You wouldn’t hire someone if you didn’t trust them. But you fear someone you hired turned out not to deserve it. You’re picking up the pieces and trying out what to do next. Instead of spending time and energy second-guessing yourself, investigate the situation to determine if the theft occurred and, if so, who might be responsible.
Employee theft and embezzlement are common. The Association of Certified Fraud Examiners, according to The Hartford, states that organizations lose about 5% of their revenue to occupational fraud each year, most of which involve theft.
Below, our friends at Focus Law LA provide insights on addressing employee theft and securing your business assets.
Where Do I Start?
Theft and embezzlement are only limited by the employee’s imagination and the opportunities that arise. Schemes to steal from you could be painfully simple or ingeniously complex. They may steal products, cash, checks, tools, or time by being paid when they’re not working. Company resources may pay for online purchases, illegal drugs, or gambling debts. Stolen company products may end up on eBay or Amazon.
Look out for warning signs:
- An unexpected profit drop
- Petty cash quickly disappears
- Inventory shortages
- Discrepancies in payroll and expenses
- Travel expenses that are inflated or for trips that didn’t happen
- Office supply shortages
That hardworking employee working late may spend their time stealing from you. The employee with a nice car and expensive habits may not be from a wealthy family or have a well-paid spouse. You must follow the money (or inventory or anything else disappearing) and come up with evidence. False allegations of theft or embezzlement could result in a lawsuit against your company for libel or defamation.
Find out:
- What is missing?
- Is it misplaced or taken by accident?
- How much is this costing your business?
- When did the alleged theft occur? Did it happen once, or is this an ongoing problem?
- Who could be responsible?
Get the help you need to accomplish this, whether that’s a forensic accountant or a company specializing in investigating employee theft or embezzlement.
How Do I Investigate What’s Going On?
If the initial signs point to embezzlement or theft, contact your attorney to discuss potential employment law issues if you fire someone, a civil lawsuit against the person to regain what you lost, and how you can work with law enforcement to come up with evidence that may support criminal charges. Things to consider include:
- The statute of limitations, or deadline to file a civil lawsuit or criminal charges. If it’s coming up quickly, you need to work hard and fast
- Talk to potential witnesses to see if they know anything useful
- Establish confidentiality guidelines for all those involved, including the witnesses. You don’t want the target to be tipped off or retaliate against someone helping you
- Collect and organize relevant documents and evidence like interview notes and surveillance video
Go over what you found with your attorney. If it supports criminal charges, contact your police department and arrange a meeting away from your workplace. If they’re interested, work with them to decide what you’ll do next.
If there’s insufficient evidence to support criminal charges but enough to fire the person, you may do so without an explanation to avoid a confrontation. You could also meet with the employee and your attorney so they’ll learn about what you found and get their reaction. Depending on state law, secretly recording the meeting may be legal, and the employee may make admissions that could lead to criminal charges or help your civil lawsuit to recoup your losses.
These situations can be very complex, factually and legally. Get your trade secret litigation lawyer involved early in the process. Their help and guidance may help you avoid serious mistakes that could undercut your legal rights.
