Practical Ways to Reduce Workplace Theft

Workplace theft comes in many forms and is hard to stop, but employers can reduce it by taking a wide range of proactive steps, running surveillance as allowed by the law and conducting prompt investigations.

“Workplace theft ranges from office supplies under $100 to setting up false business transactions resulting in millions of dollars in losses and just about anything between,” said Teresa Hardymon, an attorney with Fisher Phillips in Columbus, Ohio.

Employees have been known to steal both physical assets and electronic information. Preventing and tracking the theft of data can be more difficult than stopping physical theft.

Employees typically take two categories of valuable and sensitive data: competitive information and personal information, said Zoe Argento, an attorney with Littler in Denver.

Competitive information could include customer contact lists. Personal information—such as employees’ Social Security numbers, health insurance numbers and financial account numbers—might be used for identity theft, she said. Employees also might sell this information on illicit trading websites for substantial amounts of money.

Or employees could take information to embarrass a co-worker or customer. “I’ve seen cases where furious employees posted health information about co-workers on social media to humiliate them,” Argento said.

The trickiest situations involve employees taking personal information—for example, protected health information about patients or employee safety information—to support a whistleblower complaint about the company, she said.

“Employees have a right to complain to authorities about safety and legal violations, but the company must protect personal information and prevent unauthorized disclosure,” Argento explained.

Proactive Steps

An effective compliance and ethics program is an important first step in combatting workplace theft. “This sets the standard and clarifies the company’s expectations regarding ethical behavior,” Hardymon said.

Effective auditing programs can pinpoint potential concerns and provide guidance on improving internal controls, she added.

“Another effective tool involves the use of data analytics to spot outliers,” Hardymon said. “This can be particularly useful when dealing with vast quantities of information.”

For example, when trying to identify “ghost employees”—nonexistent workers who have received paychecks funneled into scammers’  accounts—it may be helpful to use a data analytics program to cross-check employee bank account information. “Programs can quickly identify duplicate banking information shared by employees with different names, which may indicate possible ghost employees,” she said.

Other key proactive steps, according to Argento, include:

• Having employees sign confidentiality agreements that establish that retaining confidential information for unauthorized uses and after termination of employment breaches the contract and merits injunctive relief.
• Logging and monitoring access to databases containing valuable information by unique login credential to see who is accessing the databases and when.
• Logging and monitoring the download, transmission and printing of valuable information.
• Preventing the use of portable memory devices such as flash drives on company systems.
• Implementing data-loss-prevention software.

Access to valuable information should be provided only on a need-to-know basis, she said.

Surveillance

Surveillance is an important part of theft prevention, said Christopher Olmsted, an attorney with Ogletree Deakins in San Diego. “Employees are less likely to steal when they know they are being watched,” he said.

“For facilities where employers have experienced theft, employers should consider video surveillance in common areas,” Argento said.

But be mindful of employees’ expectations of privacy.

Surveillance can violate reasonable expectations of privacy if conducted without notice and, in some cases, consent. Employers typically should obtain consent before conducting audio surveillance or intercepting messages, she said.

“Even with notice, employers should not conduct video surveillance in bathrooms, changing areas and locker rooms,” Argento added. “Surveillance can also damage morale if too intrusive.”

Investigations

Once an alleged thief is caught, even if termination is a foregone conclusion, the employee should not be terminated during a first interview about the incident, Hardymon said. “It is far better to suspend the employee pending the completion and outcome of the investigation,” she said.

During the investigation, save interviewing the accused for later and interview witnesses first, recommended David Baron, an attorney with Seward & Kissel in New York City.

At the outset of any investigation into alleged theft, the accused employee should be made aware that participating in company investigations is mandatory, Hardymon said. “Provide them a written notice that refusal to cooperate may result in termination,” she said.

At least two people should be involved in investigating the incident and, ideally, at least one of them should not be personally acquainted with the accused employee, Hardymon added.

“All witnesses should provide handwritten statements of their own and the record of the investigation must also include the account of the accused employee,” she said. “If an employee admits to the theft, ask for a written confession. However, a written confession is still no substitute for a complete investigative file.”

If the signs point to theft but the evidence isn’t conclusive, an employer shouldn’t use terms like “theft” and “dishonesty” as the reason the employee was disciplined or terminated, Hardymon said. “If such terms are used, the company may be required to prove in court that the employee did, in fact, commit a crime,” she explained.

An employer should instead use language centering on the lack of trust in the employee, Hardymon recommended.

Law Enforcement Involvement

Reporting a theft to authorities is discretionary, but doing so often is a good idea for employers, Olmsted said.

“To begin with, if the loss is covered by insurance, the company may be obligated to file a police report in order to make an insurance claim,” he explained. “Moreover, involving law enforcement may be the best way to recover the missing property or funds.”

Law enforcement can conduct searches and potentially recover the property. In addition, restitution of money is often part of a plea arrangement in criminal court.

“Reporting criminal acts to law enforcement can create a strong deterrence to theft in the future,” Olmsted said.