How To Detect & Protect Your Company From Employee Theft

How To Deal With Employee Theft In Arizona

Discovering that a trusted employee is stealing from your business is sure to be an unsettling and disappointing experience. It’s common to want to look the other way or react with anger, but neither is the best response. An Avondale business attorney answers your questions on why and how employees steal, how to mitigate your losses, and how to prevent it from happening in the first place.

Arizona Employment Laws Against Employee Theft

What Are Common Means Of Employee Theft?

Perhaps the most obvious possible type of employee theft is when employees steal cash by pocketing loose bills at the cash register, or when they embezzle funds, which is the diversion of company funds to the employee. But money isn’t the only thing that gets stolen from businesses. Physical assets, which can range from notebooks to expensive products, are common targets of employee theft. Theft of data or intellectual property is also becoming increasingly common.

The actual means of theft can happen in a variety of ways, such as:

  • Stealing cash from the register
  • Using company credit cards for personal purchases
  • Stealing checks from the company, forging signatures, or using an authorized signatory to writing checks for personal use
  • Creating fictitious vendors or employees
  • Accepting benefits from clients or vendors in exchange for sales and contracts
  • Coercing subordinates
  • Stealing databases of client information or company copyrighted materials in order to sell to competitors or use in an unauthorized way

By discussing the situation with your Arizona intellectual property lawyer, you’ll often discover loopholes in your procedures or see warning signs that might have helped you determine the problem sooner.

Why Do Employees Steal?

Like all types of crime, employee theft requires motive and opportunity. Often, opportunity presents itself when business owners delegate financial operations to one or more employees without putting controls and procedures in place regarding bookkeeping, banking, or accounts receivable. This is an especially common mistake as the business grows and owners become less connected to day-to-day tasks within the business.

Motives for employee theft can range from a true financial need to a gambling addiction to feeling disrespected by upper management. Or employees may steal because they feel they were passed over for a promotion or simply because they enjoy the thrill.

How Can I Detect Employee Theft?

Often, there are warning signs that something is amiss. These signs can include:

  • Excessive personal spending
  • Employee who refuses to take a vacation, in hopes of preventing a replacement from discovering the theft
  • Employee repeatedly wanting to take work home or taking excessive overtime
  • Petty cash disappearing too quickly
  • Employee is having an unprofessionally close relationship with a vendor or is related to independent contractors who also work with you
  • Employee has control issues
  • Employee frequently discusses his or her financial problems

What Should I Do If An Employee Has Stolen From My Business?

The first step is to contact legal authorities and then an experienced Arizona intellectual property lawyer who can help guide an investigation and provide legal advice on how to handle the situation.

Especially for a long-time or trusted employee, it may feel appropriate to utilize disciplinary measures such as a written warning, probationary period, or requiring repayment of the theft. But failing to take appropriate action can impact the rest of your employees, sending a message that the theft was not taken seriously. You’ll also be giving the person an opportunity to steal from your company again.

Termination is almost always the only real choice for employee theft. In order to build a case for termination, you’ll want to partner with your Chandler business attorney to do the following:

  • Gather evidence of the crime. Video and digital evidence are ideal and provide strong testimony. A witness can be helpful.
  • Audit all computer files and technical records.
  • Save documents, computer files, and emails.
  • Maintain a chain of custody of the evidence to prevent tampering. Ask your attorney for advice on how to do this.

If you and your attorney perform interviews or any other investigation, it’s imperative to document everything. You’ll need this information for your police report and for your insurance company if you make a claim to recover your losses.

Your Tempe franchise lawyer will also help you with other facets of a theft that involves a franchise, such as the decision of whether to prosecute the employee. You’ll also receive guidance with the termination process and civil liability issues that can arise even if the theft is not prosecuted. In situations where the employee is a union member or subject to a collective bargaining agreement, there will be specialized considerations for a business owner to take into account.

Preventing Employee Theft In The Arizona Workplace

Working through the consequences of an employee theft can feel personally violating and be a challenging experience. Work with your trusted attorney to take measured steps in collecting evidence. But before you reach this point, it is better to take steps to prevent employee theft in the first place. In many cases, employee theft can be prevented with basic accounting controls, clear company policies, and by being attentive to details within your company. A knowledgeable business lawyer can help walk you through some of these issues.

Approach Employee Theft With a Trusted Business Attorney In Arizona

Dealing with employee theft is a difficult and multi-faceted experience that requires experienced legal counsel. Denton Peterson Dunn has the skills and knowledge it takes to protect your company and keep your business going in the right direction. Schedule your confidential consultation by contacting our office today!

Brad Denton, Business Lawyer
Denton Peterson Dunn

Mesa Location

1930 N Arboleda #200
Mesa, AZ 85213

Office: 480-325-9900
Email: [email protected]

Scottsdale Location

7272 E Indian School Rd #540-132
Scottsdale, AZ 85251

Phone: 480-325-9919
Email: [email protected]