As an employer, it’s up to you to provide the best, safest working environment in your company. However, some employees might take advantage of your kindness and finances by stealing money from you. That is why, in this article, you will learn how to manage an employee stealing money from an employer.
There is a right and wrong way of handling these situations, and you don’t want to make a mistake. I was a victim of employee theft, and when it happened, I didn’t know what to do or even where to start. So I decided to write an article on the topic and give you my five cents on employee theft. Please keep reading to learn all there is to know about employee theft, how to handle it, and how to make the best out of a bad situation.
What Is It Called When an Employee Steals Money from a Company?
When an employee steals corporate funds, it’s called embezzlement. It happens when a person intentionally misappropriates the employer’s physical or intellectual property. So whether they’re stealing the inventory, trade secrets, or anything else in-between, it all constitutes a crime.
Some cases are simple petty thefts that only happen once and are perpetrated by a single low-level employee. However, trusted senior employees can commit this crime as well, and even turn it into an elaborate scheme spanning for years.
What Can You Do If an Employee Steals from You?
How you handle employee theft typically depends on the impact it’s had on your business. Because there are so many layers to this problem, there’s no one-size-fits-all method for dealing with it. However, there are four steps each employer must take to ensure a proper resolution and make the most out of a bad situation.
Step 1: Conduct an Investigation
Before taking any serious action, make sure you’re sure and have proof of the employee committing theft. You can investigate the case by yourself or hire a PI to have a look into the situation. Once you’ve dotted the I’s and crossed the t’s, you can start planning your next steps.
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Step 2: Deal with the Employee
When you have sufficient proof that an employee has committed embezzlement, you’ll need to decide how to deal with them. You’ll have the choice of terminating or disciplining them in some way.
The punishment should be proportionate to the crime, and you could also consult a lawyer to get a second opinion. Also, if you think there’s a risk of a repeat offense, I would advise you to consider terminating the employee.
Whatever you do, make sure to go through official channels, such as lawyers and police. Trust me; I’ve made the mistake of settling with an employee on my own to lose credibility among the rest of my colleagues.
Step 3: File a Claim with Your Insurance Company
As I said, it’s essential to go through official channels in case of employee theft. So your next logical step would be to file a claim with your insurer. Luckily, you can always rely on employee dishonesty policies (also known as fidelity bonds) to protect you.
These policies cover you in case you suffer any financial loss due to an employee. That way, your insurance company will cover your loss in the face of an ongoing investigation.
Step 4: Go Through the Criminal Justice System
Every theft, no matter how significant or small, is an offense punishable by law. Consult your attorney about filing an official court complaint against the employee in question. Again, I cannot stress enough how important it is to do this, as each offender should go through this process.
Next, a court will decide on a suitable punishment for the employee. If the case stands, they’ll probably have to pay restitution and reimburse you for the money they stole. Also, in some cases, they might face jail time, but we will talk more about that soon. However, first, let’s discuss the four factors that must be present for an embezzlement charge to stand.
The 4 Factors of Embezzlement
1. A Fiduciary Relationship
Both parties must enter into the relationship with trust, good faith, mutual reliance, and responsibility. This factor is typically not difficult to prove in a court hearing, as employee-employer relationships should always be fiduciary.
2. The Money Has to Have Been Acquired Through the Relationship
You’ll have to prove that the employee has taken advantage of your relationship to steal from you. This factor could be more challenging to prove, as you have to show that the embezzlement didn’t happen differently.
3. Ownership
You’ll have to show that the employee has had the property of the money or transferred it to a third party. Ownership shouldn’t be too difficult to showcase in court, as it’s something you should know from the get-go.
4. Intent
Finally, proving that the embezzlement was intentional is an essential part of your suit. That might be trickier to determine, as the offender could claim the crime was committed in the spur of the moment, but your lawyer should be able to help you with this.
Can You Go to Jail for Employee Theft?
An embezzlement conviction carries with it anything from paying for restitution to jail time. Let’s break it down factor by a factor to see in which cases an employee can and can’t get jail time for stealing.
Property Value
The majority of employee theft laws come down to the monetary value of the stolen property. More often than not, a state will list a range of money and correspond it to a fine or jail sentence. When considering the value, there are three charges that an employee might face — petty, grand, and grand felony theft.
Petty Theft
Most states consider petty theft a misdemeanor and have a range dollar amount necessary to bring the charges. The amount, as well as possible penalties for the crime, vary from state to state.
If an employee is charged with petty theft, they could be made to pay the penalty or even serve jail time. The charge carries up to a year of jail time, but the period is typically not longer than six months.
Grand Theft
If the amount of stolen money exceeds the limits of petty theft, the employee will be charged with grand theft. Depending on other circumstances that we’ll discuss later and the prosecutor’s discretion, grand theft could either be a felony or a misdemeanor.
The difference between the two is in the jail sentence each carries. For example, if the charge is a misdemeanor grand theft, the employee faces a maximum one-year prison sentence. However, a felony conviction carries a minimum one-year sentence in state prison.
Grand Felony Theft
Grand felony theft is the most significant offense an employee can be charged with, so it typically involves a higher amount of money. Again, the sum in question varies between states, but the amount is always higher than in grand theft. As a grand felony theft charge is a more serious offense, it results in higher restitution, fines, and jail time.
Aggravating Factors
Most states will impose harsher penalties when the offender embezzles money from a particular type of person. For example, when someone steals from a protected class of people or if the thief is in a position of great trust. Also, if they’re taking from a disabled or older person, the charges will be more severe. By breaking the trust and stealing from a protected class, the offender will likely face harsher punishment.
If you want to learn more about the embezzlement laws of your state, you can check out this link. There, you’ll be able to find out what constitutes each offense, as well as what fine or jail time is applicable for your particular case.
However, keep in mind that prosecutors have some leeway when it comes to pressing charges. They’ll decide on the best course of action depending on all of these factors, as well as the accused’s criminal history.
Final Thoughts
Employee theft is an unpleasant experience for everyone involved. However, it’s still one that a lot of us go through during the course of running our business.
As I have already mentioned that I have fallen victim to embezzlement myself, this issue struck a chord with me. At the time, I felt betrayed and disappointed and couldn’t even think straight. So my goal with this article is to help shield you from the stress and save you time and money in the process. After reading this article, I hope you have a better idea of what steps to take in case of embezzlement.
If you have any other ideas or thoughts on how to manage an employee that’s stealing money, let me know in the comments. Also, share this article with your friends, family, and other business owners if you think it will come in handy for them in the future.
