Multiple Supreme Court and lower court decisions have encouraged employers to establish rigorous internal investigation procedures intended to address claims of discrimination and harassment prior to any actual legal process being initiated. Earlier this month, the Second Circuit Court of Appeals joined a number of federal appellate courts in concluding that Title VII's anti-retaliation provisions do not extend to employees who participate in such internal investigations.

In Townsend v. Benjamin Enters, Inc., the plaintiff was the company's human resource manager who was called upon to investigate sexual harassment claims made by an employee against a Vice President who happened to be the husband of the company's President. The plaintiff discussed the allegations with a management consultant for the company. The president fired the human resource manager for making this disclosure, and she sued claiming retaliation under Title VII.

The Second Circuit disagreed, affirming summary judgment for the company. Because the plaintiff did not oppose any discriminatory practices, she could only claim retaliation under the "participation" portion of the statute. The Second Circuit agreed with other federal appellate circuits in concluding that the participation clause in the anti-retaliation statute does not cover internal investigations. The participation protections only apply when an EEOC charge has been filed, or other legal action has been initiated. The court recognized that other decisions have pushed employers to adopt internal investigation procedures, but that the plain language of the statute precludes a different interpretation.

In another part of the decision, the court concluded that the Faragher/Ellerth affirmative defenses to supervisor sexual harassment claims do not apply when the harassment was engaged in by a very high level official within the company. In these cases, the official is viewed to act as an alter ego or proxy of the employer, and the company is strictly liable for his behavior regardless of its lack of knowledge, or the victim's failure to report the harassment.