Saturday, February 11, 2017

Dealing with employee theft

There recently has been a spate of news articles regarding theft and embezzlement from Iowa cities. Former city clerks in Delhi, Garwin and Vining are all alleged to have embezzled or improperly spent hundreds of thousands of taxpayer dollars.

In another instance, a former city clerk in Casey was even indicted on charges of burning down City Hall to hide her alleged theft.

As the above stories revealed, an employer may not discover the crime until years after it has begun during an official audit or when someone follows a hunch or notices an irregularity. The Iowa State Auditor warned cities to “trust but verify” employees that handle money.

Public employers are not alone. One study by a national supermarket organization found that its employees were responsible for around 56 percent of supermarket thefts.

Such theft included shoplifting, taking cash from registers and/or providing unauthorized customer discounts. Theft should always be a terminable offense.

However, before doing so, employers should have a plan in place that includes proper policies, a thorough investigation, and records retention.

Proper written policies

Employers should consider requiring employees to sign an acknowledgment that they understand they have no privacy rights with items they bring to the work premises, such as purses and other bags; that they may be subject to and consent to video surveillance in certain areas; and that they are aware that participation in investigations is mandatory and that refusal to participate may result in termination.


Theft should never be taken lightly. Accordingly, a thorough investigation of the theft allegation is critical.

When an employee gets fired for theft and retains counsel, the employee’s first tactic will ordinarily be to attack the quality of the employer’s investigation. Accordingly, follow all best practices regarding your investigation.

Juries demand this, and failure to conduct a proper investigation can serve as evidence of pretext or some cover up. This means that an employer investigating an employee for theft should allow the accused employee to tell his/her story in full and include it as part of the record.

This will prevent a jury from assuming the employee was railroaded.

Employers should ensure that all employees who witnessed theft-related events write their own statements without help or interference. Such statements should be in the employee’s own words.

Should you call the police? It depends.

For years, many managers and their lawyers believed it was a best practice and a good theft deterrent. However, times have changed.

Before calling the police, it is critical to know how seriously they will respond to allegations of theft of a few hundred dollars in merchandise. Some police departments are simply too overwhelmed to do more than write a report of the complaint.

Of course, thefts involving thousands of dollars may be another issue. Check with your local law enforcement agency and proceed accordingly.

The termination meeting should not be the first time an accused learns that he or she is suspected of theft. Frankly, if you have overwhelming proof, it is far better to suspend the employee pending the outcome.

Many employees will not return for a follow-up meeting and can be terminated as having abandoned their job.

Records retention

Finally, keep all records regarding the alleged theft, investigation and termination. Nothing should be allowed to be destroyed.

Video footage of an employee pocketing a twenty, for example, is outstanding evidence in court.

Conversely, not having the video footage of the employee pocketing the $20 in an employment trial will be outstanding evidence for the plaintiff. No explanation will overcome a jury’s assumption that if the video is missing, the employer did not want them to see the video.

Eliminating theft entirely in the workplace is impossible. However, employers can limit their liability by having policies in place and conducting a proper investigation after a theft allegedly occurs.

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