRA, especially in light of the FTC’s position. Moreover, willful noncompliance leaves companies vulnerable to punitive damages. To limit liability associated with violating the FCRA as it is currently interpreted, the organization may take the following actions: Perform an initial in-house investigation. Because the FCRA’s disclosure and notification provisions only apply when an outside investigator is used, the organization may wish initially to conduct an in-house investigation (unassisted by outside professionals) to delay the necessity for sharing any information with the alleged harasser. Alternatively, the organization may wish to forego outside investigations altogether until Congress or the courts resolve the FCRA’s impact on the implementation of anti-discrimination policies. Either of these strategies might increase the organization’s liability under EEOC guidelines. Use a surveillance-only approach. Outside investigators may be asked to conduct surveillance using exclusively direct observation, perhaps aided by videotape. The surveillance-only approach overcomes the most burdensome of the FCRA’s provisions (which apply only when an outside investigator uses personal interviews to gather information). Unfortunately, for determining and assessing the facts (or fictions) of a particular complaint of harassment, this approach is of limited value, especially because it may not be timely in producing results. Request edited reports. The FCRA prohibits employers from editing a report from an outside investigator after the investigator submits the report. To overcome this constraint, an employer utilizing outside investigators might request that the investigator submit only a redacted report. In fact, this tactic was suggested in an FTC staff opinion letter. [FOOTNOTE 24] While this action may ensure some degree of confidentiality, taking an adverse employment action without the ability to “name names” leaves the employer vulnerable to claims of defamation and wrongful discharge. Revise notification procedures. Employers could require that all job applicants sign an authorization for conducting and compiling consumer reports (including investigative reports) for employment purposes. This complies with the FCRA’s notification requirements, but does not draw unnecessary attention to any subsequent investigation. For current employees, the organization may have everyone sign a similar blanket authorization. The FTC staff has opined that such one-time disclosures and authorizations are adequate for employers to obtain reports about applicants and current employees. [FOOTNOTE 25] These blanket disclosures and prior written authorizations may cause employees to request access to any investigation obtained on them. The company will need to weigh the investigative benefits against the potential administrative costs associated with this course of action. Notify the alleged harasser. The company employing outside investigative assistance must be able to provide the alleged harasser with a copy of any written report prepared by the investigator. The report, therefore, needs to be written with the understanding that it contain no more information than is necessary for the employer to make a fair and supportable decision. LEGISLATIVE PROPOSALS When legislation pursuing public policy goals unrelated to ending workplace harassment intrudes upon the ever-more-important investigatory process, serious compliance dilemmas arise. [FOOTNOTE 26] Employers have a vested interest in seeking legislative changes that facilitate the effective and efficient elimination of harassment from the workplace. Arguably, there is little evidence to conclude that Congress anticipated (or intended) that the provisions of the FCRA would be brought to bear on employers seeking to comply with the EEOC’s guidelines. Indeed, a strong case can be made that the FTC’s interpretation of the FCRA represents an unnecessary intrusion into an employer’s good-faith efforts to establish and implement effective processes for investigating complaints of harassment and other forms of workplace wrongdoing. The disclosures and notifications required by the FCRA, according to the FTC, both unfairly and inappropriately burden the employer in its attempt to effectively investigate and resolve one of the most sensitive of workplace complaints. In fact, since the Vail letter first raised the issue, three amendments to the FCRA have been proposed in Congress to address this dilemma. H.R. 3408 The first bill to amend the FCRA in response to the implications of the FTC’s position outlined in the Vail letter, H.R. 3408, was introduced on November 16, 1999. [FOOTNOTE 27] It would exempt certain investigative reports from the definition of a “consumer report,” including reports “prepared by an employee or agent of a consumer’s employer solely for the purpose of investigating allegations of drug use or sales, violence, sexual harassment, employment discrimination, job safety or health violations, criminal activity including theft, embezzlement, sabotage, arson, patient or elder abuse, child abuse, or other violations of law.” [FOOTNOTE 28] If an investigative report prepared by an outside agency is to be used in conjunction with an adverse action, however, modified disclosure rules apply. “[B]efore taking any action based in whole or in part on such report, the person intending to take such an adverse action shall disclose to the employee the nature and substance of the information in the report on which the proposed adverse action is based.” [FOOTNOTE 29] Thus, while creating a “blanket exemption” for investigations of employee misconduct, H.R. 3408 would nevertheless retain in modified form certain FCRA disclosure provisions should the investigative report later be used to support an adverse action. In a letter to the bill’s author, the FTC acknowledged that the FCRA should not unduly hinder workplace investigations seeking to comply with other federal statutes. [FOOTNOTE 30] In subsequent testimony before the Subcommittee on Financial Institutions and Consumer Credit, the FTC’s General Counsel reiterated the FTC’s support for “prudent amendments to the FCRA to remove those FCRA procedural requirements that unduly interfere with workplace investigations conducted for employers by outside entities.” [FOOTNOTE 31] The FTC argued, however, that H.R. 3408, while freeing workplace investigations from certain problematic FCRA provisions, would also unnecessarily eliminate a substantial number of privacy and procedural protections long enjoyed by employees who were targets of such investigations. Thus, the FTC proposed that targeted statutory exemptions from problematic FCRA requirements were preferable to a blanket exemption. [FOOTNOTE 32] H.R. 4373 In arguing for specific exemptions, the FTC was essentially lending its endorsement to H.R. 4373, introduced on May 3, 2000. [FOOTNOTE 33] H.R. 4373 would amend the FCRA by limiting the disclosure of consumer reports that are obtained in connection with allegations of illegal conduct. The bill exempts from certain disclosure requirements “a consumer report for an employee which is obtained for the purposes of investigating allegations of a violation of the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, the Older Americans Act of 1965, the Age Discrimination in Employment Act of 1967, [T]itle VII of the Civil Rights Act of 1964 or analogous State and local laws.” [FOOTNOTE 34] This proposed legislation effectively eliminates an employer’s FCRA-imposed duties to provide notification, to obtain the employee’s consent to proceed with an investigation, and to disclose the report to the employee upon taking an adverse action. While the employee may still request information contained in the report, the employer need not disclose “more than a summary containing the nature and substance of the information (i.e., information which is meaningful and genuine that serves as a basis of the decisions to investigate but is not so specific as to identify witnesses or otherwise inhibit the investigation).” [FOOTNOTE 35] H.R. 1543 On April 24, 2001, the Civil Rights and Employee Investigation Clarification Act (H.R. 1543) was introduced in the new 107th Congress. [FOOTNOTE 36] This bill, which was referred to the House Committee on Financial Services, would amend the FCRA to exempt certain communications from the definition of a “consumer report.” H.R. 1543 finds that the FCRA impedes investigations of workplace misconduct and undermines the ability of employers to use experienced outside investigators, especially when employers have been advised by agencies and the courts to utilize such experienced outside organizations and individuals. To address these findings, the bill excludes from the definition of a consumer report communications: (1) made to an employer in connection with an investigation of suspected misconduct relating to employment, or compliance with laws, regulations, and written policies of the employer; (2) not made for the purpose of investigating a consumer’s credit; and (3) only provided to an employer or an agent of the employer. In the case of adverse action, however, the bill provides for disclosure to the consumer of a summary containing the nature and substance of the communication upon which the adverse action is based. [FOOTNOTE 37] Commentators have been highly critical of both H.R. 3408 and H.R. 4373. [FOOTNOTE 38] While H.R. 1543 attempts to remedy the shortcomings of the earlier bills, it is likely that this latest bill will suffer similar criticisms. Under these legislative proposals, certain FCRA requirements would still apply to workplace investigations of employee misconduct. It could be argued that blanket exemptions conflict with provisions requiring a modified disclosure when an adverse action is taken as a result of an investigative report. Moreover, it might also be argued, as the FTC did with respect to H.R. 3408, that blanket exemptions unduly jeopardize the protection of the privacy rights of persons under investigation. By taking a targeted approach to exemptions, and by not fully removing workplace investigations from the provisions of the FCRA, it likewise may be argued that H.R. 4373 unnecessarily complicates the FCRA and does not adequately resolve the compliance dilemmas faced by employers seeking to eradicate workplace misconduct. While H.R. 1543 resolves certain compliance dilemmas, it does add complexity to the task of meeting FCRA requirements. The FTC’s insistence that the FCRA is applicable to outsourced workplace investigations is flawed if such investigations are not consistent with the spirit and purpose of the FCRA itself, or if such an interpretation contravenes the anti-discrimination purposes of Title VII. Thus, any attempt to modify the FCRA to accommodate the dilemma introduced by the FTC’s opinion logically is also flawed. If the FCRA continues to be used as a means of protecting the accused in workplace investigations from adverse employment actions based on false or unsubstantiated complaints, then these proposed amendments to the FCRA may simply “foster a piecemeal attempt [at] providing statutory protection.” [FOOTNOTE 39] CONCLUSION Outsourcing investigations of harassment and other forms of workplace misconduct now places an onerous set of federal compliance burdens on employers. The EEOC’s directive to conduct reasonable and competent investigations brings the firm under the regulatory hand of the FTC and the provisions of the FCRA when outside investigators are used. Only through changes in public policy can the unintended consequences of the decision to outsource investigations be eliminated. If Congress truly wanted to assist employers in ridding the workplace of harassment and other forms of wrongdoing, while at the same time protecting the rights of employees subject to workplace investigations, perhaps it ought to do so by, first, excluding all investigations of current (vis-�-vis prospective) employees from the provisions of the FCRA and, second, pass entirely new protective legislation unrelated to the FCRA. Dr. James Morgan is a Professor of Management within the College of Business at California State University, Chico. A specialist in employment law, Dr. Morgan received his J.D. from the University of California, Davis. Dr. Glenn Gomes, a Professor of Management within the College of Business at California State University, Chico, received his Ph.D. in Business Administration from the University of Southern California, and specializes in strategic management and business policy. Dr. James Owens is an Associate Professor of Management within the College of Business at California State University, Chico. He received his J.D. from Western State University College of Law and recently co-authored a textbook on business law.


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