Organizations often find themselves faced with a lawsuit or a public scandal after failing to properly address claims of harassment or other workplace misconduct. But if only they had chosen a different course of action, they could have unlocked an opportunity: demonstrating that they take allegations seriously and are striving to build a healthier culture. But how is that done?
Based on our collective years of experience litigating employment claims and counseling businesses, we offer our top 7 insights into how organizations can best prevent and respond to reports of misconduct at work.
The Nestlé Example
In May 2025, Nestlé received an anonymous tip through its internal hotline that then-CEO Laurent Freixe was allegedly having an affair with a subordinate. The hotline system, called “Speak Up,” was created so employees could report “any non-compliance concerns” at the company.
Nestlé is a publicly traded Swiss Fortune 500 company that employs more than a quarter million people worldwide, including in the United States.
Nestlé at first had its own employees conduct an internal review. They did not find any evidence to establish an inappropriate relationship: both Freixe, the CEO, and the subordinate denied being involved romantically.
However, reports disclosing Freixe’s alleged affair continued to be sent to Nestlé’s anonymous hotline. Consequently, Nestlé’s board decided to have third-party investigators evaluate the anonymous claims. After combing through Freixe’s personal data, including his texts, the outside investigation confirmed evidence of the CEO’s affair with a marketing executive at the company. The outside team also found that the CEO had been dishonest with the investigators when they questioned him about the affair.
On September 3, Nestlé’s board of directors announced Freixe had been fired for violating Nestlé’s code of conduct, as employees are required to disclose any personal relationships and to be truthful in response to investigations. Nestlé called the termination “necessary” because its “values and governance are strong foundations of our company.”
How to Best Respond to Claims of Misconduct
Although it took two attempts to get to the right resolution, Nestlé took several important steps to address the reports they received. In fact, the company followed some of the key recommendations that we usually make to organizations trying to navigate reports of harassment and other misconduct.
Below are our primary recommendations for organizations wishing to effectively and efficiently respond to reports of misconduct in the workplace, based on our collective years of experience litigating employment claims and conducting workplace investigations.
- Create specialized training programs for the executive team and the board.
The executive team of any company is in a unique place when it comes to handling reports. They often are the ultimate visible authority within an organization, determining whether to investigate a complaint, to discipline employees, or to choose some alternative course of action. They are also held to higher standards under the law. As a result, executives should be regularly trained on how to spot harassment in the workplace, the mechanisms for reporting misconduct, and when to engage independent investigators.
But what if a complaint is lodged against an executive? How should fellow leaders address it? Executives’ specialized training should include instructions on what to do when a fellow executive is accused of misconduct, such as reporting a complaint to the organization’s board of directors if one exists.
The same goes for an organization’s board of directors—they must be trained on how to respond to complaints of misconduct, including those lodged against an executive. Boards of directors have a fiduciary duty to protect the financial interests of the company, and harassment claims against leadership can be costly financially and reputationally. Further, they need to know how to best respond to a complaint made against a fellow board member. What is the organization’s official policy in such a situation? Board members should know and should be able to execute on it immediately.
Instead of ignoring the red flags and letting Freixe stay in his role as CEO, Nestlé's board voted to remove him without any severance package, yet another rare move. Nestlé demonstrated—to its employees and to the world—that no one's position will protect them from the consequences of breaking company policy. And the board demonstrated that it knew its proper function in a time of crisis.
- Ensure leaders cultivate relationships beyond a small circle.
Often, board members communicate solely with top executives in an organization. And those executives in turn interact almost exclusively with one another and immediate direct reports, often directors who themselves may be removed from the day-to-day experience of most employees, especially a sprawling and large organization like Nestlé. This arrangement can create a bubble in which top leadership and most employees are effectively walled off from one another. It is often in these situations that we have seen a build-up of intrigue, misinformation, and gossip—at sometimes worse.
To help reduce the likelihood of bad behavior, leadership should be kept “in the know” about what’s happening across the company on a consistent basis. One effective way to achieve this is by encouraging leaders to build relationships outside of a small circle of key contacts. Both board members and executives can form strategic relationships outside of usual reporting structures, connecting with employees at different levels and across functions to ensure they are getting a well-rounded and unfiltered perspective. Advisory groups, informal check-ins, town halls, or regular walk-arounds can all help to provide leaders with a more accurate, nuanced understanding of company culture and operations—and of the people who keep the organization running.
This broader perspective not only strengthens trust but also equips decision-makers to identify potential issues before they escalate. This behavior further communicates to the workforce that company leaders are genuinely interested in their well-being, which can help boost morale and retention.
- Establish independent reporting channels available to all employees.
The concept is simple enough and we often harp on it: have a means for reporting misconduct that is readily available to every employee. That said, it is often unclear how to make a report of misconduct when an owner or high-ranking executive is the bad actor.
Lacking the proper reporting outlet can leave individuals who are subject to harassment extremely vulnerable. Further, this situation can expose organizations to increased liability, as the bad actor’s disproportionate authority may help them to continue acting illicitly and avoid being held accountable, while also making it more difficult for an organization to muster a defense against potential legal claims.
Nestlé promoted a healthy workplace culture by having a system in place for employees to report concerns without fear of repercussions. The “Speak Up” anonymous hotline allowed for a direct pathway to the board of directors to look into Freixe’s behavior and preserved employee morale by demonstrating that reports are taken seriously.
- Organize an impartial investigation into any claims.
Merely conducting an internal investigation into misconduct claims can appear less than fully transparent and, as in Nestlé’s case, may not yield thorough results. By hiring an external third party, Nestlé’s board ensured their investigation was free of conflicts of interest, did their best to guarantee impartiality, and prioritized transparency. An independent, third-party investigation is the gold standard for getting to the truth in a timely manner with results that can be trusted.
- Prevent retaliation and respond to retaliation allegations swiftly.
Employees are far less likely to come forward with concerns if they believe they’ll be punished for speaking up. That’s why companies must provide strong protections against retaliation—not just in policy, but also in practice. Employers should establish clear anti-retaliation policies, communicate them broadly, and reinforce them during regular trainings.
Just as importantly, managers should be educated on what retaliation looks like, since it can often be subtle. Retaliation is not limited to dramatic acts like termination or demotion. It can also include:
- Reduction in hours, pay, or responsibilities
- Denial of promotions, raises, time off, or professional opportunities
- Undesirable transfers or shift assignments
- Exclusion from meetings or team communications
- Subtle hostility, ostracism, or changes in workplace treatment
Companies can further protect employees by creating multiple reporting channels (so no one feels forced to report only to their direct supervisor) and by ensuring confidentiality to the greatest extent possible. Periodic check-ins with reporting employees after a concern is raised can also prove helpful.
In practice, the safest course for employers is to adopt a zero-tolerance approach toward any form of reprisal and to treat retaliation prevention as seriously as the underlying issue itself. Doing so not only reduces legal exposure but also fosters a culture of trust and transparency.
- Understand how insurance coverage may impact responses to claims.
Employment Practices Liability Insurance, or “EPLI” provides insurance for businesses that are the subjects of claims made by current, former, or prospective employees related to wrongful employment practices. Knowing the amount of coverage being offered and when it is triggered can help an organization navigate its response to claims. For instance, sometimes there is an obligation to notify the insurer at the time you learn of a claim. Other times, the obligation to alert the insurer is only upon a claim being filed, either with a government entity, a court, or an arbitration panel.
Further, it may be worth learning what extra coverage the company may have for individual liability and/or for claims that may exceed normal employment claims.
- Leverage workplace culture audits.
One of the most effective tools for preventing problems before they escalate is a workplace culture audit. A culture audit takes a step back from handling individual complaints in isolation and looks at the bigger picture: what trends or themes are emerging across the organization?
When complaints are reviewed only case by case, leaders may miss broader signals. For example, three separate complaints about “communication issues” in different departments might not seem connected—that is, not until a culture audit reveals that all three stem from the same management style or policies. Identifying these patterns allows the company to address root causes rather than putting out fires one by one.
By mapping out these connections through use of a culture audit, leadership can distinguish between one-off incidents and cultural red flags, enabling them to address root causes through targeted training, policy changes, or leadership interventions.
Navigating claims of workplace misconduct requires courage from everyone involved. But by being prepared for eventualities and following established policies, organizations can help minimize risk and prove that they take these kinds of claims seriously, turning an otherwise corrosive situation into an opportunity.