In most workplace investigations, the respondent is a supervisor, manager, or co-worker. Occasionally, however, the allegations are directed at the owner of the business. That scenario raises unique challenges involving neutrality, conflict of interest, employee trust, and organizational accountability.

When the person at the center of the complaint also controls the business, the investigation becomes more complex. The owner may influence reporting lines, promotions, discipline, layoffs, or the handling of complaints, which can make employees reluctant to speak openly and make internal fact-finding harder to defend.

Why These Cases Are Different

When the respondent is the owner, the power imbalance is often more pronounced than in a typical workplace complaint. Employees may reasonably fear retaliation, career damage, loss of hours, reduced opportunities, or even termination if they participate in the process.

These matters also create a structural conflict. Internal HR, managers, or administrators may report to the owner, depend on the owner for their employment, or feel pressure to protect the business. Even where no one intends to interfere, the process may still appear biased to employees, counsel, or a regulatory agency reviewing the organization’s response.

The Conflict of Interest Problem

A workplace investigation must be impartial not only in substance, but also in appearance. If the owner is the respondent, any internal investigator who answers to that owner may be seen as lacking independence.

That problem becomes even more serious when the owner had direct involvement in the events being investigated. If the owner approved promotions, selected employees for layoff, responded to prior complaints, or influenced witness relationships, the organization may have difficulty showing that the investigation was free from actual or perceived bias.

Case Examples

One common example arises when the owner personally approves promotions and advancement decisions. An employee may allege that they were repeatedly denied promotion despite strong performance, while others outside their protected class advanced. If the owner played a central role in deciding who was promoted and is later named as one of the respondents in a discrimination complaint, the organization faces an immediate credibility issue. The same individual who influenced the employment decision cannot realistically be viewed as neutral in the response to the complaint.

Another example involves layoffs. In a small or closely held business, the owner may direct or approve a reduction in force and later face allegations that the stated business reason was merely a pretext for discrimination or retaliation. In that situation, the investigation must examine whether selection criteria were legitimate, consistently applied, and supported by contemporaneous documentation. If the owner was both the architect of the layoffs and the respondent, internal review may be viewed as self-protective rather than objective.

A third scenario occurs when complaints never make their way to ownership at all. Employees may report harassment, discrimination, or retaliation to a manager or internal HR contact, but the owner is never informed. Later, a government agency or regulatory body investigates, and the owner is still held accountable for the company’s failure to respond appropriately. In those matters, the issue is not only what the owner knew personally, but whether the organization had an effective reporting and escalation system. Owners can face serious consequences even when they were unaware of the underlying complaints because responsibility ultimately rests with the organization’s leadership structure.

Practical Response

These cases usually call for an external, independent investigator. That step helps separate fact-finding from internal power dynamics and gives employees greater confidence that their participation will be handled fairly.

The organization should also evaluate interim safeguards right away. Depending on the allegations, that may include changing reporting relationships, limiting direct contact, preserving documents, clarifying anti-retaliation expectations, and identifying who will receive findings and make decisions if the owner cannot credibly do so alone.

One often overlooked issue is who receives the final investigation report. Even when the owner retained the investigator, it may be prudent for the report to be delivered to someone other than the owner if the owner is also a respondent. Reporting directly back to the owner in that circumstance can undermine the appearance of neutrality and create the impression that the respondent controls not only the workplace, but also the outcome of the investigation.

In some cases, the most defensible approach is to designate a neutral internal recipient in advance, such as a CFO, board member, outside counsel, or another senior executive outside the reporting chain of the complaint. That person can receive the report, preserve its confidentiality, and manage the organization’s internal response in accordance with policy and governance obligations.

An investigator may wish to confirm that point in writing at the start of the engagement. For example:

“As I proceed with scheduling interviews, I want to confirm one administrative point in writing so that it is settled in advance rather than after the findings exist.

At the conclusion of the investigation, I will prepare a neutral fact-finding report. Because that report will contain sensitive information, including summaries of witness statements, I deliver it to a single designated recipient rather than distributing it directly to the parties.

Given that this matter involves you as the owner and the Human Resources Director, the most defensible approach is for the report to be delivered to Adam Hurlburt, CFO, as the neutral recipient. Mr. Hurlburt can then manage how the findings are handled internally in accordance with company policy. If this approach works for you, please confirm that Mr. Hurlburt agrees to accept that role. If another arrangement would be more appropriate, I’m happy to discuss.“

As a neutral fact-finder, I do not advise on the merits, but establishing the recipient in advance is a standard step that helps keep the process fair to everyone involved.

That kind of communication does two important things. First, it protects the investigator’s neutrality by making the reporting line explicit before the evidence is gathered. Second, it signals to the organization that independence is not just about hiring an outside investigator; it is also about ensuring that the report itself is handled in a way that does not reinforce the same conflict the investigation was meant to address.

Policy Lessons

These matters often expose a gap in workplace policies. Many organizations have complaint procedures that tell employees to report concerns to a supervisor or HR, but they do not explain what happens when the complaint involves the owner, founder, or highest-ranking leader.

A stronger policy addresses that issue in advance. It identifies an alternative reporting channel, provides for escalation of serious complaints, and makes clear that outside investigators may be used when senior leadership is involved or when neutrality is reasonably in question. Written procedures for identifying and managing conflicts also help organizations show that the process was structured rather than improvised.

Why This Matters

A poorly handled investigation involving an owner can damage morale, discourage reporting, and create lasting credibility problems. It can also increase legal and regulatory exposure if the process appears compromised or if employees believe no one at the top is truly accountable.

By contrast, a fair and independent response sends a different message. It shows that the organization understands that accountability applies at every level, including ownership, and that workplace concerns will be addressed based on facts rather than hierarchy. It also demonstrates that independence must be built into the entire process from investigator selection, to witness handling, to report delivery, to the internal management of findings.

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About Kathie Allen
Kathie Allen is a licensed California Private Investigator (PI 27033) with over 20 years of experience conducting workplace investigations throughout Orange County and California. She is an Association of Workplace Investigators (AWI) trained investigator and Certified Title IX Investigator specializing in harassment, discrimination, employee misconduct, and Title IX compliance investigations for businesses, schools, and organizations.

Contact Allen Morris Investigations:

📞 Phone: 949-573-4624

✉️ Email: Kathie@allenmorrispi.com

Schedule a consultation or learn more at Allen Morris Investigations.