Internal Investigations:
FAQs about Leave for
Complainants and Accused

One of the most common and most important questions about conducting internal investigations is whether the complainant and/or the employee accused of wrongdoing should be placed on paid or unpaid administrative leave. After answering those key questions, two additional related questions need to be answered – what is the duration of the leave and should an employee on unpaid leave be paid for participating in the investigation? Kristen Gallagher, Chair of McDonald Carano’s Employment & Labor Law Practice Group, shares her insights and expertise to help answer these critical questions.

1. Should an accused employee be placed on paid or unpaid administrative leave?
2. Should a complainant be placed on paid or unpaid administrative leave?
3. What should be the duration of the paid or unpaid administrative leave?
4. Should compensation be provided to employees on unpaid leave who participate in an investigation?
5. Conclusion

1. Accused Employee: Paid or Unpaid Leave?
   

• Employers may place an employee accused of wrongdoing on unpaid leave pending an investigation but should tread lightly because the outcome of the investigation may result in a finding that is not substantiated by the complaint.
• To avoid allegations of discrimination or wage and hour violations, employers should first consider opting for paid administrative leave pending an investigation depending on the nature of the alleged misconduct.
• Placing an employee on unpaid leave may trigger allegations of retaliation, and placing an employee on paid administrative leave could also give rise to allegations of retaliation if such leave has a particular stigma.
• It may be prudent for an employer to take immediate steps to exclude the accused from the workplace. For example, an employee accused of taking and/or disseminating confidential information, trade secrets or other intellectual property should be placed on administrative leave so the employer can make sure the employee does not try to interfere with preservation of evidence or investigative efforts. Complaints of workplace violence, criminal activity, severe and/or ongoing harassment should also be evaluated to determine whether the accused should be placed on immediate leave.

2. Complainant: Paid or Unpaid Leave?

• Placing a complainant on unpaid leave pending an investigation would only likely be appropriate in a narrow set of circumstances, such as the complainant’s substantiated involvement in the underlying conduct involving workplace violence, commission of a crime, or other serious misconduct that suggests placing the employee on paid administrative leave pending the outcome of the investigation would not appropriately address the circumstances.
• Employers should also be mindful of any job or location reassignments for the complaining party to avoid allegations of retaliation.

3. Paid or Unpaid Leave: Duration of Leave?

• Generally, an accused employee who is placed on administrative leave should remain on leave until the investigation can be completed and a determination made as to whether the complaint was substantiated and whether and to what extent discipline may be appropriate.
• If a complainant is offered and accepts paid leave resulting from the complaint, the complainant may want to return to work prior to completion of an investigation. In those circumstances, employers should evaluate whether supervisory or reporting structures should be modified to avoid, for example, further harassment, discrimination or other alleged conduct of the accused.

4. Participating in Investigations: Pay Employees on Unpaid Leave? 

• If a non-exempt employee has been placed on unpaid leave during an investigation, and if the request to participate in an interview is not voluntary, then the time spent in an employer mandatory meeting is deemed compensable under the FLSA.
• Attendance at lectures, meetings, training programs and similar activities need not be counted as working time if the following four criteria are met.

(a) Attendance is outside of the employee’s regular working hours.

(b) Attendance is in fact voluntary.

(c) Course, lecture, or meeting is not directly related to the employee’s job.

(d) Employee does not perform any productive work during such attendance.
(29 C.F.R. § 785.27)

Depending on the circumstances of the complaint, it may be difficult to establish that, under subsection (c), the meeting is not directly related to the employee’s job. Employers should also look to related state and local laws.

5. Conclusion

• Before selecting a particular course of action, employers should ensure they follow their employee handbook and all policies and procedures with respect to placing employees on paid or unpaid leave during an investigation – and ensure historical uniformity in the approach taken.
• In most instances, placing an employee on paid administrative leave pending an investigation will likely be the best route to avoid discrimination and wage and hour allegations.
• Ultimately, the decision is based on the circumstances presented and the severity of the alleged misconduct.

About McDonald Carano

In 2024, McDonald Carano celebrates our 75^th year of shaping Nevada’s legal, business, and government landscape. More than 60 lawyers and government relations professionals serve state, national, and international clients from our offices in Reno, Las Vegas, and Carson City. McDonald Carano provides legal services and government affairs and advocacy advice to startups, corporations, trade associations, nonprofits, public entities, high-net-worth individuals, investors, and public-private partnerships throughout Nevada. We are proud to be your Nevada law firm since 1949.

Media Contact

Mark Buckovich

mbuckovich@mcdonaldcarano.com
702.257.4559

Kristen T.
Gallagher

Partner Employment & Labor LawCo-Chair kgallagher@mcdonaldcarano.com Phone702.873.4100 Fax702.873.9966 V-Card PDF (Print) Learn More »