What To Do If You Suspect an Employee is Stealing

Employee theft costs businesses a whopping $50 billion per year. Workplace theft can hurt a small business already struggling with cash flow, and unfortunately, the problem is more common than one would hope. What can a business do to minimize the theft risk?

How To Spot Employee Theft

Employee theft can be difficult to catch, since the perpetrators usually know your company’s procedures and vulnerabilities well. Here are some signs of employee theft to look out for:

Look For Common Warning Signs in the Workplace

Take an objective look at your workplace through the eyes of an employee. Look for possible vulnerabilities that could make it easy for someone to steal. Some things to watch out for include:

• Unlocked exits: If employees have fast access to enter and exit your business through unlocked doors (especially those without open/close sensors that emit a sound), it may be easier to walk out with your business property.
• Lack of security cameras (or blind spots): Cameras should be recording all areas around cash registers or where expensive items are kept to monitor any suspicious activity.
• Employee vehicles parked in a loading zone: Parking right at the exit door may make it easy to stash stolen merchandise in a vehicle and should be forbidden.
• A pattern of missing merchandise or supplies: All businesses should regularly perform inventory and supply counts to monitor for pilfering.

Monitor Employee Behavior

If you suspect your employees are responsible for a rise in missing cash or merchandise, the most effective way to determine what’s going on is by monitoring your employees’ behavior. Some behaviors to watch out for include:

• Frequent dumping of trash: Some individuals will hide stolen merchandise in a waste bin and frequently take the garbage out.
• Unusual working hours: Whether employees are coming in early or staying late, they should always be supervised.
• Poor work performance: Watch your employees for a decline in work performance or staff that appear apathetic or distracted. They may be disgruntled or distancing themselves.
• An unexplained close relationship with a supplier, team member, or customer: The more sophisticated workplace thieves may work with others to steal. They may be working in conjunction with a customer or coworker as part of a scheme.

What To Do If You Suspect Employee Theft

If you’ve identified possible culprits, it’s crucial to consult with legal counsel before taking any action. Accusing someone of theft without solid proof can land your business in hot water by exposing you to an employer lawsuit for violation of a contract or wrongful termination. For the time being, document the suspect incidences by:

• Making copies of surveillance camera footage that backs up your claim;
• Recording shortages in the cash register logs including specific dates and times;
• Confidentially interviewing other employees who may be witness to unusual activity;
• Hiring a security or forensic expert to investigate the crime professionally, if the case is serious;
• Making changes to your company’s procedure (if possible) to prevent the theft.

What To Avoid

Even if you have enough evidence to prove the employee is stealing, you should proceed with caution. Depending on your state’s business and employee laws, detaining or accusing an employee may be illegal and could result in the accused employee filing charges against your company for defamation or false accusations. Here’s what to avoid:

• Detaining or restraining the employee;
• Accusing or defaming the employee by calling them dishonest or a thief;
• Firing them without cause;
• Secretly recording conversations or activities;
• Telling other staff members about the employee’s tendency to steal.

Once you build a case file against the employee, it’s best to take them aside and interview them about the incidents in question. Do not accuse them of theft — ask them if they have any information about what happened to specific merchandise, or missing money. Document their answers as they respond. If they ask you if you think they are stealing, be careful how you reply. It’s better to state that you are currently gathering information on what happened to business property and are making no accusations.

For petty theft, you may give the employee a written warning. For more serious workplace theft, consult with your attorney for advice on how to properly terminate the employee, as well as what steps to take to file theft or fraud charges, if applicable. Depending on the amount of the loss from theft, you may be able to take the employee to a small claims court for reimbursement of the stolen items.

Polygraph Tests

The federal Employee Polygraph Protection Act forbids the use of lie detector tests in the workplace unless “certain employees of private firms are reasonably suspected of involvement in a workplace incident (theft, embezzlement, etc.).” To perform a polygraph test, you must give the employee written notice at least 48 hours before the test stating that they are suspected of theft (or embezzlement). Be sure to provide proof to show why you are investigating them.

Create Anti-Theft Policies and Procedures

Once you uncover the ways your business is vulnerable to theft, it’s important to update or create anti-theft policies and procedures. Some items you can include in your company’s procedures include:

• Requiring a criminal background check for all new hires;
• Requiring a manager to manually open the cash drawer if the employee has a valid reason;
• Asking two employees to be present when closing the register at the end of each day;
• Requiring a written report if the till doesn’t balance at the end of the day;
• Performing more frequent inventory and business supply counts to monitor for missing items;
• Having a log for when and who takes office supplies from the supply cabinet;
• Using clear trash bags in all bins to see the contents easier;
• Limiting who takes the trash, recycling boxes, and other items to the dumpster;
• Having a manager or supervisor do personal item and handbag checks for employees each time they leave the premise;
• Adding additional security layers to protect sensitive company data from breaches.