Issue: HR must walk a legal tightrope when employees are suspected of in-house theft.
Risk: A bungled theft investigation increases your organization's risk of being sued for slander or.
Action: Use the five-step plan below when faced with suspected employee theft.
Organizations spend lots of time and money shielding themselves against outside intruders, but they shouldn't overlook an equally (if not more) menacing threat: in-house thieves. U.S. employees steal more than $660 billion annually from their employers, according to the Association of Certified Fraud Examiners.
When your organization suspects an employee of theft, walk a careful line, balancing the rights of the employee while protecting the organization. Here are five tips to keep in mind:
1. Zip your lip until the investigation is complete. Warn all managers who are aware of the investigation to avoid making any accusations until the investigation is completed. Tell them not to discuss the case with other employees. The employee could use such accusations to later sue your organization for slander or libel.
2. Recommend hiring a security consultant to aid the investigation. Security firms can provide tools and techniques that can build a concrete case against an employee. Using an outside firm limits the potential for wrongful-termination claims.
3. Word termination reasoning carefully. Don't let managers tell anyone that he or she is being fired for "suspected theft" or even "theft." Instead, urge them to simply note the incident and cite how it violated a specific company policy.
Example: A manager sees an employee withdrawing cash from a petty-cash drawer. If the manager cites "stealing from the cash drawer" as the reason for termination, the employee may be able to argue in a wrongful-termination suit that he or she was unjustly accused because he or she was simply taking money to buy office supplies.
Instead, make clear that the employee was fired for "failing to follow written policy regarding obtaining permission to access the cash draw." Record the reason in the employee's personnel file. Remind managers, even after the employee leaves, not to discuss the termination details with other employees.
4. Encourage execs to file a police report. Too many businesses shy away from doing so because they fear negative publicity or the disruption of a police investigation.
Many also believe that reported cases go nowhere. Not true: In fact, 82 percent of employee theft cases referred to the police either end in guilty pleas or successful convictions, according to the Association of Certified Fraud Examiners.
Advice: Get tough on serious in-house theft. Failing to file a police report sends the message that nothing will happen if employees steal. Plus, it allows the person to commit similar crimes at another business.
5. Defuse reference-request land mines. Have reference requests for former employees terminated for theft, and, in fact, all ex-employees, directed to HR. Know your state's requirements regarding employer liability for reference checks.
In some states, a previous employer can be held liable if it doesn't warn the prospective employer about the employee's in-house crimes. On the flip side, in other states, employers can be held liable for disclosing negative information that's unsubstantiated. Best bet: Limit any disclosures to specific, documented violations of company policy.
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