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Dealing With Government Investigations

In the last several years we have seen an increase in the number and frequency of federal and state government investigations of, and actions taken against, private businesses. Whether the investigation or action is from the U.S. Department of Labor, the California Department of Industrial Relations, or the California Department of Fair Employment and Housing, it is rarely welcome. The increase in government scrutiny often comes from increased funding for certain agencies at the federal or state level, as well as directives from agency heads to be more proactive on issues of concern.

If your business has received notice of a government investigation or action, it is important to heed the following advice:

1. Understand what is privileged and what is not. Generally any confidential communications with your attorney, whether in-house or outside counsel, are privileged from disclosure. However, the rules regarding when this privilege can be waived can be complex. If you have an attorney representing the company, and you should, any action or communication on their part should be protected.

2. Preserve the evidence. As they say, “the cover up can be worse than the crime”. Even if evidence is deleted or destroyed inadvertently, the government agency involved will be unlikely to see it that way. At a minimum this involves proper litigation holds to preserve documents, and likely suspension of any routine document destruction/deletion.

3. Understand what the government is looking for, what they hope to achieve, and what the potential penalties, fines, sanctions, or negative implications may be. Government agencies and investigations can be confusing, and any notice you receive may not fully apprise you of how it will proceed, what the applicable deadlines are, or what the end result may be. If there are any criminal implications these need to be assessed as early as possible.

4. Treat the agency with respect. While an investigation or action can seem extremely intrusive and engender frustration and often anger, it is important to work as professionally and courteously with the agency as possible. Individual agents or supervisors often have a good deal of discretion in how the proceed with their work, and a great deal of power if they do not like you. However, treating the agency professionally does not mean rolling over. Agencies have legal limits on their authority, and thus it is important to know how to challenge and defend any action that is taken, whether through the administrative process or through court proceedings.

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