October 1, 2014

Employee Theft

Who's Minding the Store?

Barbara Miracle | 6/1/2005
Workplace theft takes many forms, from the executive putting extra charges on expense reports to the hourly worker lugging reams of copier paper home. "It's a huge problem," says Heather Gatley, executive vice president and general counsel for Alpha-Staff, a Boca Raton-based human resources outsourcing firm. Gatley cites the oft-quoted figure from the U.S. Chamber of Commerce that 75% of employees steal at least once and 50% steal more than once.

"Employers have always been reluctant to look for the problem -- especially in smaller companies. They don't have the resources," says Gatley. She also notes that small businesses frequently operate in a family-type atmosphere, and the owner may not want to question employees' actions.

Every business should take a few actions to protect itself:

Look at where the business is most vulnerable. Review the everyday procedures regarding managing inventory (it should be checked frequently) and bill paying, which should not be done by the person who is handling accounts receivable.

Limit check-signing authority. Only one or two people should be allowed to sign checks, and for checks above a certain amount, there should be two signatures required.

Don't have a credit card in the company's name. "Have cards in employees' own names and require a back-up reimbursement form," says Gatley.

Consider pre-employment screening. Gatley, a labor and employment lawyer by training, recommends screening for every employee. That may entail all or several of the following: Criminal background checks, credit checks, education and employment verification and drug tests. Background screening must comply with the Fair Credit Reporting Act.

Watch the small stuff. It may seem petty, but it adds up when employees grab a few bottles of water every day or borrow a USB computer cable that is never returned.

Put a policy in place. Let employees know what is expected of them, including what will happen if they are caught violating the policy.

TIP
If an employee steals from your business, DON'T withhold that amount from the person's paycheck. It is against the law. "In Florida and most states, there is an unpaid wages statute," say AlphaStaff General Counsel Heather Gatley.

FAST FACTS
Florida employers lose more than $13.2 billion to white-collar crime each year, according to the 2004 Florida Workforce Crime Report, a study by Florida State University professor Tim Lynch.

In the retail industry, 47% of inventory loss is because of employee theft, while 32% is because of shoplifting, 15% administrative and paper error and 6% vendor fraud, according to the University of Florida's 2003 National Retail Security Survey directed by Richard C. Hollinger.

Tags: Florida Small Business, Business Services, Entrepreneur

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