Addressing Employee Theft

Policies & procedures to protect your business

From stealing merchandise to inflating expenses, employee theft costs U.S. businesses billions of dollars every year. However, as evidenced by the recent lawsuit against Target, companies must proceed carefully when they address employee theft.

As detailed in the media, a Pasadena mother has filed a wrongful death suit against Target, alleging that the retailer’s handling of a suspected employee theft caused her son to commit suicide. She alleges that her son, 22-year-old Graham Gentles, who worked as a cashier, was handcuffed and “paraded” through the store in front of coworkers and customers, in what the suit calls a “walk of shame.” While he was taken into police custody, he was never charged. The suit maintains that the emotional trauma caused by the incident ultimately caused Gentles to take his own life.

The suit highlights the importance of having comprehensive employment policies and procedures in place to deter, detect, and investigate theft. Below are a few tips:

Accounting protocols

Many cases of employee theft are so-called “crimes of opportunity” that take advantage of lax company oversight. If your business has the proper accounting practices in place, it should be easy to detect employee theft as soon as it occurs. Examples include revolving accounting duties among staff members; regularly auditing bookkeeping records and inventory; limiting the amount of petty cash; reviewing bank statements monthly; requiring supporting documentation prior to disbursing funds; and never providing employees with blank checks.

Security measures

Businesses should also implement security measures that are designed to deter and detect theft. Examples can range from locking up check and deposit slips to installing security cameras in high-risk areas. Ultimately, the goal should be for employees to be aware that your company is actively monitoring for theft, without feeling like “big brother” is always watching.

Employee policies

Every business should have written policies in place that address employee dishonesty and theft. At minimum, the policy should expressly state that employee theft and dishonesty will not be tolerated; outline the type of conduct that will be considered theft, i.e. unauthorized use of company services or facilities or the taking of any company property for personal use; and set forth the potential consequences of violating the anti-theft policy, which may include suspension, termination, and prosecution.

Investigation safeguards

Employers should conduct theft investigations confidentially on a “need to know” basis until they have gathered all of the evidence. This not only helps ensure that you collect all of the pertinent facts prior to taking any action against the employee, but can also help avoid a defamation lawsuit if the suspicion turns out to be unfounded. Businesses should also have internal whistleblower procedures in place that encourage workers notify management about potential theft without fear of retaliation.

Legal action

Businesses should report employee thefts to the appropriate law enforcement agency, particularly if their policy states that workers who are caught stealing will be prosecuted. If such policies are not enforced uniformly, it may not only render them ineffective, but could result in a discrimination lawsuit. Companies may also pursue a civil suit to recover any financial losses associated with the theft.

Ramon Rivera is a partner at Scarinci Hollenbeck and chairs the firm’s labor & employment law group. He is a member of the executive committee of the section on Labor & Employment of the New Jersey State Bar Association. Ramon represents four of the largest school districts in NJ. Scarinci Hollenbeck is a full-service, general practice law firm that provides a broad range of legal services to a diverse group of clients. The firm has offices in Lyndhurst and Ocean, New Jersey and New York, New York. For more information on the firm, please visit the firm’s website at

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Meadowlands Magazine

Meadowlands Magazine

Meadowlands Magazine, the official publication of the Meadowlands Chamber and its affiliate organizations, has proudly served the business community of the Meadowlands region for over 40 years. We are among largest business magazine in New Jersey (second by circulation) and offer prime visibility opportunities for businesses to connect with potential customers.

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