Internal investigations are uncomfortable, and if not handled correctly, they can get complicated fast. Maybe it’s a complaint, a policy slip, or something that feels off but isn’t clear yet. For many in-house counsel teams in California, these situations are becoming a regular part of the job.
By 2025, expectations around corporate compliance have shifted. Regulators and employees alike are paying attention to how internal issues are handled. That means how your team responds can calm things down or open the door to bigger problems.
This guide outlines practical ways for internal legal teams to confidently manage investigations and protect the business through smart legal risk management.
When and Why to Launch an Internal Investigation
Knowing when to start an internal investigation is one of the most critical decisions for any in-house counsel or internal legal team. Not every complaint warrants a full-scale inquiry, but some do. Start too late, and your company could face reputational damage or regulatory consequences. Start too soon without clear direction, and you risk undermining trust internally.
Here are some situations where an investigation is often necessary:
- Allegations of harassment, discrimination, or retaliation
- Reports of policy violations or ethics concerns
- Financial irregularities or fraud
- Security breaches or mishandling of sensitive data
- Whistleblower complaints
Investigations aim to find out what happened and show that your organization took the issue seriously. In today’s corporate compliance 2025 environment, even how you handle minor issues can reflect on your company’s commitment to integrity.
Launching an investigation is also part of legal risk management. It creates a record that the company acted in good faith, which can be critical if the issue escalates or leads to litigation.
Key Legal Updates in 2025 Affecting Internal Investigations
Several new laws and changes in enforcement have shifted how internal investigations should be conducted in 2025. These updates impact how companies in California and beyond approach documentation, timing, and employee protections.
One major update is Senate Bill 497, effective January 1, 2024. This bill strengthens retaliation protections by creating a rebuttable presumption if an adverse action occurs within 90 days of a protected activity.
Another important change is the adoption of Senate Bill 553, requiring workplace violence prevention plans that can involve investigation protocols. It applies to most California employers.
In addition regulatory agencies like the California Department of Fair Employment and Housing (DFEH) and U.S. Equal Employment Opportunity Commission (EEOC) have updated guidance to stress timely, impartial investigations.
These changes mean internal legal teams must update their protocols regularly. What passed as reasonable in the past may no longer be defensible.
Related: Crisis Management: The Role of In-House Counsel
Best Practices for Interviewing Employees During an Investigation
A well-conducted interview can provide clarity, but a poorly handled one can lead to mistrust or legal exposure. As in-house counsel, your role is to gather facts and ensure the process is fair, respectful, and legally sound.
To make the most of your employee interviews:
- Start with preparation: Know the purpose of the interview and have your questions ready.
- Create a safe environment: Choose a private location, explain confidentiality limits, and ensure the employee feels they can speak freely.
- Ask open-ended questions: Let the employee tell their story without steering them.
- Avoid leading or accusatory language: Keep the tone professional and neutral.
- Take clear, objective notes: These may later be reviewed by others, so keep them factual.
Bring in an HR representative or a second legal team member to observe if needed. Good interviews build a record of fairness and professionalism. In a time where legal risk management matters more than ever, how you interview is as important as what you ask.
Managing Confidentiality, Privacy, and Documentation
Balancing transparency and confidentiality can be one of the most complex parts of an internal investigation. Employees often want to know what’s happening, but oversharing can create its own problems. Your internal legal team should keep the following in mind:
- Promise discretion, not secrecy: Let people know the investigation will be handled seriously and discreetly, but avoid guaranteeing full confidentiality.
- Limit information sharing: Only share findings or details with those who need to know.
- Use secure systems: Store interview notes, reports, and evidence in a protected location.
With stronger privacy laws in California, especially around employee data, reviewing personal emails or devices requires caution. Your team must weigh the relevance of information against the right to privacy.
Documentation matters too. Keep records of:
- What was reported
- When and how the investigation started
- Who was interviewed and when
- What conclusions were reached and why
These records can be key if a claim or litigation process arises later. Good documentation is one of the most practical forms of legal risk management you can use.
How to Evaluate Findings and Determine Next Steps
Once the investigation wraps up, your job is far from over. Evaluating what you’ve learned and deciding what to do next can be challenging, especially when the facts are unclear. Use your internal report as a starting point, not the final word.
Here’s a quick reference table to help guide post-investigation decisions:
| Finding | Next Step |
| Clear policy violation with supporting evidence | Disciplinary action or termination |
| Minor or unintentional infraction | Coaching, retraining, or updated policies |
| No violation, but poor communication uncovered | Team feedback, manager training |
| Conflicting accounts without firm evidence | Close with caution, monitor the situation |
| Retaliation concerns raised during the investigation | Separate review or follow-up inquiry |
For in-house counsel, making sound decisions at this stage is another way to reduce legal risk and show regulators or employees that the company takes these matters seriously.
How CEB Can Support You
CEB offers practical tools that help in-house counsel lead strong internal investigations while reducing legal exposure:
- Use the CEB extensive resource center for sample interview questions, documentation templates, and case studies tailored to California
- Access deeper legal research through OnLAW Pro for fast, trusted answers on privacy laws, retaliation risks, and recordkeeping.
- Watch CEB’s on-demand CLE videos to train your internal legal team on investigation ethics and compliance updates.
Contact us to learn how CEB can support your internal team.
