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Employee theft is a growing problem in the workplace. This affects businesses, workers and their families alike. Businesses lose money, employees feel betrayed and family members experience emotional trauma when they learn that someone stole from them or even worse — was involved with an embezzlement scheme. The good news is companies can take steps to prevent it by adopting a few key policies designed to protect workers and minimize losses from this threat.,
Employee theft is a type of financial crime that occurs when an employee steals money or property from their employer and it’s one of the most common types of crimes in America. This article will explain the different types of employee theft, why it occurs, how to prevent it, and 7 steps you can take to reduce your risk.
Employee theft occurs when individuals who work for you, such as workers or contractors, steal things, money, or time. To avoid employee theft, you must first determine how your company is susceptible. To decrease or prevent employee theft, you may implement rules, practices, and monitoring systems.
Here are seven measures to keep your employees from stealing from you:
Step 1: Hire trustworthy individuals.
Hiring personnel that do not steal is your greatest strategy for preventing theft. That means, in addition to monitoring current workers, which we’ll discuss below, you’ll need to do background checks on potential hiring to guarantee they’re trustworthy.
Step 2: Create a “zero-tolerance” policy.
According to estimates from the Statistic Brain Research Institute, firms in the United States lose an average of 7% of their yearly earnings to employee theft each year. To avoid this at your company, you should implement a zero-tolerance policy.
Make it clear to your staff that stealing from you in any form will result in their job being terminated; include the following five areas in your employee theft policy:
- Employee theft is forbidden, according to the following statement: This section should warn workers that employee theft is forbidden and include instances of prohibited employee theft, such as taking cash, items, or falsifying time cards.
- Employees are expected to report management if they notice theft taking place: This discussion should also include how workers should report the theft to management.
- As an example, consider the following forbidden behaviors: This section is specific to each organization and explains frequent kinds of theft in your field, such as service personnel taking company gear home or foodservice staff providing food and beverages to friends.
- A remark regarding the ramifications: This part should include a link to your disciplinary policy, a statement that termination is automatic, and a suggestion that instances be reported to the police.
- Notice about your commitment to investigating theft: This part explains that you will investigate all theft claims, but you will not tolerate false allegations.
Step 3: Make Your Policy Clearly Communicated
Any new policy should be included in your employee handbook and reviewed at least once a year, ideally in a meeting environment. That way, you can provide examples and workers may ask questions to ensure that everyone understands the theft policy and the penalties of breaking it.
Make careful to provide work-related scenarios that may arise in your field while communicating your policy. This is particularly critical if your personnel, such as summer high school students, is fresh to the employment market. Some workers may need examples to learn that taking food and beverages from the shelves to eat during or after work is not acceptable.
Unless you tell them otherwise, others may think it’s no great issue to make a few photocopies or borrow a sticky note pad or tape dispenser from the supply room.
Step 4: Lower Your Temptation
After you’ve established your policy and conveyed it to your employees, the next best strategy to decrease employee theft is to make it impossible for them to steal. Installing video security cameras, for example, may help to reduce temptation by making staff aware that they might be readily detected. Cash should not be left on countertops or PCs. When money or valuables are at danger, make sure you have more than one person there at all times.
Here are two more suggestions to help workers resist the desire to steal.
Assign two people to each task.
When dealing with cash or costly items, assign two persons to a job. Schedule two staff to reload your stores at night, for example. Knowing that they can be caught stealing might act as a deterrent. Employees that count cash, handle customer refunds, or count goods in the back room are all in the same boat.
Separate responsibilities
To avoid embezzlement, divide work responsibilities. Make sure that anybody handling money or checks has a receipt signed by a coworker, for example, in accounting tasks. Similarly, the lockbox keys should be handled by the person in charge of the petty cash fund’s money in and out. Equipment and supply room tools might be subjected to similar regulations.
Furthermore, it is recommended practice to not allow anybody who writes corporate checks to handle business bank reconciliation. This is also true in payroll—the person who authorizes employee time cards should not be the same person who runs payroll. For financial transactions, one individual acts as a check and balance for the other.
Step 5: Keep an eye on employee activities for different types of theft.
Theft by employees may happen at any moment. Employees, for example, may steal things before they reach the shelves. Cash may also be taken later in the sales cycle, for example, when items are not rung up accurately or cash is pocketed.
The sort of monitoring you utilize should be determined by the type of employee theft you’re attempting to avoid. A camera at your back door, for example, may assist guarantee that products being delivered are not stolen, whilst purchase orders can ensure that each transaction is “authorized” in advance.
Other sorts of employee theft that a company can face are listed below. Knowing how workers may steal in various ways will help you develop theft prevention strategies for each form of theft.
Product Theft by Employees
Product Theft by Employees occurs when employees take items from your business that they don’t pay for or allow those items to be taken by others. For example, if you run a retail outlet or a distribution center and employees walk off with products they haven’t paid for, that’s employee theft.
Product theft isn’t always clear. Let’s imagine you own a restaurant or a bar, and one of your servers “gives away” food or beverages to their pals who don’t pay for them. This is also a kind of staff theft.
Employees have been known to steal the following objects, products, or inventory:
- Consumption of soft drinks or food items from the refrigerator
- Theft of retail merchandise from the shelves
- Employees who use their “discount” for the purchases of a buddy
- Raw meats, such as steaks and prime rib, are removed from the walk-in freezer.
- Supplies from the office are being taken out of the storage to be utilized at home.
- A company computer or other piece of equipment is removed from a vacated office.
- Theft of tools or supplies from work vehicles
- Without authorization, work vehicles are utilized for non-work reasons.
According to reports, new recruits and part-time staff steal five times as much from retail establishments as shoplifters. Remember to have cameras recording every movement into and out of the building. Installing a corporate security system like Simplisafe can help you keep track of what’s going on in most sections of your company.
Employee Services Theft
Another sort of employee theft is theft of services, which is often carried out by workers for the benefit of friends or family members or to gain money from a third party while pretending to be working for the company. For example, if you own a car wash and your workers let their friends and family members wash their vehicles for free, you are stealing your services.
Other examples of Employee Services Theft:
- If you own a computer repair shop and one of your employees fixes a friend’s computer at work time but doesn’t charge them, you’ve got a problem.
- If your firm is a service company, and a worker uses the corporate car to execute a plumbing repair for a neighbor, components and equipment are “off the clock.”
- Employees who, without authorization, use the corporate fax, copier, or mailing machine for personal purposes
Theft of Cash or Payments by Employees
When many companies think of employee theft, they think of cash or money theft, and it’s a typical occurrence, particularly in organizations that don’t have robust POS systems like Lightspeed. If a consumer pays cash to a receptionist, for example, it’s simple for the money to disappear if the transaction isn’t recorded.
Customers’ credit card details must be kept secure since many payments are made by credit card. Untrustworthy staff might take a customer’s credit card information and use it to make online transactions. Employee theft of consumer payment information might be damaging to your company’s image.
Other types of money and payment fraud include:
- Cash from a cash register or petty cash fund has gone missing.
- Theft of tips from a tip jar or a coworker’s table
- Cash sales are not recorded on a POS system.
- A bookkeeper withdrawing monies from your company account and depositing them in his or her own bank account.
- Customer payments have been received, however, they have not yet been entered into the accounting system.
Embezzlement and check fraud, in fact, are the most expensive types of employee theft. Check fraud accounts for almost 70% of all check fraud in organizations with less than 100 workers.
Employee Theft of Time
Another kind of employee theft that new firms may not consider, but is expensive, is time theft. Let’s imagine workers arrive early for their planned shift, or worse, have a friend punch in for them when they aren’t there yet. That is a kind of time stealing. The following are some more typical instances of time theft:
There are several types of time theft. APSPayroll is the source of this information.
Employees who don’t clock in and leave accurately may be stealing 15 minutes or more every day. That adds up, particularly if you pay hourly non-exempt workers time and a half for overtime.
It’s not unusual for otherwise honest workers to arrive late, leave early, or take extended lunches – all while recording their time (and profits) as though they worked their normal hours. According to some estimates, the typical worker steals four hours each week.
Employee Intellectual Property Theft
When workers steal private knowledge to use or sell, this is known as employee idea theft. A list of current business connections, a hard disk full of fresh product ideas, or copies of your company plan are all possibilities.
Idea theft is particularly frequent in professional or high-tech organizations, and it may be prevented by having workers and contractors sign a non-compete or nondisclosure agreement when they start working for you.
You may also want to consider putting in technologies that enable you to keep an eye on what’s going on with your company’s computers, network, or website.
Monitoring’s Risks
There are laws in place in 12 states that prohibit video or audio surveillance without prior authorization. If you want to use a video camera or record employee phone calls, make sure that information is specified upfront in an employee handbook or in a theft policy that each employee signs.
Step 6: Educate the Supervisors
Train your supervisors on the many types of theft and how they may assist monitor employee behavior without being accusatory. You may print a copy of this paper and give it to them as a handout. Encourage them to be your eyes and ears on the job, keeping an eye out for theft.
If they witness an employee slipping out the back door with what they suspect is stolen property, they should approach them and begin asking non-threatening inquiries, such as:
- “It appears that you are departing. “Have you checked out yet?” says the narrator. If the employee declines, the management may have more time to inquire about why he or she is taking unpaid products outside.
- “Can you tell me what you’re carrying?” “I didn’t see you bring it in.” This may seem harsh, but as the employer, you have the right to check everything that enters and exits your shop.
- “Did you pay for that?” “Can I see the receipt?”: It’s OK to inquire about the receipt if the staff displays your shop products. He or she will not be angered if it has been paid for.
- “Why are you utilizing the back door?” enquires the narrator. You’re not accusing them of stealing, but supervisors have a right to know why employees are “sneaking out,” particularly if they’re “on the clock.” It’s possible that he’s receiving something from a car.
- “Can you tell me what you just placed in your backpack?” Trunk?”: Only say this if you are certain someone has just taken something. The individual will not get defensive if he or she has done nothing wrong.
Make careful to remind supervisors throughout training that they should never accuse an employee of “stealing” or “theft.” “I need you to come back inside and explain what you were doing,” they should say instead, or “Let’s go look at the videotape and see what it reveals.”
Step 7: Put Your Policy Into Action
Employees will be encouraged to steal or continue stealing if they know you don’t police your rules. If someone gets $12 an hour and steals $100 a day in things to take and sell or money pocketed from cash sales, he or she may determine that stealing is a better bargain, even if it means losing their job.
As a result, if your policy stipulates that workers will be prosecuted for stealing, follow it. After one or two cases of you implementing a zero-tolerance policy, other workers will recognize you’re serious and will be less inclined to do it themselves.
You may want to put in place a mechanism that allows workers to report any theft in the workplace to their manager or human resources. Then, by implementing your rules, follow up on their issues.
Taking Down a Thief
If you catch an employee stealing, be extremely cautious about what you do next to avoid being sued for wrongful termination. Employees are presumed innocent until proven guilty, just like all other citizens of the United States. Use the three procedures outlined below to ensure that you deal with the claimed “theft” in a professional manner that does not backfire and cost you money or legal troubles.
1. Collect information
Gather your evidence, such as a video clip or employee witness testimony, before presenting an employee with a theft claim. Then, discuss the next steps with the company owner or management. Take a picture if you see someone with stolen items. No matter what you do, don’t terminate the employee on the spot for “stealing.”
If necessary, make the individual leave the premises right away by stating that you’re looking into a possible breach of company policy. Follow your progressive disciplinary policy if you have one.
2. Consult with and/or fire the employee
Meet with the employee and explain the facts you’ve discovered, such as “the video reveals a corporate policy violation of unpaid items being taken outside the shop,” or “the video shows a company policy violation of unpaid merchandise being taken outside the store.” If the damage is significant enough that you need to submit an insurance claim, consider informing the employee.
If the employee refuses to leave, you may want to phone 911 and submit a police complaint right away (threatening to call the police may encourage an employee to cooperate or at least leave the premises until you can get your termination documents and his or her final paycheck together).
You may fire an employee if they don’t follow the company’s standards, which are detailed in the employee handbook. You don’t have to say that you caught him or her stealing. You may send the employee home with a termination letter or email if you’ve already sent them home.
In fact, if the individual is subsequently proven not guilty, using the terms “theft,” “stealing,” or any other loaded charge might lead to a wrongful termination claim. It would be more accurate to say that he or she is being fired for “infringing on business rules.” Here’s some more advice from a lawyer:
“If I see something odd, I would always make sure to disclose the cause for termination in writing.” If the employee claims that he or she was fired for another reason, you will be able to show specific documentation of why the person was fired.”
— Sam Mollaei, Esq., Mollaei Law, Inc.
If you live in a state that recognizes the at-will employment law, you may not even need to provide a cause for termination. “You are being dismissed under our at-will employment policy,” you might simply remark. For additional information, see our guide to at-will employment.
3. Make a report to the police.
If the value of the products or money stolen is more than $50, you should submit a police complaint. When filing an insurance claim for lost items, you may need to file a report since the insurance company needs the police report number to make a claim. To submit a report, contact your local police, sheriff, or law enforcement authority.
Accusation’s Risks
Make certain that no one other than the immediate supervisor and employee is aware that an employee has been fired for stealing. In reality, accusing someone of stealing is dangerous since it implies guilt. As a result, keep the cause for termination ambiguous, such as “violation of business policy” or “failure to meet our ethical standards,” and stick to your existing disciplinary and termination procedures. An employment law expert adds the following:
“Theft is a personal concern that should be handled discreetly.” Openly blaming an employee might make the employer seem unprofessional to the rest of the team, causing humiliation and uncomfortable for the employee. Instead, the employer should manage the subject behind closed doors and only with those who are directly engaged; this protects the workplace’s integrity and prevents anybody from being embroiled in subsequent issues. Spreading incorrect information about someone may lead to a defamation action in terms of legal issues.”
— California Employee Rights Legal Group CEO Jesse Harrison
Employee Theft: What Causes It?
Employee theft, according to many proponents, arises as a result of a company’s terrible culture, lack of monitoring, or unhappy workers. It’s conceivable, though, that a tiny fraction of individuals are prone to stealing and lack the moral self-discipline to refrain from doing so. According to a CNN investigation, most people who steal do it out of greed or vindictiveness, rather than need. According to a CNN investigation, up to 66 percent of workers would steal if they saw others doing so.
Furthermore, the CNN research revealed that individuals are more prone to steal when there are no penalties. As previously said, enforcing your policy is vital, as is tightening up your recruiting procedures in the first place.
Final Thoughts
Employee theft may be prevented in a variety of ways, from employing trustworthy staff to minimizing the incentive to steal on the job. It also necessitates the use of monitoring instruments for different sorts of employee theft, such as video surveillance and proper inventory and accounting procedures. You must implement your theft policy in order for it to be effective. We hope that by taking these actions, you can lessen the effect of employee theft on your company.
Frequently Asked Questions
What factors cause employees to steal?
A number of factors contribute to someone stealing. Some of these include the amount in which they need money, stress that is caused by working conditions, and emotional instability.
What is the most common type of employee theft?
The most common type of employee theft is stealing company credit cards and using them for personal expenses. Billing statements are also quite easy to steal, as well as payroll information.
