Q. While a manager at one of our locations was on vacation, we performed an audit of her books and discovered that she had written unauthorized checks to herself totaling $25,000. We intend to confront her and terminate her. What else should we do?
A. First, handle the termination as you would any termination. Explain to her exactly why she is being terminated and document that explanation in her file. Also, be sure to keep a copy of the audit results.
Second, contact appropriate law enforcement (either municipal police or the sheriff’s department, depending upon where the misconduct took place) and fully cooperate with any ensuing investigation.
Embezzlement in North Carolina is a felony, and law enforcement is well-equipped to handle the investigation and hopefully will recover your property.
Do not, however, threaten the employee with criminal prosecution as a means to recover your property. Agreeing, in exchange for some payment, not to prosecute or inform on someone who has committed a felony is, in itself, a common-law misdemeanor in North Carolina.
Third, consider withholding funds from any pay owed the employee. You may do this, as long as:
- Criminal warrants have been issued, the employee has been indicted or the employee has been arrested.
- The employee’s pay for the relevant period does not fall below minimum wage.
Fourth, consider suing the employee. Different from criminal prosecution, a threat of civil suit may be used as a means to recover your property. It is often best, particularly at the civil lawsuit stage, to consult company counsel for guidance.
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