Employee Theft Prevention Guide - Statics


Published By: Nexlar, LLC. All rights reserved. 2015

To contact the publisher, please email [email protected].

The suggestions in this ebook are simply that. They are suggestions for how to create a theft policy and procedure guideline to give to your employees. It also outlines what you need to do throughout the whole process. You do not want to implement any of the information in this ebook without first speaking with an attorney and your human resources department. You never want to violate human rights or the rights of your employees. Each state will have different rules of what is or is not allowed when it comes to theft. Make certain you know these, how you can proceed legally, and only then implement your policy and procedures.



I. Theft Investigation Report


Theft can occur at any company. It could be the theft of supplies, products, data, proprietary information, and anything else of monetary value.

Many times trusted employees are the offenders. Having clear set policies and a proactive security system is vital to a Company’s overall success. 

A Company’s size does not make it immune from theft. Small privately-owned locations and multimillion-dollar franchises are affected the same. Even paying employees top-tier for their expertise does not reduce the probability. Nor does setting up a security system in the hopes that its mere presence will deter crime.  

Only strict guidelines and pro-active employee theft prevention methods work! It is highly recommended that each business owner learn and implement employee theft prevention tactics to protect themselves from such losses. And take the time to learn which type of security system would best fit their needs, as there are many options.


II. Policy and Procedure Suggestions


The following suggestions can be used as an educational tool and a starting point for employee theft prevention. Before implementing any theft prevention type, the Company’s Human Resources and Labor Attorney should review and ensure such suggestions are following the local governing law.


A. Create An Anti-Theft Culture


Have written policies for employees as part of their handbook and orientation training. Said policies should outline all anti-theft policies as well the disciplinary action that will be taken should s/he be found stealing.

Define the term “Stealing.” Some individuals may see it as borrowing. 

Many Companies use the words “unauthorized removal of company belongings both intangible and tangible.” The word theft is not a part of the definition because, in legal terms, theft requires a specific proven intent. 

For Companies, the intent is not essential, but rather establishing a definite rule against a particular behavior, which is important should the Company choose to prosecute.

Set up posters and other messages that can be seen and read daily to help reinforce the anti-theft message. 

Consistently enforce anti-theft policy at all levels of employees- terminations due to theft also help sets a precedent and reinforces the anti-theft message.

Management should know their responsibilities for setting an example, and their role in providing sound leads to the internal investigation department regarding possible culprits. 

Smaller businesses may not have an internal investigation department; however, a written plan can help outline what will begin an investigation and the person who will look into the issue.


B. Implement Employee Searches


Businesses do have the right to conduct a search if there is suspected theft. Such a request must be handled with sensitivity and be appropriate. 

There are human rights violations that can be an issue when handled incorrectly! Being consistent and clear will help avoid legal trouble. 

Bag checks are a common occurrence and should be accepted by employees who wish to work in a safe environment. 

When creating a search policy, it is important to outline what search means. For example, anything outside of the body like purses, briefcases, backpacks, sacks, and computer bags- there is no need to touch or frisk employees.

All employees, including management, should understand that there will be a circumstance that will require their bags to be checked. Make sure such circumstances are clear.

Searches should be done by someone with authority and/or training. If warranted, a security person should be on hand to stop all employees (including the president, owner, or other high-level management) and check what they are carrying. 

Employees may refuse the search, which is their right. It does not mean they have conducted a theft; it simply means they do not feel the policy is correct. Such a situation can escalate if not handled appropriately. 

Any refusal should be documented to establish a need for disciplinary action based on non-compliance. The refusing employee should be allowed to leave unless there is a compelling reason not to. Remember, they have a right to privacy.     

Clear steps and policies should be outlined for the instance when something is discovered on a search, such as company assets, narcotics, firearms, or others.


C. Setting up Controls


Make irregular policy checks to ensure procedures are being handled as written.

Have daily reviews in place for situations involving cash, such as deposits.

Set-up trash and dumpsters control; employees will place stolen items in the dumpster and come back for them after hours.

Accurate recording of all valuable assets (use serial numbers and place logs) should be taken. Always record, including date and time, an item like a laptop that has been stolen or is missing.

A well-implemented security system can give you total control of your environment. A system can allow you to restrict/ monitor access to sensitive areas and collect vital data that will be needed when a theft was to occur.


III. Investigating Possible Theft


Investigating employees for theft is very serious, no matter who conducts the investigation. Investigators should be done by management with training, or by an independent security company, or by a firm hired for such occurrences.


A. General Investigation Rules


As soon as a theft has occurred, begin an investigation needs to begin. 

All efforts must be documented. 

Any person interviewed, including the suspect, should sign a non-disclosure agreement in order to keep the investigation confidential. It is very important for those conducting the investigation to keep quiet even when others may not.

Evidence is paramount to any cause. All relative documents, witness statements, physical evidence, CCTV video evidence, and security logs must be collected.

Before using any tests, like a drug test or polygraph, it is important to ensure it is allowed by law and under what terms. Polygraphs are generally legal when a loss occurs. It is best to have police perform the polygraph to ensure it is conducted accordingly. 

Employees have the right to refuse to take part in the investigation. Such a refusal cannot lead to termination. 

Before making allegations make sure the entire investigation can support the claim. A CCTV system can provide tremendous support in such a situation.


B. Conducting Interviews


It is better to have a trained investigator interview witnesses and suspects; however, if that is not possible, there are two companies that offer training, which can be found at www.w-z.com and www.reid.com. The interviewer needs to be able to read body language as well as listen to what the person is or isn’t saying. 

Interviews do not need to have a witness present; however, female employees should be interviewed with a female present even if that person is just in the room and not a part of the interview.

Always go into an interview prepared with all the facts, documentation, and evidence.

Document the start and stop times of the interview, including any break or drink offered, even if they are refused. 

The employee should receive a document stating their acknowledgment of the interview and that they can leave at any time. It should be signed and kept on file.

The interview should be set up, allowing free access to the door for the employee and not blocked by the interviewer.

Always note the amount of time an interview takes. If a suspect has not admitted to anything in an hour, they are unlikely to do so in another hour. There is no standard, but in general, when an hour has gone by, more time on the interview is not going to help.

Recording the interview can be against the law unless it is made certain the person is aware of the recording and has given authorization. 

Always make certain to schedule interviews at reasonable hours.

Video evidence does not have to been shown unless the interviewer claims to have one.

Most employees are not going to admit to theft, stealing, lying, or intentional misappropriation. 

It is important to find out if the suspect was influenced by others, such as a supervisor they saw stealing or another employee. 

Get a written statement about the theft the employee committed. Have it included everything discussed in the interview, such as others involved, and make sure it provides as much information as possible, including times, dates, property, and circumstances.

Unless brought to the law or if law enforcement is conducting the interview, the Miranda Rights do not need to be read.


IV. Response to Proven Theft


Terminations due to theft should be clearly outlined. For some companies, there is a sliding scale depending on the intent behind the theft of what was stolen determines the harshness of the disciplinary action. However, not terminating for theft often sets a precedent that employees can get away with it, so policy should be based on these thoughts as well.


A. Suspension of an Employee Who Has Stolen


Suspension may be an option if the termination is not the first step. It is important to speak with legal counsel to determine what should occur if theft is proven. It is the legal counsel that will have to defend the Company should the employee bring up a civil suit. Most of the time, it is easier to terminate for violation of company policy rather than the actual theft because there is no intent required in this instance. 

When young adults are hired, parents may wish to know why their child was terminated. There are no rights whether the child is over 18 or considered a minor; however, the Company can use discretion to discuss the case. Before information is released, counsel should be consulted.


B. Going with Prosecution


Despite the percentage of employees who conduct theft, there are actually very few who will be prosecuted for it. Several reasons exist for why prosecution may not occur. A part of it is the lack of evidence for a prosecutor to take it to trial. However, a strong CCTV solution can help overcome this obstacle.

The prosecution may not be able to gain restitution for the Company depending on how much or what was stolen. It can be very costly to prosecute, so companies often look at the costs of trial versus letting the employee go. 

While it is dramatic to have the employee taken in handcuffs, it is better to have an organized case. When the case is well organized and documented, it can be turned over to a prosecutor. The prosecutor will decide if the case should be tried or if a plea bargain should be given.

There are instances where losing the case in criminal court can incite a civil lawsuit based on malicious prosecution, which is another consideration to make before taking on the prosecution.


C. Seeking Restitution


Restitution is possible for a prosecuted case. It may be civil restitution or full restitution of the assets. It depends on the state, the civil statute, and how the Company proceeds with the case. For example, damages might be up to $1,000 for adults and $5,000 against parents whose child stole. The value of the theft is usually irrelevant when it comes to restitution. 

It is best to speak with counsel to determine what is possible, and there should be a clear guide to policy and procedure if you will seek restitution for any thefts.

If prosecuting, restitution is up to the courts, and the amount is set up based on payment and length of time.

For cases that are not prosecuted, a written agreement with a promissory note should be created, such as giving the person one year of equal payments to make restitution for what they stole.

An employee may voluntarily give up vacation pay, profit sharing, final pay, and other monetary options they have as a way to pay back what they stole. If this is the case, documentation of their voluntary option must be created and notarized to ensure the employee cannot come back later and say something different. It is important to check with counsel and human resources before agreeing to this type of restitution.


V. Post-Theft Review


Once the matter is resolved, there is still work!

An After-action report is often where the post-investigation falls short. Such reports need to show the root cause, including what happened, why it was not caught earlier, and how it can be prevented in the future. Prevention will be successful, nearly 80% of the time, particularly when there are good policies and procedures put in place after a theft occurs. 

After the matter is resolved, employee interviews should be reviewed to determine how the theft occurred. All video collected by a CCTV system before and after the crime needs to be reviewed as well to help determine weakness and how to implement improvements for the employee theft prevention. 

With all the acquired information, a solution can be put in place to avoid the same theft from happening again. The safeguards you put in place should not hamper overall business practices as this can hurt the bottom line. 

Remember you want to set the correct precedents without leaving yourself open to civil action suits against you or your Company. This can only happen when you follow through with a proper policy and procedure on theft.

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