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Stop thief! How to control employee theft
Excerpted from Tennessee Employment Law Letter written by attorneys at the law firm of Miller and Martin
by John B. Phillips, Jr.
A cry on the subway? A call for help on a crowded sidewalk? A homeowner’s shout to neighbors? Or a frustrating demand from HR?
Employee theft is nothing new. It’s just bigger than ever. I’ve seen estimates that employers in the United States lose anywhere from $4 billion to $40 billion per year to employee theft. Unless your pockets are terribly deep, either number is staggering.
What kinds of things are we talking about? Let your imagination run wild — but they’re usually things like forging receipts, hiding receipts, pocketing loose change, pilfering merchandise, setting up a fictitious payroll, overbilling expenses, committing purchasing fraud, stealing office supplies, stealing time, and stealing confidential information.
Interestingly, there are “management misconceptions” about employee theft. It’s usually difficult for a manager to believe that an employee he or she hires, trusts, and works beside is capable of stealing or being dishonest. Consequently, management embraces misconceptions about this problem, such as the following:
- Most theft is caused by nonemployees.
- Well-paid and/or senior employees are trustworthy and won’t steal.
- Honest employees can be counted on to report employee theft.
So what’s an employer to do? How do you prevent — or at least control — employee theft?
- Watch for telltale signs like an unexplained rise in an employee’s living standards.
- Hire people you can trust through the use of good background checks.
- Make it hard to steal by careful supervision, the use of commonsense procedures and controls, and routine auditing.
- Partner with employees to create an environment in which reporting theft is a job responsibility.
- Give alternatives to stealing by providing employees with assistance when they get in a real bind with heavy medical expenses and the like.
- Establish clear written policies on ethical behavior to be signed by each employee and to be enforced consistently, no matter the employee’s position.
Once you think you have a thief, be careful. Be very, very careful. Can you hear the lawyer in me now?
Accusing an employee of theft is serious stuff. Firing an employee for theft is even more serious. You can be sued for wrongful discharge, invasion of privacy, intentional infliction of emotional distress, or defamation — unless you have your ducks in a row.
How are you careful in dealing with this kind of situation? How do you get your ducks in a row?
- Thoroughly consider the source and validity of any information that alerts you to potential theft.
- Obtain as much information or evidence you can find about the alleged theft before you take action.
- Review all policies that govern this kind of situation to make sure you’re following them.
- Don’t speculate about what the facts could be; find out what they are.
- Consider what you have done with employees in similar situations to be sure that consistency is being applied.
- Consult legal counsel to make sure you’re on solid legal footing before taking action.
If you decide to fire an employee for theft, see if you can obtain his or her “confession.” Hopefully, you’ll have enough evidence that he or she won’t be able to deny it. It’s surprising sometimes, when you really do have your ducks in a row, how often the accused employee will confess — in writing.
Employers that take this subject seriously can add a lot of money to the bottom line.
Copyright 2007 M. Lee Smith Publishers LLC. TENNESSEE EMPLOYMENT LAW LETTER. TENNESSEE EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but to provide information about current developments in Tennessee employment law. Questions about individual problems should be addressed to the attorney of your choice.
John Phillips
Email: johnphillips@na.cokecce.com
John B. Phillips is deputy general counsel with Coca-Cola Enterprises and is of counsel with Miller & Martin. He also is coeditor of Tennessee Employment Law Letter and moderator of the 12 Danger Zones supervisor training video series.
Subscribers Area Resources
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Available to Employment Law Letter subscribers
- Who's ripping you off?
- You can give employees lie-detector tests if they're part of theft investigation
- Background checks on potential employees: Are you doing enough?
- Theft = no bargain
- Solving some problem employees
Other Resources
- Audio Conference - Stop Thief! How HR Can Control Employee Theft
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