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6 Action Steps When Dealing with Employee Theft


6 Action Steps When Dealing with Employee Theft

What would you do if you caught an employee stealing? A thorough investigation, properly documented, precedes any action when dealing with employee theft.

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.

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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.

Wondering what to do if you caught an employee stealing? Here's how to handle theft in the workplace.

Policy is Key to Dealing with Employee Theft

How to handle employee theft takes care and thought, and 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 freeDetecting 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 Would You Do If You Caught an Employee Stealing?

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.

Use these tips on how to handle suspected employee theft in your next investigation to stay compliant and fair.

Keep these six action steps on how to handle employee theft on hand with by downloading this free cheat sheet.


Frequently Asked Questions

How do you deal with an employee who steals?

When dealing with an employee who steals, it's crucial to conduct a thorough investigation, gather evidence, and follow company policies regarding termination, notifying authorities if necessary, and maintaining confidentiality throughout the process.

What happens if an employee is caught stealing?

Before terminating an employee for theft, ensure you have strong evidence, follow company policies and legal requirements, document the termination process carefully, consider any contractual obligations or union agreements, notify the police if needed, refrain from deducting anything from the final paycheck without proper authorization, maintain confidentiality, and ensure safety protocols are followed during the termination process.

Can you deduct stolen money from an employee paycheck?

Deducting anything from the employee's final paycheck without proper authorization may not be allowed by law. Check your state and local laws before punishing an employee in this way.