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6 Action Steps When Confronting Employee Theft

A thorough investigation, properly documented, precedes any action

Posted by Timothy Dimoff on January 3rd, 2013

As we discussed in last month’s blog, employee theft is a huge problem. It can be as simple as a clerk at a store stealing from the cash register or taking money from customers and voiding the sale, to a more complicated theft such as employees falsifying their expense accounts or writing phony checks.

Keep these six action steps on hand with by downloading this free cheat sheet.

If you find an employee stealing, it’s important that you handle it carefully so you don’t expose your company to litigation.
In most cases of employee theft there is a trail you can follow. Checking for frequent cash balance variances, inventory shortages, missing tools and equipment, changes in employee behavior or spending patterns, and complaints from other employees about missing items can produce a great deal of information.


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Policy is Key

How you handle a case of employee theft can mean the difference between a simple matter and complex litigation. If you find an employee stealing, it’s important that you handle it carefully so you don’t expose your company to litigation.

Prevention and preparation are important. You must have a policy in place that outlines procedures to be followed. Make sure your company policy clearly covers both the topic and the repercussions. And make sure all your employees know the company policy.

Let employees know that any dishonest acts come with serious consequences. Advise employees that if they know of another employee’s dishonesty and fail to report it, they can be subject to discipline as well.

Use Words Carefully

Remember, the word “theft” is a minefield all by itself. Used in the wrong circumstances it could expose your company to litigation, a defamation claim or worse.

Need help figuring out whether your employee is telling the truth? Download our free Detecting Deception Cheat Sheet to get tips on assessing credibility.

It’s better to accuse the employee of “violating company policy” or of a “cash handling violation” than accusing him or her of “theft”.

Data Theft Counts Too

Employee theft isn’t just about physical assets or money. Data theft is increasingly common and just as, if not more, dangerous to your company. Data theft can result in loss of business for many reasons, and can jeopardize your operations if the theft is of proprietary data or of sensitive personal data of individuals.

Read more about this here: Top 20 Tips for Preventing Data Theft.

Given the dire consequences of a data breach, every company should have policies and procedures in place for preventing data theft.

What to Do

Once you’ve investigated and concluded that an employee has been stealing, either assets or data, take the following steps:


1. Make sure your evidence is strong.

Video is preferred, but witnesses can also work.

Gather facts and compile documentation; audit computer files, financial records; preserve evidence, such as documents, computer files and e-mails; and maintain a chain of custody to prove the evidence wasn’t tampered with. Document all steps and summarize your interviews.

Learn about 15 Types of Evidence and How to Use Them.

The investigative report may be important in the event of any subsequent legal action. Evaluate whether to administer a lie detector test. The Federal Employee Polygraph Protection Act governs the use of polygraph exams in the workplace.


2. You will probably want to terminate the employee immediately.

Make sure the method you use to document the termination follows your company policy and check to see if there are any issues that must also be addressed such as contracts, collective bargaining agreements, union representatives that need to be notified, etc.

A termination can be a legal nightmare. One of the best things you can do for yourself is use a Termination Letter Template to keep things consistent and documented.

In a union setting, an employee has the right to have a union representative or co-worker (not a lawyer) present during any interview that the employee expects could result in discipline.


3. Notify the police.

If you have insurance covering employee theft, a police report will be needed.


4. Don’t deduct anything from the employee’s final paycheck.

There may be state restrictions governing this.


5. Don’t discuss the situation with other employees or outsiders.

Revealing confidential information about the situation or those involved can ruin the credibility of the investigation.


6. If the employee leaves immediately while you are terminating them, have someone else contact the police.

If you fear for your safety or the safety of your workplace, hire an outside firm who can be armed to escort them off premises.

Timothy Dimoff
Timothy Dimoff

President, SACS Consulting & Investigative Services

Timothy A. Dimoff, CPP, president of SACS Consulting & Investigative Services, Inc., is a speaker, trainer and author and a leading authority in high-risk workplace and human resource security and crime issues.
He is a Certified Protection Professional; a certified legal expert in corporate security procedures and training; a member of the Ohio and International Narcotic Associations; the Ohio and National Societies for Human Resource Managers; and the American Society for Industrial Security. He holds a B.S. in Sociology, with an emphasis in criminology, from Dennison University.

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