March 15, 2019

5 Realistic Ways to Prevent Employee Theft

by Devin M. Spencer and David H. Thomas, Taft Stettinius & Hollister LLP

Employee theft is an unfortunate reality for businesses of all sizes. According to the National Federation of Independent Business, employees are 15 times more likely to steal from a business than a non-employee.

Prevention is the best way to protect your business. These five simple measures can help prevent employee theft:

1. Background Checks. Conduct pre-hire background checks, especially for anyone handling money, financial records or merchandise. Be sure to comply with all relevant federal, state and local laws, and be mindful of the Fair Credit Reporting Act’s requirements when conducting a background check or consumer report search through a third party business. Similarly, reference checks provide insight into a potential employee’s background.

2. Handbook Policies and Acknowledgment. Ensure your business has policies addressing confidentiality, company property, trade secrets and a zero-tolerance policy for employee theft. Employees should also sign an acknowledgment of these policies and be regularly reminded of the company’s policies.

3. Install Security Measures and Manage Inventory. Restrict access to financial records and confidential information to only those employees who need it, and consider a point of sale system to isolate and track individual employee transactions. Require periodic password changes and ensure security measures are regularly reviewed to prevent former employees from re-accessing information.

4. Prevent Time Theft. Time theft may occur through extended breaks, altered time cards or excessive personal time during working hours. Review employee time cards for accuracy and discrepancies. Consider time and attendance software for tracking working hours. When disputing working hours and an employee’s paycheck, be aware that wage and hour laws are complex and can create expensive liability if not complied with.

5. Reporting Methods. Provide realistic, easy ways for employees to report coworker theft or fraud. Employees may be reluctant to report coworker theft, so consider an anonymous or online reporting method.

By taking proactive action, you can help protect your business from workplace theft.

For questions or comments, please contact David H. Thomas, Esq., or Devin M. Spencer, Esq., at Taft Stettinius & Hollister LLP.


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