Employee Theft Lawyers

Dealing With Employee Theft: What to Do If You Suspect an Employee is Stealing

Employee theft, also called occupational fraud, is any act of stealing, embezzling, or misusing an employer’s assets or resources by an employee. It’s a big problem that affects companies of all sizes – one study estimates that the typical organization loses 5% of it’s annual revenue to employee theft. As a business owner, discovering that a trusted employee has betrayed you by stealing can be shocking and infuriating. However, it’s important to respond in a measured, legal way in order to recover your losses and prevent future theft. Here’s an overview of your options and legal rights when dealing with employee theft.

Documenting Suspected Theft

If you suspect an employee is stealing, the first step is to discretely gather evidence. Don’t confront the employee prematurely – you want to be sure you have proof of wrongdoing. Carefully monitor inventory levels, cash drawer amounts, expense reports, etc. Install surveillance cameras if necessary. Document everything suspicious you notice. If you can prove a pattern of theft, your case will be much stronger. It may help to consult with a forensic accountant to analyze records and identify any improper transactions. Once you have clear evidence, you can confront the employee.

Confronting a Suspected Thief

When meeting with a suspected thief, have another manager present as a witness. Present the evidence calmly and directly, and ask the employee to explain themselves. Don’t make direct accusations yet. If the employee admits to stealing, get a written and signed confession. False confessions do happen, so don’t take a confession as absolute proof. If the employee denies stealing, tell them you will conduct a full investigation and they are suspended until it’s complete. Reassure them that if they are innocent, they have nothing to worry about.

After confronting the employee, consult your employee handbook about next steps for discipline or termination. You may want to get a qualified employment lawyer involved at this point.

Filing Criminal Charges

If you have clear evidence of employee theft adding up to a felony amount (typically over $500-$1000), you can choose to pursue criminal charges. Report the theft to your local police – they can investigate and refer the case to prosecutors if appropriate. The advantage of criminal prosecution is that if the employee is convicted, you won’t have to prove theft occurred in a civil case later. The conviction legally establishes that the employee stole from you.

The downside is that criminal cases move slowly, and you likely won’t recover your losses through restitution. Talk to your lawyer about whether to pursue criminal charges in addition to a civil case.

Civil Lawsuits for Damages

Even if you don’t pursue criminal charges, you can sue the employee in civil court to recover your losses. Common claims in employee theft cases include fraud, breach of fiduciary duty, and conversion (theft of property). You can potentially recover the amount stolen, legal fees, and punitive damages. Your lawyer can help calculate exactly what you are owed.

The advantage of a civil suit is you have more control over the case and can potentially recover much more than restitution ordered in a criminal case. The drawback is you’ll need to prove the theft using a “preponderance of evidence” rather than the higher “beyond reasonable doubt” standard used in criminal cases. But strong documentation and accounting records can meet this burden.

Insurance Claims

If you have employee theft insurance or a fidelity bond, report the loss to your insurance company right away. They will investigate and reimburse you according to your policy limits and terms. This is the easiest way to recover direct financial losses from theft. But insurance doesn’t cover indirect costs like damage to your reputation or lost customers. And you may still need to sue the employee or pursue criminal charges to prevent future theft.

Improving Controls to Prevent Theft

Any time employee theft occurs, use it as a learning experience to improve your financial practices and controls. Update your employee policies to clarify theft will lead to immediate termination and prosecution. Limit access to cash, inventory, accounts, and data only to employees who truly need it. Conduct regular audits and inventory checks. Install surveillance cameras and monitoring software. The more transparency and accountability you build into your processes, the harder it will be for employees to get away with stealing.

Discovering an employee has stolen from your business can be difficult and emotional. But by responding calmly and legally, you can recover your losses through restitution or insurance claims. A qualified lawyer can advise you on protecting your rights and pursuing damages. With better financial controls, you can prevent theft from happening in the first place. Don’t let an untrustworthy employee undermine the hard work you’ve put into building your company.

When to Hire an Employee Theft Lawyer

If you need legal help recovering damages from employee theft, when’s the right time to hire a lawyer? Here’s some guidance:

• Consult a lawyer as soon as you have strong initial evidence of theft, before confronting the employee. They can advise you on gathering evidence and your options.
• Definitely involve a lawyer if you plan to terminate the employee for theft. They can ensure the process follows employment laws.
• Hire counsel immediately if you plan to pursue criminal charges or file an insurance claim. Early legal guidance is key.
• If you only plan to handle the issue internally, you may not need a lawyer. But consult one anyway to understand your rights.
• Engage counsel as soon as possible if you decide to sue the employee for damages. The sooner a civil case begins, the better.

The most important times to hire a lawyer are before terminating an employee or filing a claim or lawsuit. This ensures you don’t make legal mistakes that could hurt your case down the road. Don’t wait until after you’ve already taken action against the employee.

What Laws Apply to Employee Theft?

Several different laws may apply when an employee steals from your business:

• Criminal theft laws – Theft over a certain dollar amount is a felony under state criminal statutes. Prosecutors can file charges.
• Conversion laws – The civil tort of conversion covers theft of property. It allows you to sue for return of stolen property or its value.
• Fraud laws – Lying to steal from the company constitutes fraud. It can justify punitive damages in a civil case.
• Breach of fiduciary duty – Employees owe certain duties of care and loyalty. Theft breaches these obligations, opening the employee up to civil liability.
• Employment laws – Stealing is grounds for terminating any employee. But proper procedures must be followed.
• Insurance laws – Fidelity bonds and employee theft policies require prompt reporting of losses from theft.

An experienced employee theft attorney will be familiar with these laws and how to apply them to get the best outcome for your situation. Understanding your legal rights is key to recovering fully from employee theft.

Proving an Employee Stole – Challenges and Strategies

Proving an employee stole from your business presents unique legal challenges. Unlike external theft, you must demonstrate breach of trust – not just a crime. Here are some effective strategies:

• Thoroughly document all evidence of theft. Track inventory losses, altered records, suspicious transactions, etc. The more proof you have, the stronger your case.
• Get an expert forensic accountant to analyze your books and identify any improper expenditures or transfers. Their testimony carries weight.
• If you have surveillance footage showing theft, preserve the original. Don’t just rely on lower-quality copies.
• In depositions and court testimony, stick to the facts. Avoid emotional accusations or speculation without evidence.
• Request a court order for access to the former employee’s financial records. Large deposits or lavish spending can prove illicit income.
• Demonstrate how theft hurt your business. Lost profits, damaged morale, lower productivity, and other harms justify higher damages.

Building a solid case requires time and care. An employee theft lawyer knows how to gather persuasive evidence and argue it effectively in court. With the right legal strategy, you can hold a thief accountable.

Common Employee Theft Defenses – What to Expect

When sued for employee theft, the defendant may raise certain defenses to avoid liability. Here are some common defenses and how plaintiffs can counter them:

• Lack of proof – The employee will claim you lack definitive proof they stole anything. Combat this by presenting extensive documentation and forensic accounting.
• Accident – They may argue any improper transactions were accidental mistakes. But systematic patterns of theft can’t be accidental.
• Authorization – Employees sometimes claim they were allowed to use company funds or property. Rebut this by showing lack of policies allowing such use.
• Retaliation – A fired employee may allege you’re falsely accusing them of theft in retaliation for whistleblowing, discrimination complaints, etc. Prove you had evidence of theft before any other issues arose.
• Wrongful termination – If fired, they may claim it was wrongful termination unrelated to theft. Point to employment policies listing theft as grounds for termination.

Anticipating defenses ahead of time allows your lawyer to build a more well-rounded case. An employee theft attorney knows how to rebut common defenses persuasively.

Recovering from employee theft requires time, care, and good legal guidance. But with the right evidence and legal strategy, you can demonstrate the theft, regain lost funds, and prevent more harm to your business. Don’t let an unethical employee take advantage of you. Protect your rights and assets.