Four Things to Know About Employee Theft

Employee Theft social security card application

You may not think that your business has or will ever be a victim of theft by an employee, but the sad fact is that it happens more often than most of us would like to think. In fact, it’s often the most trusted employee who turns out to be the one stealing from your business. No matter what kind of theft you suspect has occurred in your business, taking the right action steps is imperative for a quick recovery.

#1. It’s Not Always Simple:

Employee theft is not always a clear-cut case of an employee taking something that they shouldn’t from your company, such as money or stock. There are several different ways in which an employee could be stealing from you, whether it’s somebody stealing office tools and equipment, a cashier putting their hand in the till, or an office worker falsifying numbers on a spreadsheet. The most common form of theft is known as ‘skimming’ and involves shortchanging customers and taking the difference for themselves, but there are a number of other fraudulent activities that your company could fall foul to. Be aware of fake payroll records, amended expenses, the creation of non-existent customers or suppliers, or employees stealing goods to sell fraudulently.

#2. Look Out for Warning Signs:

Fraud and theft within a business does not always manifest itself quickly, and in many cases, it can go on for several years undetected. That’s why it’s so important to be aware of the warning signs and to constantly have an eye out for them. All too often, cases of fraud will occur when you give an employee complete trust in a sensitive area of the business. Common signs to look out for include frequent changes in cash balances, inventory shortages, or more frequent complaints regarding missing items. Look out for any unexpected changes in employee behavior, particularly large financial purchases to which there is no good explanation.

#3. Taking Action:

If you feel that you have spotted enough signs that it is necessary to take action, the first step is to decide whether the investigation should be conducted internally or externally. An internal investigation will likely save you money, but on the other hand, external investigations are more likely to be conducted without bias. Whichever choice you go with, it’s essential to avoid jumping to conclusions; accusing an employee of stealing or fraud without clear evidence puts you at risk of legal action. Most of the time, digital records of fraud will be recoverable. You can find this evidence using digital analysis services such as

#4. Seek Legal Advice:

Regardless of whether or not any concrete evidence has been uncovered, it’s always a wise idea to seek legal advice in this situation. Do not accuse, discipline or fire an employee until you have first investigated, reviewed all of the evidence available, and consulted with a legal professional. It is down to you whether you want to press criminal charges or recover any losses in a small claims’ court. Deducting losses from the employee’s final pay can be tempting, but is best avoided.

Have you ever had to deal with employee theft or fraud? We’d love to hear from you in the comments.