How to Appropriately Handle Employee Theft

Apr 24, 2017

How to Appropriately Handle Employee Theft

Employee theft is an occupational hazard that no employer wants to encounter. Unfortunately, it’s a crime business owners cannot ignore, with an estimated global loss of $3.5 trillion annually according to the ACFE (Association of Certified Fraud Examiners) 2012 Report to the Nations. Learn how to appropriately handle this crime before you are faced with it with a few foundational tips below.

Prevention is Key

The best way to handle employee theft is to prevent it from happening in the first place. If it can be prevented then you’ll avoid a lot of trouble, lost time and damages.

According to ACFE’s study, guilty employees tend to exhibit signs such as living beyond their means, having financial trouble, creating suspiciously close relationships with vendors and displaying control issues. Being present is one of the best things you can do. Walk around, get to know your staff, observe behaviors and, most importantly, let them know you are paying attention!

Other items to pay close attention to: petty cash, extravagant expenses, increased expenditures for things like office supplies and excessive overtime. Implementing smart accounting practices (separate financial duties, daily deposits, monthly reconciling, etc.) are simple practices that can reduce the temptation for employees to steal from you.

Pro tip: We tend to want to give our employees the benefit of the doubt so as to achieve high morale in the workplace. Displaying the above behaviors does not always equate to employee theft, so use your good judgment and discretion when making your observations!

Put It in Writing

An important step to preventing employee theft is assuming it’s going to happen to you because it forces you to put it in writing. Clearly state your company policy - and repercussions - in your employee handbook. Outlining company policy on employee theft can help avoid problems, including litigation, later. For example, it is much safer to accuse an employee of violating company policy than it is to make theft allegations.


Slander. The last thing you want to do is wrongfully damage someone’s good reputation. Not only because it is ethically wrong, but because it is illegal. Accusing an employee of theft without being able to prove it will land you in the defamation boat and those waters are very shaky.

Pro tip: Ensure every employee has signed the employee handbook!

Have Evidence and Be Certain

When you suspect employee theft, there is a right and a wrong way to go about obtaining proof while conducting your investigation. Video surveillance is highly recommended but you’ll want to steer clear of invasion of privacy or false imprisonment claims. Resist any temptations to look through an employee’s personal belongings or hold employees against their will for questioning. We recommend hiring a professional to assist with the investigative service.


Countless potential missteps that can land you on the wrong side of this conversation. Hiring private investigators will ensure the challenges facing your business’ safety, security, workforce or bottom line are uncovered and documented. Their professional expertise is needed to properly determine the who, what, why, where, when and how the alleged theft occurred while following proper procedures and keeping you free from legal trouble.

Pro tip: Keep any suspicions or confirmed instances of employee theft under wraps. This is not a topic to discuss at the water cooler, or worse, in a paper trail among workplace friends.

Why Prosecute?

The most recent Report to the Nations findings showed that many occupational fraud cases go on for 18 months before detection. This indicates that the damages are not limited to loss of goods (money and data being the most common), but that there is an opportunity cost to consider as well. Furthermore, small businesses suffer the most due to lack of anti-theft protocols. Vulnerability is higher when resources aren’t employed toward anti-theft precautions, and therefore, small businesses incur the largest median losses (Report to the Nations). Losses which are never recovered in nearly half of the cases studied.

Employers often develop relationships with their employees, which makes situations like employee theft difficult. If you choose not to prosecute, you risk sending the wrong message to the rest of your staff about the severity and tolerance of the crime. Prosecution paves the way to prevention.

Pro tip: Think of prosecution in terms of tough love. The right thing is often the hard thing to do.

Before you find yourself in an unfortunate employee theft scenario, take preventative measures and expect the worst so that you are fully prepared. Have everything in writing and familiarize yourself with the ins and outs of properly handling this delicate situation. Should the worst case scenario become a reality, reduce your risk by letting a professional, licensed private investigator handle it for you. Lastly, be prepared to prosecute.

Contact us for more information on our business investigative services, which include undercover employee investigations, interrogation services and covert cameras.


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