Handling Employee Theft

Q: I think an employee is stealing from me. What should I do?

A: While it's only natural to feel angry toward an employee who has betrayed your trust, you need to think twice before saying or doing something you may regret. "Five minutes of catharsis are not worth five years of litigation," says Judith Ann Moldover, an employment lawyer at Ford & Harrison LLP in New York City, "not to mention the possible loss of an innocent employee." So before you call the police and press charges, Moldover recommends taking a deep breath and putting a three-step action plan in place.

1. Investigate. Demonstrating that you launched a thorough investigation of the missing money and who was responsible for it will help protect you against any allegations of wrongful discharge, discrimination and other claims the employee might bring after termination.

2. Discipline. No matter how apologetic the employee may be for what he did, you need to terminate him immediately or the problems are likely to continue. "The disciplinary decision should be communicated in a closed-door meeting, preferably with another management person present," says Moldover.

3. Prevent it from happening again. Chances are that the employee who stole from you has stolen from other employers in the past. By conducting background checks on any new hires, you can often prevent a situation like this from happening again.