If you have ever handled a harassment complaint, retaliation allegation, or “this manager is a walking liability” situation, you already know the drill.
You move fast.
You document.
You keep it as calm and confidential as possible.
You either investigate internally or bring in an outside investigator so it is fair, credible, and not a political knife fight.
And then the world hands you a plot twist you did not request: in many states, “workplace investigation” can fall under private investigator licensing statutes or be regarded as the practice of law, even though the statute never bothers to say the words workplace investigation.
Briefly stated: do not hire a vendor to conduct your investigation without a compliance check. Cheap investigators are often also unlawfully working.
Because of course it can.
WHY THIS MATTERS TO EMPLOYERS
The EEOC has made it clear that when an employer learns about possible harassment, a key part of taking reasonable corrective action can include conducting a prompt and adequate investigation, as reflected in the agency’s harassment enforcement guidance and related materials available through the EEOC’s harassment prevention guidance.
So you are trying to do the right thing quickly. You may also be building your defense if the situation escalates.
Now add this wrinkle: the Association of Workplace Investigators task force reviewed 20 states and concluded that all but one of the states researched, Colorado, has a law limiting who can do investigations.
Translation for employers:
If you hire the wrong outside investigator in the wrong state, you may end up paying for an investigation that your opposing party or a regulator argues should never have happened the way it did.
Not fun.
Not cheap.
Not great for your blood pressure.
THE SIMPLE VERSION OF THE RULE, IN MANY STATES
The patterns are remarkably consistent:
- The statutes tend to define “investigation” broadly enough to cover inquiries into employee conduct, honesty, efficiency, loyalty, credibility, or similar topics.
- They often limit that work to licensed private investigators.
- They often include exemptions for internal employees investigating for their own employer, and for attorneys performing work as attorneys.
The people most likely to get squeezed are external, non-attorney investigators who are not licensed private investigators.
If you read that and thought, “Wait, we use an HR consultant for this sometimes,” keep reading.
REAL WORLD EXAMPLES YOU CAN USE TODAY
Texas
In Texas, internal investigators conducting an internal investigation of their employer’s employees do not need licensing. However, third-party investigators must be an attorney, under the direct supervision of an attorney, or a licensed private investigator.
Texas law defines an investigations company broadly under the Texas Occupations Code Chapter 1702, including obtaining or furnishing information about a person’s identity, habits, business, occupation, knowledge, efficiency, loyalty, reputation, or character.
Texas also requires a person to hold a license as an investigations company to act as one. Licensing oversight is handled through the Texas Department of Public Safety Private Security Program.
Why you should care: If you bring in an outside consultant to investigate employee conduct in Texas, you want to be confident you are not accidentally hiring someone the statute treats as an unlicensed investigations company.
Washington
Washington requires licensing for anyone who performs the functions and duties of a private investigator, and violation can constitute a gross misdemeanor under Washington’s private investigator licensing statute.
The state’s Department of Licensing administers requirements through its Washington private investigator licensing program.
Washington also includes exemptions that matter to employers, including for people employed exclusively or regularly by one employer conducting investigations solely in connection with that employer’s affairs, and for an attorney at law performing duties as an attorney.
Florida
Florida’s private investigator law defines “private investigation” broadly under Florida Statutes Chapter 493, covering work done for the purpose of obtaining information about matters such as a person’s identity, habits, conduct, movements, affiliations, transactions, reputation, or character.
Florida’s Department of Agriculture and Consumer Services administers licensing through its Florida Division of Licensing.
The statute also lists exemptions, including an employee of an employer performing duties in connection with the affairs of that employer, and attorneys in the regular practice of their profession.
New York
New York law provides that no person or business shall engage in the business of a private investigator without first obtaining a license from the Department of State, as set out in New York General Business Law Article 7.
Licensing oversight is administered through the New York Department of State Division of Licensing Services.
Colorado
Colorado is the outlier referenced in the AWI review. The state repealed its private investigator licensing statute in 2021. The repeal language can be found in Colorado Revised Statutes § 12-58-101 et seq. (repealed).
Two takeaways for employers:
First, this area changes.
Second, assuming your vendor “can do investigations anywhere” is a bad plan.
THE NOT OBVIOUS EMPLOYER RISK
Even if nobody ever sues you, licensing problems can still cause pain.
Vendor contracts and insurance
If your vendor is not authorized to do the work, you may get coverage fights, indemnity disputes, or finger pointing you did not budget for. That is not a legal conclusion. It is a practical reality of messy vendor disputes.
Multi-state operations
If you operate in multiple states, you can end up with an investigator interviewing witnesses in one state about conduct in another. Cross-state activity raises licensing and professional responsibility questions that vary by jurisdiction.
Meaning: you should not wing it.
Do-overs cost profit
A redo investigation costs leadership time, HR time, employee time, and momentum. It also drags out workplace drama, which is basically the opposite of productivity.
A PRACTICAL CHECKLIST BEFORE YOU HIRE AN OUTSIDE INVESTIGATOR
Use this as your quick triage tool:
- Identify every state that could matter
Where are the witnesses located?
Where is the accused located?
Where is the investigator physically located when conducting interviews?
If you conduct video interviews, do not assume geography is irrelevant. - Confirm the investigator’s legal lane
Are they a licensed private investigator in the relevant state, an attorney performing duties as an attorney, or someone who clearly fits an internal employee exemption? - Put compliance language in the engagement letter
Ask for written confirmation they are permitted to perform the work in the applicable jurisdiction and that they will comply with applicable licensing laws. - Decide whether counsel should direct the investigation
Sometimes you need an independent investigator.
Sometimes you need an investigator working with counsel so the legal issues do not get separated from the facts.
Sometimes you need both. - Document your decision making
Not everything has to be a courtroom exhibit, but you want a clean story for why you chose the investigator you chose and why the process was reasonable.
WHERE WE COME IN
Our job is to turn this from “please do not let this become a seven-figure distraction” into “handled.”
Employers navigating investigations across multiple jurisdictions face increasing regulatory complexity. A structured approach reduces avoidable licensing exposure while preserving credibility and defensibility.
If you are about to launch an outside investigation, or you are mid-investigation and someone just asked, “Wait, are we allowed to use this investigator,” it may be time to take a closer look at your process.
Schedule a consultation to review your investigation structure before it becomes a preventable problem.