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Work Place Theft

Posted August 2018 by S. Ward Heinrichs

Work Place Theft

Statistics about work place theft show that employees regularly steel from employers. Work place theft can cause substantial losses. Some statistics indicate that employers lose more from employee theft than from non-employee theft.

Employee theft is a big problem because employees have much greater access than the general public to business cash, merchandise, internal books, bank accounts, credit card systems, etc. In essence, employee theft is an inside job.

Work place theft takes many forms. Some of the general categories are: Theft of cash, theft of merchandise, theft of time. Employees sometimes setup fake vendor accounts, make payments to those accounts, and then access the money paid to those fake vendors. Bookkeepers can stash money in hidden accounts and access the deposits. Money can be taken directly from cash registers, and, in some cases, a cashier can overcharge a customer to prevent the register from appearing to be unbalanced. Warehouse workers may work with little supervision around large quantities of merchandise. An employee can have a friend punch a time clock for him or her but not be present and working. Employees can take extended paid breaks or leave an unsupervised office to run personal errands. They can also do personal activities while on the clock, such as texting, searching the internet, or playing on social media. In bars and restaurants, I have heard that a bartender can bring in liquor from home and receive cash payment without even presenting a bill, or the bartender can draft a handwritten or other unofficial bill. When that happens, the business liquor stock remains the same, but the transaction is never officially tallied, allowing the bartender to keep the proceeds.

How can employers battle work place theft? Try one or more of these things to help prevent work place theft:
1. Set up cameras in key areas. In California, employers may use cameras to monitor employees in places where they have no reasonable expectation of privacy. For instance, employers should not put cameras in bathrooms.
2. Have independent outside investigators or accountants review company books.
3. Don’t let one employee control multiple aspects of money collection and book keeping.
4. Do not let employees work alone in places where they have access to sensitive information, cash, or merchandise.
5. Institute expense payment procedures that are reviewed by two or more people.
6. Set up a system for checking cash register balances. For instance, many retail stores require a cashier who begins a new shift to certify the register balance and have a manager sign off on it.
7. Consider only allowing the owner or top manager to sign checks and issues payments to vendors.
8. Randomly audit cash registers, financial information, receipts, and vendor payments.
9. Screen applicants carefully. Call their references and former employers. Do criminal background checks but be aware of Ban-the-Box rules in your state. For instance, California does not allow criminal background checks until the employer has extended an offer of employment. That requirement applies to employers who have at least  5 employees.
10. Have a reward system for employees who report theft.
11. Have a written discipline policy that addresses theft issues.

“Wage Theft” describes practices that employers use to under pay employees. Although not normally labeled “Work Place Theft”, many states have passed anti-wage theft laws. Acts of wage theft may include: off-the-clock work, not paying minimum wage, failure to pay overtime. 

All references to statistics are taken from: 7 Tips For Preventing Employee Theft In The Workplace, Kristin Eriksen, February 15, 2018

S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
858-292-0792
(858) 408-7543 (fax)

Employment Law Office of WARD HEINRICHS

4565 Ruffner St. Suite 207 San Diego 92111

858-292-0792

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