Who Should I Tell If Someone Is Stealing Money From My Employer

business income insurance

Published: August 28, 2017

Updated: April 12, 2022

What to Do When You Suspect an Employee May Be Stealing From Y'all

In 2015, employees who stole took an average of $175,000 from businesses of all sizes—a loss many small businesses tin can't survive. In fact, an estimated one-third of all small businesses get broke considering of employee theft.

Given the likelihood that y'all will face up employee theft as a small business owner, y'all should consider preparing how to respond. Missteps can disrupt your workplace and lead to lawsuits, compounding an already hard situation.

Tips on Detecting and Handling Employee Theft

These guidelines can help you take wise and prudent action when you believe an employee has stolen from your business.

Know the Signs

Employee theft tin can take many forms—from stealing cash and trade to padding time and committing fraud—and may be difficult to detect. Your first step is to be alert to telltale signs, such as:

An unexplained drop in profits
Petty cash that is rapidly depleted
Missing inventory
Payroll and expense discrepancies
Undue travel expenses
Disappearing office supplies

Also beware of employees who work late and never take fourth dimension off. They may be the workplace ideal (equally opposed to those who always phone call in ill), merely could exist the perpetrators of theft along with those whose lifestyle and income don't friction match.

Evaluate the Situation

Unless you catch an employee scarlet-handed, it's important to non jump to whatever conclusions about a suspected theft and who's responsible. An employee who is falsely accused could sue you for defamation.

Begin by taking stock of the specifics:

What was stolen?
If items are missing, could they have been misplaced or taken by accident?
What is the cost to your business?
When did the incident occur? Was it a one-shot deal or has it persisted over fourth dimension?
Who exercise y'all believe is responsible?

(Heed to the Podcast discussion: What to Do When You Suspect an Employee May Be Stealing from You lot)

Deport a Thorough Investigation

If you lot're convinced that theft has occurred, conduct a thorough investigation to gather the evidence you need to prove your case across a reasonable doubtfulness. Consult your attorney for guidance, and take these steps without filibuster:

Begin promptly so the statutes of limitations don't run out. These vary by state and by the value of the loss; your attorney can advise on the timeframe that applies to your case.
If the theft is complex or substantial, hire an exterior practiced such as a trained forensic accountant to assist in the investigation. An outsider will bring not just the specialized noesis you lot need but also a neutral perspective.
Collect all relevant documents and evidence, from financial records and personnel files to accounting records and surveillance videos.
Gather the perspectives of any witnesses through 1-on-ane interviews. Before you meet, formulate the questions you lot wish to ask to ensure you embrace all key points. Have detailed notes.
Found confidentiality guidelines for everyone participating in the investigation, including investigators and employees. This will aid preclude leaks and minimize the fear of retaliation among employees who disclose sensitive information.
To corroborate the evidence yous take compiled to date, present your case to the employee yous doubtable of theft. Make information technology clear to the employee that this is a preliminary interview to capture their version of the story, not to secure a confession. Focus on the facts and communicate in a respectful, even-handed manner.
Document your findings in a detailed written report and gather the signatures of those who participated in the enquiry. Together, these constitute a strong form of evidence that can assist y'all uphold your case in a court of police and can defend confronting whatever actions taken by the accused that purport wrongful discharge or defamation.

Kn ow the Law

When investigating employee theft or employee fraud, always bear in listen these legal constraints regarding employee privacy:

It is a federal criminal offense to wiretap or otherwise tape the communications of others without courtroom approval or prior consent of ane of the parties. Information technology's also against the law to use or disclose information caused in this manner.
Video cameras are generally permitted providing they exercise not apply audio and employees are notified of the surveillance activity.
Some states take additional limitations on how and where employees may be monitored. Check with your state labor agency to ensure your actions comply with the law.

Other legal considerations utilize to the manner in which y'all behave your investigation. If you use an overly aggressive approach, an employee can merits that you intentionally inflicted emotional distress. If you suspect, accuse or burn an employee based on the suspicion of theft without clear-cut bear witness, yous can be sued for defamation.

Mete Out the Proper Consequence

In one case you take evidence of the theft, its extent and the wrongdoer, make up one's mind the punishment that suits the criminal offence. For serious offenses, such every bit employee fraud with a loftier dollar value, termination may be your only option. Only be sure to follow all regulations governing employee dismissal. You may also choose to report the matter to constabulary enforcement and press criminal charges. For petty theft, a written warning, probationary period and restitution may be sufficient.

Nowadays the evidence and disciplinary measures to the employee in a confidential meeting. Take ane other person in the room to deter whatever assailment that may ascend.

Forbid Employee Theft

The best way to respond to employee theft is to prevent it from occurring in the start identify:

Apply caution when recruiting. Insist on references and validate them. Crave criminal background checks of all new employees.
Implement internal controls to safeguard your assets. Carve up accounting duties so no ane employee is responsible for both recording and processing a transaction. Restrict access to your assets and accounting systems.
Develop policies and procedures related to fraud and spell out the disciplinary measures for violations. Railroad train employees on these topics annually.
Monitor your employees and operations to keep your staff honest, but steer clear of micromanaging employees unless information technology's welcome or necessary.
Perform routine fiscal audits.
Bank check stock and equipment on a regular footing.
Provide an anonymous means for employees to report suspicious activity.

Employee theft can exist a significant drain on your business. Preventive measures, ongoing vigilance, and a prompt and thorough response to any suspected incidents can help y'all proceed your business resilient and your employees honest.

Next Steps:By signing up for the weekly Modest Biz Ahead Newsletter, you'll receive hand-picked manufactures, How-Tos and videos covering the latest in small biz tools and trends. Nosotros'll do the research while you spend your time where information technology counts: managing and growing your business organisation.

What are your thoughts? Let usa know in the comments!

Source: https://sba.thehartford.com/managing-employees/suspect-employee-stealing/

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