Internal company investigations are common. Most of these white-collar investigations are conducted and concluded. Others make headlines. If you receive an Upjohn warning as a result of an internal investigation, it is important to understand what you are looking at and where to get help.
Internal investigations are conducted for many reasons. The most common are those conducted out of concern for financial loss, payroll tax issues, embezzlement, tax fraud, money laundering, theft, conflicts of interest, or potential theft of intellectual property, among other topics.
It is not unusual for companies to retain outside vendors, like a law firm, to conduct an ostensibly fair internal investigation to examine potential wrongdoing. Such an investigation may ensue if the corporation is approached by a regulatory agency or the IRS. Some internal investigations have a big impact on those involved if potential corporate criminal liability is alleged. An investigation may ensue when the company needs to better understand its role in any violation of state or federal law.
During an investigation, you may receive an “Upjohn warning.” The term itself derives from a 1981 case before the Supreme Court titled Upjohn Co. et al v United States et al. One of the outcomes of the case impacted whether company lawyers could claim attorney-client privilege when speaking with non-management employees during an internal investigation. Mid-level or other employees often have information relevant to ongoing business but had heretofore not been protected in those conversations with company attorneys trying to get to the bottom of an issue.
As a result, today, an Upjohn warning is a procedural warning given to an employee that their conversations with company attorneys or investigators does not necessarily protect the employee. Employees have certain rights in serving the company, but the company holds the attorney-client privilege—not the employee.
It is important for the recipient of an Upjohn warning to understand that company counsel represents the company—not the employee. In that context, any conversation between a worker and the company lawyer should be considered by the worker to be confidential and resist disclosing information discussed to others. Importantly, the company can waive that privilege and disclose information provided to them by the employee to other parties. Another term for an Upjohn warning is a “corporate Miranda warning.”
If you are asked to participate in a company investigation and receive an Upjohn warning, you may be a person of interest in the investigation. If asked to participate in conversations about irregular accounting practices, employment tax disputes, or because of outside scrutiny from an IRS civil or criminal audit—speak with an experienced criminal defense tax attorney before engaging in an interview with investigators to better understand your options.
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From offices in Chicago and Cleveland, Robert J. Fedor, Esq., LLC offers strategic legal guidance to clients throughout the U.S. and abroad on IRS audits, criminal tax investigations, payroll tax issues, and more. When you have questions about individual or business tax compliance, call us at 800-579-0997 or contact us.
