After-Acquired Evidence: The Importance of Documenting Employee Misconduct

By: Evan Schodowski

Often, employers do not learn the extent of a former employee’s misconduct until after the employer ends the employment relationship or the employee resigns. For example, after a former employee moves on, others may feel more comfortable discussing the former employee’s work, the replacement employee may learn that the former employee was not following company protocol or procedures, or a review of the former employee’s desk or workspace may uncover some additional information.

It is important for employers to document and preserve any instances of employee misconduct discovered after letting an employee go. This material may be useful if the former employee pursues litigation against the employer because this information can be used as the basis for asserting the after-acquired evidence defense. The after-acquired evidence defense does not shield an employer from liability, but may limit what the former employee can recover if she prevails on the merits of her case.

To illustrate this point, lets say a former employee, who worked as an accountant, files a wrongful termination lawsuit against her former employer alleging that her supervisor unlawfully ended her employment because she refused his sexual advances. Let us next assume that the accountant has a slam-dunk case. However, the employer subsequently discovers that the accountant had been embezzling money.

Because of the after-acquired evidence doctrine, the employer can make the argument that it would have ended the accountant’s employment anyway, despite the supervisor’s inappropriate conduct, after it discovered that the accountant had been embezzling money, and that the accountant should barred from recovering certain damages. Most commonly, the after-acquired evidence doctrine will bar the former employee in this hypothetical from recovering a portion of her back pay, which are wages the former employee would have received if she had continued working for the employer.

The best practice is for an employer to keep any information relating to a former employee’s misconduct in that former employee’s personnel file. Ideally, it is best to preserve the evidence in its original format, if possible. This way, the misconduct will be readily available to the employer’s attorney if the former employee pursues litigation concerning her employment.

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