What To Do If An Employee Steals From Your Company

As a business owner, one of the most difficult and frustrating things to deal with is an employee stealing from your company. Frequently, the discovery of such a betrayal strikes employers as a complete surprise. Other times, of course, the theft is discovered because the employer had a suspicion and was looking for it. Unfortunately, employee theft is more common than you might think. In this article, we will discuss what to do if an employee steals from your company, as well as reviewing some Texas laws on employee theft as well as some tips and tricks for preventing and detecting employee theft. Under Texas law, theft is a criminal offense that can be punished by imprisonment, fines, or both. Employee theft is generally not treated any differently than theft of other sorts. The severity of the crime/punishment depends on the value of the property stolen.

• If the value of the property stolen was $100 or less, the offense is a Class C misdemeanor. The allowable punishment is a $500 fine only (no jail time).
• If the amount stolen was between $100-$750, the offense is a Class B misdemeanor. The allowable punishment is up to 180 days in jail and a fine up to $2,000.
• If the amount stolen was between $750-$2,50, the offense is a Class A misdemeanor. The allowable punishment is up to 1 year of jail time and a fine up to $4,000.
• If the amount stolen was between $2,500-$30,000, the offense is a “state jail felony.” The allowable punishment is between 6 months – 2 years in state jail and a fine up to $10,000.
• If the amount stolen was between $30,000-$150,000, the offense is a third-degree felony. The allowable punishment is between 2-10 years imprisonment and a fine up to $10,000.
• If the amount stolen was between $150,000-$300,000, the offense is a second-degree felony. The allowable punishment is between 2-20 years imprisonment and a fine up to $10,000.
• If the amount stolen was $300,000 or more, the offense is a first-degree felony. The allowable punishment is prison time of 5 years to 99 years and a fine up to $10,000.

If an employee steals from your company, you have the right to report the theft to the police and ask that the police and prosecutors pursue criminal charges against the employee. However, depending upon the circumstances, it is possible that the prosecuting authorities may decline to prosecute the case, make a plea bargain with the alleged thief, or charge a lesser offense. Contrary to popular belief, it is not your decision on whether to “press charges.” However, in addition to reporting the theft to the criminal authorities, you may be able to sue the employee for damages on a civil basis, including the value of the stolen property, any losses you incurred as a result of the theft, and any legal fees you incurred in pursuing the case. Most likely, your cause of action against such an employee would be for conversion. Conversion is a common law tort that involves the wrongful exercise of dominion and control over someone else’s property. Conversion occurs when a person intentionally takes or uses someone else’s property without permission, depriving the owner of its use. Success on a suit for conversion requires the plaintiff to prove that they owned (or had a right to possess) the property, that the defendant wrongfully exercised dominion or control over the property, and that the plaintiff suffered damages as a result. Needless to say, in a case of employee theft, the elements of conversion are quite likely to be present. It is often said that an ounce of prevention is worth a pound of cure. That is certainly true when it comes to employee theft. Implementing a few common-sense protocols and procedures can drastically reduce the opportunity and incentive for an employee to steal.

1. Conduct Background Checks and Call References: One of the best ways to prevent employee theft is to conduct background checks before hiring, and call an employee’s references. This can help you identify candidates with a history of theft or financial problems.
2. Establish Clear Policies: Clearly communicate your company’s policies on theft, fraud, and embezzlement to your employees. Make sure your employees understand the consequences of violating these policies.
3. Restrict Access to Valuables: Limit access to cash, inventory, and other valuable items. Only give access to employees who need it to perform their job duties.
4. Implement Checks and Balances: Implement a system of checks and balances to prevent one person from having too much control over financial transactions or inventory management.
5. Monitor Inventory and Financial Records: Keep a close eye on inventory levels and financial records. Conduct regular audits and review surveillance footage.
6. Monitor Credit Card Statements: If any employees are given access to company credit cards, you should ensure that you strongly monitor your credit card statements.
7. Educate Employees: Educate your employees on the importance of integrity and honesty in the workplace. Encourage them to report any suspicious behavior.
8. Reward Good Behavior: Create a culture of honesty and integrity by rewarding employees who demonstrate ethical behavior.
9. Conduct Exit Interviews: Conduct exit interviews with employees who leave your company to learn more about their reasons for leaving and to identify any potential issues with theft or fraud.

Detecting employee theft can be difficult, as many employees are skilled at covering their tracks. However, there are some signs that can indicate that an employee is stealing from your company. These signs include:

1. Unexplained shortages in inventory or cash flow.
2. Missing or damaged inventory.
3. Increased purchases of expensive items by an employee.
4. Unusual or suspicious behavior, such as (unnecessarily) staying late or arriving early, taking very long breaks, refusing to take time off, etc.
5. Employees who are struggling financially or have a history of financial problems.

There are several other steps that you may consider implementing on an ongoing basis to detect future employee theft, including:

1. Regularly Monitor Inventory: Keep a close eye on inventory levels and conduct regular audits to identify any discrepancies. This will help you identify any theft or losses.
2. Periodically Analyze Financial Records: Analyze financial records regularly to detect any irregularities, such as unexplained transactions or unusual expenses. This can help you identify any fraudulent activity or theft.
3. Use Surveillance Cameras: Install surveillance cameras in areas where theft is likely to occur, such as cash registers, storage rooms, and inventory areas. This will help you monitor employee behavior and detect any suspicious activity.
4. Conduct Background Checks: Conduct background checks on new hires and monitor employees with access to cash or inventory. This can help you identify any previous history of theft or financial problems.
5. Encourage Employees to Speak Up: Encourage employees to report any suspicious activity or behavior. Establish a confidential reporting system to allow employees to report any theft or fraud without fear of retaliation.

If you discover that an employee has stolen from your company, you should take immediate action to protect your business. However, as tempting as it may be, it is important NOT to immediately confront the employee. Confronting the employee could cause the employee to destroy evidence before you can build your case; or, in the event that your suspicion is wrong, you will have falsely accused an innocent employee of theft. Start your investigation by consulting with your company attorney on a confidential basis. One good potential course of action is to conduct an internal investigation and collect evidence of the theft. This may include reviewing surveillance footage, conducting interviews with employees, and reviewing financial records. You may also conduct a financial analysis that may highlight any irregularities. After your investigations are concluded and you have consulted with counsel, there are a number of actions that you can take, including:

1. Terminating the employee’s employment.
2. Contacting law enforcement and reporting the theft.
3. Pursuing legal action against the employee.
4. Conducting a review of your internal controls and making changes to prevent future theft.
5. Educating your employees on the importance of honesty and integrity in the workplace.

Employee theft can have a significant impact on your business, but there are steps you can take to detect and prevent it. By understanding Texas laws related to employee theft and taking proactive steps to protect your business, you can reduce the risk of theft and minimize the impact if it does occur. If you suspect that an employee is stealing from your company, it is important to take action immediately to protect your business and pursue justice.