Dealing with Employee Theft: An Attorney’s Perspective

I came across a recent article in The Gazette by Wilford H. Stone, a lawyer with Lynch Dallas in Cedar Rapids, Iowa.

He shares some startling examples of embezzlement and theft throughout his state.  For example, Stone cites employees at a national supermarket chain where employees were responsible for 56% of theft, ranging from unauthorized discounts, shoplifting, and outright stealing cash from the register.  There are also examples of city clerks allegedly mishandling thousands of tax payer dollars – one public employee even attempted to burn down City Hall to hide her alleged crime.

Employers may not even discover an instance of theft until years later or following an audit.  This is certainly consistent with my experiences as a forensic accountant.

Stone continues that while theft is a terminable offense, employers are advised to have proper written policies in place, conduct thorough investigations, and retaining records.

Written policies signed by employees can establish they understand they have no privacy rights with items brought unto work premises, that bags and purses may be examined, or that video surveillance may take place.  Stone writes that refusal to participate in those policies could be ground for dismissal.

When an investigation follows an allegation of theft leading to termination, an employee might retain counsel.  For such situations, following best practices in all aspects of an investigation will be critical, lest juries suspect an accused employee is being singled out or falsely accused.  Stone states investigations should include allowing the employee a platform to write their own statements in their own words.

Stone finally states that all records supporting an alleged theft should be kept.  For instance, he shares, lack of video evidence for an accusation of theft could adversely prejudice a jury.

While eliminating all work place theft is impossible, Stone concludes the article by advising that employers can limit liability by establishing policy and procedure after an alleged theft occurs.

There are also preventative measures employers can pursue to help subvert theft or other unethical behavior observed by coworkers.  A proven tool that provides such preventative measures is a hotline. Red Flag Reporting’s mission is to provide a simple yet highly effective ethics hotline, safety hotline, fraud hotline and whistleblower hotline.  Red Flag Reporting helps protect your organization’s employees, goodwill, and bottom line.

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