Licensed to investigate?

A bombshell legal decision has ruled that consultants offering workplace investigation services must be licensed as private investigators unless they hold another equivalent form of accreditation.

After hearing a complaint about the way a consulting company handled an investigation into alleged workplace misconduct, the Private Security Personnel Licensing Authority, Trish McConnell, found the company had been in breach of the Private Security Personnel and Private Investigators (PSPPI) Act because neither it nor its investigators had been appropriately licensed during the 2019 investigation (NZPSPLA, 4 June 2020).

She ruled, however, that this failure did not warrant prosecution because it had been inadvertent and was the result of a widespread belief among employment investigators that they were not required to comply with the legislation. The two investigators who did the work now both hold practicing certificates as lawyers, and McConnell concluded that this was sufficient to exempt them from any additional licensing requirements.

Under the PSPPI Act, any person or business that takes money to obtain and supply information (other than that in public records) relating to the character, actions or behaviour of others, is deemed to be a private investigator, McConnell said. The work done by the consultant company was of this nature, with most of it relating to allegations of bullying, sexual harassment and other inappropriate workplace behaviour.

Responding to submissions from the company that the legislation was not intended to apply to work of this type, she acknowledged that employment investigators may not have been specifically considered when the law was enacted, but said the definition of private investigator in the act was “clearly intended … to cover all people in the business of carrying out investigations into a person’s character, actions, or behaviour [which] is an integral part of an employment investigator’s work.”

She also rejected the company’s claim that because employment investigators do not use covert surveillance, they should not be regarded as private investigators.

“Covert surveillance is not part of the definition of the work of a private investigator as set out in the act,” she said, noting that the term “private” was intended to distinguish the investigators covered by the act from those employed by the police and other government agencies.

She concluded that at the time of the investigation the company should have held a private investigator’s licence, and its failure to do so was a breach of the PSPPI Act.

The two individuals conducting the investigation should also have had certification under the act, but she accepted the company’s argument that the practicing certificates they now hold under the Lawyers and Conveyancers Act are enough to exempt them from the need for future certification, because the act allows exemptions for those authorised to carry out security work under alternative professional frameworks.

McConnell said a legal practicing certificate meets the stipulated requirements for such regimes in that it has a robust complaints procedure and requires appropriate levels of training and ethical standards of behaviour. “Even if [the company] had not become an incorporated law firm, I would not have recommended prosecution … but would have allowed them time to rectify the situation.”

 

Investigators: no quick fix?

Employment lawyer Kathryn McKinney agrees that there are as yet no clear-cut answers as to the types of professional accreditation that will satisfy PSPPI Act requirements, and says further case law may be the only way to provide certainty about which professional accreditations qualify for exemptions under the act.

McKinney, who heads the employment team at Anthony Harper, told Safeguard she has had a number of clients raise questions about what the determination means for them, and advises those in doubt to err on the side of caution.

“Firstly, it must be remembered that employers can always conduct their own internal investigations, as long as they can do so with sufficient independence,” she says.

Those wanting to use external providers must understand that any individual or organisation that seeks or obtains information relating to the character, actions or behaviour of others in exchange for payment must hold a licence under the act, unless their work is done in accordance with a practicing certificate issued under a different enactment.

The challenge, it seems, lies in determining what alternative practicing certificates are acceptable.

As a starting point, McKinney notes the three characteristics that the Private Security Personnel Licensing Authority considered when determining that those accredited under the legal practitioner system are exempt from the PSPPI Act licensing regime. These were:

• The availability of a strong, comprehensive complaints process;
• Training and ethical requirements comparable to those of private investigators; and
• The presence of ethical guidelines for the management of any conflicts of interest.

“If we apply these tests to practitioners in industries such as health and safety, it will be a circumstantial test, depending on the professional body concerned and its internal policies.”

She notes the fact that there is, as yet, little subsequent case law dealing with the issue, makes it difficult to provide general advice on how the tests should be interpreted.

“We would advise independent investigators to err on the side of caution. If they are not confident that the exemption applies to them they should seek legal advice or submit an application for a licence under the PSPPI Act.”

According to the PSPLA website, those seeking a licence must supply evidence of training and/or competency and pay a fee, which will not be refunded if the application is withdrawn or rejected. The fee is $750 for an organisation, plus an additional $200 for each employee who carries out investigations. Employee certification is renewable every five years. A sole trader must pay a licence fee of $600.

McKinney says an individual found to be conducting investigations without an appropriate licence can be fined of up to $40,000, while a similar breach by an organisation has a possible fine of up to $60,000. Investigations conducted by those without appropriate licences may also be open to challenge on the grounds of invalidity, she says.

 

Investigators: seeking answers

NZISM president Robyn Bennett says the PSPLA decision has significant ramifications for the health and safety industry because it leaves a lot of unanswered questions around the legal status of those who undertake investigations and audits on behalf of others.

These questions, she says, not only pertain to those providing health and safety investigations as part of a consultancy service, but also to organisations seeking support from external auditors and assessors.

“When might private investigator licensing be required by those whom they wish to engage?” she asks.

Complicating matters is that fact that the work history, membership, training and evidence requirements for those seeking to be licensed as private investigators don’t align well with professional standards for health and safety, she says.

“As this not only affects NZISM but all related associations, we’ve asked HASANZ to take the lead in this to provide some definitive answers that will assist all parties.”

She says HASANZ will seek a legal opinion and will look to clarify aspects of the PSPLA decision with Minster of Justice Kris Faafoi.

“We don’t think we should try and interpret this for ourselves, given that the work health and safety people do is varied and complex.”