For best investigative results, travel fraud audits should be performed by an employer on at least a yearly basis if possible.  The reason for this is that major hotels routinely purge their systems on a 6-month to yearly basis, so it can be difficult for an investigator to obtain detailed hotel expense information after a year.

This problem came up for me recently when asked to conduct an audit of travel expenses going back several years.  In instances where the employee had submitted a non-itemized hotel receipt more than a year prior to the investigation, it was difficult to ascertain whether the employee had made fraudulent or padded hotel charges, including exorbitant hotel restaurant charges.  Whereas more recent itemized hotel receipts could be obtained and they revealed meals for a spouse, children, and other guests at the hotel restaurant and excessive alcohol charges.  Further, the itemized hotel receipts showed that meal expenses were charged to the hotel bill (which the employer reimbursed) even though the employee requested money back for the same meal in a separate entry on the expense report, and even though the employee had also received an advance "per diem" payment prior to the business trip to cover meals.  In this case, the employee was obtaining a triple recovery for the same meal!

I recently heard a story about an employee somehow obtaining a handful of blank receipts from a restaurant and subsequently handing them out to co-workers who needed forms to submit expense receipts for meals.  Employees have also been known to alter a duplicate copy of a receipt and change the document number, or change the dollar amount, for example, changing a "1" to a "4" or "7", or adding an extra digit to the front of an existing number, or cutting off the top the business name or logo of a document to hide an irregularity. 

Another scam is to charge the employer for coach or business class airplane fare (on an expense receipt or using a company P-Card), obtain a refund on the ticket, then purchase a super-saver ticket for the same flight, and pocket the difference.  Or worse, booking a trip and getting reimbursed for it by the employer, getting a refund from the airline, and not traveling at all.  Or, an employee might claim he is attending a conference out of state, but then the meal receipts he submits (which are sometimes time-stamped by restaurants) reflect that he was dining in the middle of the day at location miles away from the business conference he was supposedly attending.  In these types of cases, an employee has essentially received a full paid vacation out of town (free airfare, free hotel, free meals, plus salary) and is skipping the conference.  

In sum, a strong monthly review and periodic audit process are essential to circumvent travel reimbursement fraud by employees. 

A "procurement card" or "purchasing card" (also abbreviated as PCard or P-Card) is a form of company charge card that allows goods and services to be procured without utilizing a traditional purchasing process.  P-Cards help employers manage high volumes of small purchases by employees that might otherwise overwhelm accounts payable departments.  P-Cards are an area of great fraud potential in companies, and employers should perform periodic audits to determine if fraud is occurring.  

I recently completed a large investigation involving P-Card abuse by multiple employees.  This blog entry will point out some red flags to look for:

  • Employee is typically late turning in (or fails to turn in) monthly reconciliations to support the charges made.
  • Employee fails to attach any receipts at all, claiming they were lost.
  • Employee attaches a receipt, but not the itemized receipt presented to Employee at the time of purchase.  Employee only submits the receipt showing the total amount charged, so as to avoid showing the specific items purchased.  For example, Employee goes to Office Depot and claims he bought "office supplies", when in reality, Office Depot sells many personal items that Employee could have purchased for personal use at home or school supplies that Employee gives to his children.  If you catch this fraud early enough, the vendor may be able to provide you with the detailed receipt and you can see exactly what was purchased.  If you see Disney DVDs (or similar) on the receipt, then you know you’ve got a problem.  If you see printer toner cartridges that don’t match the model of printers at the employer’s business, then Employee is likely using company funds to supply his home office (which may not be allowed by company policy).
  • Employee was recently placed on probation or knows he is in danger of termination, which may motivate Employee to cheat the Employer out of money pre-termination.
  • Employee presents multiple monthly reconciliations at one time right before the deadline believing that the documentation will undergo very little scrutiny due to the last minute submittal. 
  • Employees submits receipt with long list of items hoping to bury personal items in the long list.
  • Employee makes purchases at restaurants for multiple people, and you see children’s dinners ordered, or alcohol purchases that may be against company policy.
  • Employee makes multiple gas or food purchases over the weekend when he is not traveling for business.  
  • The person in charge of reviewing the P-Card purchases has a reporting relationship to the Employee submitting the monthly reconciliations, and simply signs off on the reconciliations in fear of retaliation if the reconciliation is scrutinized or questioned.  Similarly, if the Employee submitting the reconciliation is the same person in charge of reviewing the reconciliations, this is a situation of the fox guarding the hen house and must be avoided.   For example, the CEO or CFO should not be in charge of reviewing his own reconciliations.

These are just some examples of potential fraud indicators, and they don’t necessarily mean that fraud is actually occurring every time one of these indicators pops up.  Employers can implement controls to prevent this type of abuse, but that is beyond the scope of this entry.  

In sexual harassment investigations, it is often the case that harassment occurs behind closed doors, with no witnesses, and it becomes a "he said-she said" scenario.  Instead of reaching a finding that the allegations were "sustained", "not sustained", or "unfounded", I have heard of investigators reaching an "inconclusive" conclusion, and in such an instance, the employer (who asked for the investigation to be conducted) and the complainant are no better off after the investigation than they were before the investigation began.  Such a finding puts the employer back to square one, left wondering, "What do we do now?"

What investigators should keep in mind is that they are being asked to reach a well-reasoned conclusion, considering all facts on both sides of the story, weigh the evidence based on a preponderance of the evidence, and make a credibility determination between the complainant’s story and that of the alleged wrongdoer.

According to the EEOC’s Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors dated June 18, 1999:

If there are conflicting versions of relevant events, the employer will have to weigh each party’s credibility. Credibility assessments can be critical in determining whether the alleged harassment in fact occurred. Factors to consider include:

Inherent plausibility: Is the testimony believable on its face? Does it make sense?

Demeanor: Did the person seem to be telling the truth or lying?

Motive to falsify: Did the person have a reason to lie?

Corroboration: Is there witness testimony (such as testimony by eye-witnesses, people who saw the person soon after the alleged incidents, or people who discussed the incidents with him or her at around the time that they occurred) or physical evidence (such as written documentation) that corroborates the party’s testimony?

Past record: Did the alleged harasser have a history of similar behavior in the past?

None of the above factors are determinative as to credibility. For example, the fact that there are no eye-witnesses to the alleged harassment by no means necessarily defeats the complainant’s credibility, since harassment often occurs behind closed doors. Furthermore, the fact that the alleged harasser engaged in similar behavior in the past does not necessarily mean that he or she did so again.

It is highly advisable for investigators to discuss these factors in their written reports whenever there are conflicting versions of relevant events.

Cuiellette v. City of Los Angeles (Case No. B224303, Court of Appeals of California, Second District, Apr. 22, 2011) is a reminder to employers that simply because an employee (in this case, a police officer) has been rated as 100% totally and permanently disabled–for workers’ compensation purposes–the employer is not relieved of its duties under the Americans with Disabilities Act (“ADA”) and Fair Employment and Housing Act (“FEHA”).  A workers’ compensation rating, even 100% disabled, does not mean that the employee cannot be a qualified individual entitled to an individualized assessment of his or her disability through an interactive process and a reasonable accommodation. 

In this case, the LAPD had a policy of offering injured police officers one of 250 permanent “light-duty” positions as an accommodation, but the LAPD fired the plaintiff after he worked five days in the light duty assignment when they learned that he was 100% disabled according to his workers compensation rating.  According to the court, the relevant inquiry should have been for the LAPD to determine whether the employee was a qualified individual who was able to perform the essential functions of the position to which he was, or would be reassigned–not whether he was able to perform the essential duties of his original position.

After his termination, Cuielette filed a lawsuit alleging that the City of Los Angeles violated FEHA by sending him home because of his workers compensation disability rating, failed to engage in the interactive process, and failed to accommodate him.  He received a $1,571,500 jury verdict, and after three appeals, the Court affirmed the jury’s finding that the City had violated FEHA by summarily sending Cuiellette home because of his disability rating and without engaging in the interactive process.

Bottom line, workers comp is a whole other animal, and the ADA and FEHA must be analyzed independently.  

On October 9, 2011, Governor Jerry Brown signed into law AB 887, which prohibits discrimination based on “a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”  The law will take effect on January 1, 2012.

Current California laws already protect employees from discrimination based on gender identity and gender expression because California non-discrimination laws define "gender" to mean sex, including a person’s "gender identity" (how they see themselves) and "gender expression" (how other people see them) (Education Code 66260.7 and Penal Code 422.56).  However, "gender identity and expression" do not currently appear as a specific categories within California’s various non-discrimination laws, but now AB 887 will place "gender identity and expression" alongisde other protected categories in the state’s non-discrimination laws, which should assist employers in effectively addressing discrimination against transgender people.

The bill adds language to several anti-discrimination statutes, including sections of the Fair Employment and Housing Act, to define the term "sex", which includes, but is not limited to, pregnancy, childbirth, or medical conditions related to pregnancy or childbirth; and "sex" also includes, but is not limited to, a person’s "gender"; "gender" means sex, and includes a person’s "gender identity" and "gender expression"; "gender expression" means a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.  Thus, AB 887 will clarify law by directly adding "gender identify" and "gender expression" to the list of protected classes. 

Existing law requires an employer to allow an employee to appear or dress consistently with the employee’’s "gender identity".  This bill would additionally require an employer to allow an employee to appear or dress consistently with the employee’’s "gender expression".

If the claims under investigation so warrant, workplace investigators may want to consider checking employment posters, employee handbooks, etc. as part of making a factual determination during a gender identity or gender expression discrimination investigation post-2011.  

California Senate Bill 559, a civil rights protection bill was signed into law by Governor Jerry Brown in September 2011, and will go into effect on January 1, 2012.  The new law will protect Californians by prohibiting discrimination based on an individual’s genetic information.  This state law follows along with federal law ("GINA") already in effect.  The bill’s sponsor, Senator Alex Padilla states:

This new law enhances the civil rights of every Californian.  Ten years from now as more and more Californians obtain their genetic information they will look back and thank Governor Brown for protecting them from discrimination.

The bill amends the Fair Employment and Housing Act (FEHA) to prohibit employment and housing decisions based on genetic information.  SB 559 also amends the Unruh Civil Rights Act to prohibit unequal access to accommodations, advantages, facilities, privileges, or services provided by business establishments based on genetic information.  SB 559 defines “genetic information” as information about an individual’s genetic tests, the genetic tests of family members of the individual, or the manifestation of a disease or disorder in family members of the individual.

“Genetic information” includes “any request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by an individual or any family member of the individual.” The definition excludes information about an individual’s sex and age, which are already considered to be protected classes under state civil rights laws.  SB 559’s definition of genetic information closely tracks the language of the corresponding definition in GINA.  

In sum, workplace investigators should note that this law creates a new "protected class" under California law.

I attended a presentation today at the 29th Labor & Employment Law Section Annual Conference where Andrew Friedman of Helmer Friedman in Venice, CA, was one of the speakers.   Mr. Friedman typically represents employees in employment disputes; however, he previously worked for a prestigious employment defense firm, so he has a very grounded ability to look at discrimination cases from both sides–which is a skill required by workplace investigators.  I had the opportunity to look through his book Litigating Employment Discrimination Cases, which is written for both plaintiffs and management lawyers.

I highly recommend it for workplace investigators as well. 

Readers may already know that I am on the Board of the California Association of Workplace Investigators ("CAOWI").  I wanted to tell you about our Second Annual Conference that is coming up this November 2011, and let you know about an optional pre-conference session.  It’s called "Examining the Investigation: A Demonstration of Trial Testimony of the Investigator and the Expert Witness", which promises to be very informative for all people who conduct workplace investigations.  

We have six speakers for this demonstrative training session:  Amy Oppenheimer, Rhoma Young, Nancy Bornn, Michael Robbins, Julie Moore, and the Hon. William F. Highberger

Per CAOWI’s website, here is the summary of what will be covered:

Investigators often dread having to defend their investigation at trial. How will their work look under the microscope of cross-examination? This trial demonstration will show just that. Based on a hypothetical set of facts the employer’s investigator will be examined and cross-examined and an expert witness will give her view, also via examination and cross-examination, as to where the investigator went wrong.

I hope to see you there!


I wanted to let my readers know that I will be conducting training on how to conduct defensible (aka "bulletproof") workplace investigations.

The California Association of Workplace Investigators and The State Bar of California Labor and Employment Law Section are co-sponsoring this event, and registration is now open.

Date:  May 17, 2011, 9 a.m. to 4 p.m. 

Title:  Workplace Investigation Basics: From the Decision to Investigate to the Final Report

Location:  Los Angeles office of JAMS/ADR, 707 Wilshire Blvd, 46th Floor, Los Angeles CA 90017

Presenters: Katherine J. Edwards, Michael H. Leb, Rich H. Ramirez & Debra L. Reilly

This fast-paced, interactive program is designed to teach all of the practical skills necessary to investigate any allegation of employee misconduct. Among other things, you will learn how to: ask effective questions, interview reluctant witnesses, obtain relevant evidence, assess credibility, and arrive at a legally defensible decision. You will also learn how to prepare and utilize all of the necessary documentation during the investigative process. Each attendee will receive a program workbook containing valuable checklists, forms, and templates that will assist them in carrying out investigations.

5.5 Hours MCLE Credit Pending

CAOWI Members $180 • Labor & Employment Law Section Members $240 • Non-Members $300

Register at  I hope to see you there!

EEO Investigators should examine all kinds of evidence in an investigation:  direct evidence, circumstantial evidence, and statistical evidence (if possible, but usually not practical if expert opinion is required).  

In a recent 9th Circuit case (EEOC v. The Boeing Co.), the Equal Employment Opportunity Commission (“EEOC”), on behalf of two Boeing employees, argued that the trial court erroneously granted summary judgment in favor of Boeing.  The employees alleged discrimination and retaliation under Title VII of the Civil Rights Act of 1964 after they were RIF’d.  Boeing had terminated these two employees after they received low scores on reduction-in-force (“RIF”) assessments, which Boeing used to evaluate employees when determining whom to lay off.  

The 9th Circuit held that the EEOC had introduced adequate evidence from which a reasonable jury could have concluded that the reasons Boeing advanced to justify its employment actions were pretextual.  Accordingly, the 9th Circuit reversed and remanded the case for trial.  See EEOC v. The Boeing Company, Case No. 07-16903 (9th Cir. 2009).

What can an EEO investigator take from this case?  This case demonstrates how investigators should look closely at the "legitimate non-discriminatory reason" or "legitimate non-retaliatory reason" provided by the employer, and determine whether any circumstantial or direct evidence is contrary to the proffered reason for the adverse employment decision.  In the Boeing case, the 9th Circuit believed that the facts demonstrated enough evidence for a reasonable jury to believe that Boeing’s proffered reason (low test scores on RIF assessments) for its actions was really a "pretext" (i.e. fake or phony excuse) for discrimination.

The Boeing Court explained that two ways exist to determine "pretext":

“[E]ither directly by persuading the [fact-finder / EEO Investigator] that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer’s proffered explanation is unworthy of credence.”

Concerning one of the two employees, the Court found "direct" evidence of sexually discriminatory animus because of demeaning comments a decision-maker had made about women in general.   The Court noted that the employee’s poor RIF evaluation scores, which led to her termination, were pretextual because her supervisor in her new department had previously referred to her as a “little girl” and made a “joking” inquiry as to whether she “broke a nail.”  Although these comments occurred two years prior to her firing, and Boeing argued that these comments were merely inadmissible “stray remarks," the Court held that the supervisor’s comments constituted at least some evidence of discriminatory animus

The Court added that in RIF cases, an employee can “show through circumstantial, statistical or direct evidence that the termination occurred under circumstances giving rise to an inference of . . . discrimination.”   Here, the Court also found "specific and substantial circumstantial evidence" of pretext in that the decision-maker:

  • Initially refused to transfer the employee at all;
  • Made promises to transfer her to the department she requested;
  • Agreed to transfer her, but only to a different department to which no other engineers from her department had been transferred in recent years; and
  • Assured her that she would be exempt from the RIF process during her training in order to induce her to accept the transfer despite her explicit (and not unwarranted) concern that the transfer might significantly increase her risk of termination.

In short, a workplace investigator needs to look at all the direct and circumstantial evidence carefully to determine whether the employer’s "legitimate business reason" was a pretext.  In an EEO investigation, the investigator is the fact-finder and must evaluate credibility of the witnesses and try to access the real motivations of the decision-maker.  The investigator needs to ask the complainant employee to articulate all the reasons why he/she believes the employer’s alleged business reason is a really a façade (or pretext) for a hidden discriminatory motive.