Employee Theft Prevention Guide - Statics

NEXLAR SECURITY’S GUIDE TO EMPLOYEE THEFT PREVENTION

The suggestions in this ebook are simply that. They are suggestions for creating a theft policy and procedure guidelines 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 regarding theft. Ensure you know how to proceed legally, and only then can you 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, or anything else of monetary value. Many times, trusted employees are the offenders. Clear policies and a proactive security system are 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 way. Even paying top-tier employees 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 proactive 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. They should also take the time to know 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 theft prevention, the Company’s Human Resources and Labor Attorney should review and ensure that such suggestions follow the local governing law.

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 and the disciplinary action that will be taken should they be found stealing.
• Define “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 part of the definition because, in legal terms, theft requires a specific proven intent. For companies, the purpose is not essential; instead, it establishes a definite rule against a particular behavior, which is necessary should the company choose to prosecute.
• Set up posters and other messages: These can be seen and read daily to reinforce the anti-theft message. Consistently enforce the anti-theft policy at all levels of employees—terminations due to theft also help set a precedent and reinforce the anti-theft message.
• Management responsibilities: 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 who will look into the issue.

B. Implement Employee Searches

• Conduct searches if there is suspected theft: Businesses have the right to search if there is suspected theft. Such a request must be handled with sensitivity and appropriateness. Some human rights violations can be an issue when mishandled! Being consistent and clear will help avoid legal trouble. Bag checks are standard and should be accepted by employees who wish to work in a safe environment. 
• Define “search policy”: When creating a search policy, it is essential to outline what search means. For example, there is no need to touch or frisk employees on anything outside of the body like purses, briefcases, backpacks, sacks, and computer bags. All employees, including management, should understand that there will be a circumstance requiring their bags to be checked. Make sure such circumstances are clear. 
• Proper authority for searches: 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 carry. 
• Handling refusal: 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 for discovered items: Clear steps and policies should be outlined when something is found during a search, such as company assets, narcotics, firearms, or others.

C. Setting up Controls

• Regular policy checks: Make irregular policy checks to ensure procedures are handled as written.
• Cash handling reviews: Have daily reviews in place for situations involving cash, such as deposits.
• Trash and dumpster control: Set up trash and dumpster control. Employees will place stolen items in the dumpster and come back for them after hours.
• Asset recording: 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.
• Security system implementation: A well-implemented security system can give you total control of your environment. It can allow you to restrict/monitor access to sensitive areas and collect vital data needed when a theft occurs.

III. Investigating Possible Theft

Investigating employees for theft is severe, no matter who conducts the investigation. Management should conduct investigations with training from an independent security company or a firm hired for such occurrences.

A. General Investigation Rules

General Investigation Rules

• Immediate investigation: An investigation must begin as soon as a theft occurs. All efforts must be documented. Any person interviewed, including the suspect, should sign a non-disclosure agreement to keep the investigation confidential. It is essential for those investigating to stay quiet even when others may not.
• Evidence collection: Evidence is paramount to any cause. All relative documents, witness statements, physical evidence, CCTV video evidence, and security logs must be collected.
• Legal tests: Before using any tests, like a drug test or polygraph, it is important to ensure they are 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.
• Solid allegations: Ensure the entire investigation supports the claim before making allegations. A CCTV system can provide tremendous support in such a situation.

B. Conducting Interviews

• Trained investigators: It is better to have a trained investigator interview witnesses and suspects; however, if that is not possible, two companies 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 and listen to what the person is or isn’t saying. 
• Documentation: Interviews do not need 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. 
• Record keeping: Document the start and stop times of the interview, including any break or drink offered, even if they are refused. Employees should receive a document stating their acknowledgment of the interview and that they can leave anytime. It should be signed and kept on file. 
• Non-coercive environment: The interview should be set up so that the employee has free access to the door and is 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 when an hour has passed, more time on the interview will not help. 
• Recording consent: Recording the interview can be against the law unless it is made sure the person is aware of the recording and has given authorization. Always make sure to schedule interviews at reasonable hours. Video evidence must not be shown unless the interviewer claims to have one. 
• Admission of guilt: Most employees will not admit to theft, stealing, lying, or intentional misappropriation. It is important to determine 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. 
• Legal considerations: Unless brought to the law or if law enforcement conducts 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, a sliding scale depends on the intent behind the theft of what was stolen, which determines the harshness of the disciplinary action. However, not terminating employees for theft often sets a precedent that employees can get away with, so policy should also be based on these thoughts.

A. Suspension of an Employee Who Has Stolen

Suspension may be an option if termination is not the first step. It is important to speak with legal counsel to determine what should occur if theft is proven. The legal counsel must 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 committing theft, very few will be prosecuted. Several reasons exist for why prosecution may not occur. One is the lack of evidence for a prosecutor to take it to trial. However, a strong CCTV solution can help overcome this obstacle.

Depending on the amount or nature of the theft, the prosecution may not be able to recover restitution for the Company. Prosecution can be very costly, so companies often consider trial costs rather than letting the employee go. 

While handcuffing the employee is dramatic, 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 whether the case should be tried or whether a plea bargain should be given.

In some instances, losing the case in criminal court can incite a civil lawsuit based on malicious prosecution, another consideration before taking on the trial.

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. If you seek restitution for any thefts, there should be a clear guide to policy and procedure.

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

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

Employees may voluntarily give up vacation pay, profit sharing, final pay, and other monetary options 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 return later and say something different. Checking with counsel and human resources before agreeing to this restitution is essential.

V. Post-Theft Review

Once the matter is resolved, there will still be work!

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

After resolving the matter, 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 examined to help determine weaknesses and how to implement improvements for employee theft prevention. 

With all the acquired information, a solution can be implemented to prevent the same theft from happening again. The safeguards you put in place should not hamper overall business practices, which 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 theft policy and procedure.