What recourse does an employer have when an ex-employee steals?

Employee theft is an unpleasant reality in the workplace, but when the employee is still on the job, at least the employer can easily confront the worker. But what’s an employer to do if the theft is discovered after the employee leaves the job and moves out of state? Does the errant worker get off scot-free?

Not necessarily, but recovering the theft may not be easy. Recently, a group of attorneys was asked what to do about an employee who left the company a month earlier and moved to another state. The employer found out too late that she had been using one of the company gas cards for her personal use for the last nine months of her employment. The employer wanted to know if there’s any hope of recovering the money.

Options limited by employee’s departure

“It’s always startling to learn that an employee or former employee has committed fraud or stolen from your company,” Jason S. Ritchie, an attorney with Holland & Hart LLP in Billings, Montana, says, adding that because the theft wasn’t discovered until after the employee resigned, the employer can’t take actions such as imposing discipline or getting her to agree to pay back the gas money through payroll deductions.

Ritchie advises first sending the former employee a letter demanding that she repay the money to avoid further legal consequences. “Give a specific date by which she must make the payment so you can decide on your next course of action if she ignores the letter,” he says. “Have your attorney draft the demand letter to ensure compliance with all applicable laws.”

Getting “the Law” involved

If that approach doesn’t work, the employer has other options, one of which is to report the theft to police and have law enforcement prosecute her. Another option is to pursue a civil lawsuit. “This option will necessitate hiring an attorney to bring the case, and key players in your company will have to expend time and resources to gather evidence of the misconduct, such as the gas card bills and other financial records,” Ritchie says.

“In addition, even if you secure a court judgment against the former employee, you may have trouble collecting on it,” Ritchie says. “Consult with your legal counsel to discuss the situation and weigh all of your options.”

Will recovery be worth the effort?

Jason R. Mau, an attorney with Greener Burke Shoemaker Oberrecht, P.A. in Boise, Idaho, also says the employer has both criminal and civil options available. “If an agreement was signed when she was issued the company gas card, it will go a long way toward helping you prevail on any civil action,” he says.

But prevailing in court isn’t the only consideration. “In the end, many factors could affect your ultimate decision about which remedy you pursue,” Mau says. “On the one hand, you will want to send a message that employee theft will be dealt with harshly. On the other hand, you will need to take into consideration the likelihood of any recovery, the cost of litigation, and the type of information that may be disclosed in the course of litigation.”

Jason E. Starling, an attorney with Porter Wright Morris & Arthur LLP in Columbus, Ohio, points out that the employer shouldn’t deduct funds from the former employee’s final paycheck unless the employer has an agreement with the employee authorizing the deduction. “That agreement should be in writing and should clearly encompass this type of deduction,” he says.

Tips for dealing with theft

When employee theft is discovered, it’s often while the perpetrator is still employed—when the employer has more options. Bryan Cokeley, an attorney with Steptoe & Johnson PLLC in Charleston, West Virginia, wrote on the subject for the September 2013 issue of West Virginia Employment Law Letter.

Cokeley advises an employer planning to confront the suspected employee to first gather evidence. “There’s no rule that says you have to confront an employee before conducting an internal investigation,” he wrote. “Indeed, you would be foolish to run to an employee with your suspicions before checking out the facts.”

Cokeley also says to make sure to have a witness taking notes during the meeting with the suspected employee. “In the meeting, you have the option of stating the concern generally, laying out some of the evidence, or laying out all of the evidence,” he wrote. “One tactic, borrowed from the traffic cop, is, ‘Do you know why I have asked you to come to my office?’ In other words, you may be able to get the employee talking and obtain an admission ahead of the accusation.”

When theft is suspected, the employer needs to decide whether to handle the investigation in house or go with a private investigator. “A technique the private investigator can bring to the table is surveillance—either in person or with technology,” Cokeley wrote.

It’s important to make sure state laws regulating surveillance are adhered to. “Also, if you have a unionized shop, be aware that installing surveillance cameras, even to investigate theft, can be a mandatory subject of bargaining,” Cokeley wrote.

Also, keep notes. “Record how and when you first became aware of the issue,” Cokeley wrote. “If you received an anonymous tip, capture the substance of the tip. If appropriate, take and retain statements from the suspect’s coworkers. You may share with the employee the substance of the information you have gathered, but you need not give him your documentation.

Cokeley points out, though, that if the issue eventually turns into a lawsuit, all documentation may end up being turned over during the pretrial exchange of evidence.

Source: HR Hero Line