What California HR Leaders Need to Know
A few years ago, a client asked me to review a workplace investigation that had been conducted by their attorney and closed with a decision to terminate. The report supported the company’s position. They came to me because a discrimination lawsuit looked likely and they wanted a second set of eyes.
When I read the file, one problem was obvious. The attorney who ran the investigation was the same attorney who had advised the company on the very decisions the employee was complaining about. He had been part of the situation before he was ever asked to investigate it. I flagged the conflict. The employer trusted the attorney’s impartiality, and the attorney reminded the team that his investigation was attorney-client privileged. The case stayed closed and the company braced to defend its decision.
In April of 2026 the Paknad lawsuit changed things. As a result of the court’s findings, an investigation like that would no longer stay protected. Under the new ruling, the moment the employer tries to use it as a defense, the investigation itself would become discoverable.
How the Paknad ruling changed CA workplace investigations
In April, 2026, the California Court of Appeal issued a ruling in Paknad v. Superior Court. It should change how every California employer thinks about workplace investigations. The employer in that case did what most people consider best practice. They received discrimination and harassment complaints, hired outside counsel to investigate, and produced detailed reports. When the case went to court, the employer pointed to those investigations as their defense. They argued the reports proved they had acted to stop the harassment. They argued the investigations proved they had taken reasonable steps to prevent and correct workplace harassment.
So the court held something important. By relying on the investigations as a defense, the employer waived attorney-client privilege over them. As a result, the investigator’s factual findings, credibility calls, and conclusions about whether the evidence supported each complaint all became discoverable.
Employers can no longer hand a thorough investigation report to a jury as proof that you did the right thing, then keep the underlying findings sealed. If you use it as a sword, you have given up the shield. Most small business owners I work with built their entire complaint-response strategy around an assumption that no longer holds.
Outside counsel or neutral HR investigator, choose deliberately
The first decision is who runs the investigation, and it has to happen before the investigation starts. When outside counsel handles an investigation, the work happens under attorney-client privilege. That sounds protective. After Paknad, the trade-off is real. Cite the investigation in your defense and you risk losing the privilege. You cannot have both. You cannot keep the report sealed and also use it to prove you acted in good faith.
A neutral HR investigator outside the legal team operates differently. First, the work is not privileged, so there is no privilege to lose. As a result, you get an investigation built to be examined. The investigator writes for a fact-finder. They focus on credibility and evidence, not legal strategy. They show up as a fact-finder, not an advocate. When the investigation later shows up in a case, it looks like what it is. A fair process. We build our workplace investigations on exactly that standard.
Choosing the right investigator becomes crucial in light of the Paknad ruling. Let’s explore your options to make sure you select wisely.
Build the investigation as if it will become evidence
There is now a much stronger chance that it will. So document everything: the scope, the protocol, every interview, and the basis for every finding. Then make sure the evidence actually supports each finding. Not what the company hoped the evidence would show. Also, pick an investigator with no ties to anyone involved and no stake in the outcome. Neutrality is not a label. It is a structural feature. In short, expect the question of who chose the investigator to come up in discovery. If your investigation is already underway, audit it now.
Is outside counsel currently investigating a complaint for you? Then do not assume you understand how that report can be used later. Before you commit to a defense based on the investigation, think through one question. What does the ruling do to your privilege calculus? For complaints likely to escalate, also consider running a parallel neutral process outside the privileged channel. As a result, you get a clean, non-privileged record built to be examined. Strong compliance and policy systems keep a small business from having to make this call on the fly.
The employer in my opening story had the luxury of attorney-client privilege when I flagged the conflict. They could decline to revisit the investigation because no one outside the privileged circle would ever see it. That luxury is gone. If you have an open harassment, discrimination, or retaliation complaint, this free consultation is for you. The same goes for any recent investigation file you are not sure would hold up to discovery. Reach out here and we will respond within one business day.
Reference: California Courts of Appeal, Paknad v. Superior Court, H052652 (Sixth District, April 17, 2026): https://courts.ca.gov/opinion/published/2026-04-17/h052652
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