Insureon Blog

Beyond Discrimination: Dealing with Employee Theft

23. June 2014 08:45

Man and woman in meeting behind glass

As your business begins to grow and you start adding to your workforce, your business risks will inevitably increase – including your risk of employee theft. Have you ever suspected that an employee was stealing from your business? What would you do if you did? Immediately fire the suspect? Not so fast.

Navigating employee theft requires nuance. After all, allegations like this could result in a workplace discrimination claim – especially if the employee in question is part of a protected class.

This week, we’ve been discussing the issue of illegal employment discrimination and harassment. We’ve also explored why small businesses should follow the Equal Employment Opportunity Commission’s guidelines and regulations, even when if their operations fall outside the jurisdiction of the law.

(Need a refresher? See: “Harassment, Bullying, and Discrimination in the Workplace.”)

Mishandling an employee theft situation could prompt discrimination allegations against your business. Read on to learn more about how you can deal with employee theft and avoid a costly discrimination suit.

Employee Theft: Expect It

According to a CBS investigative report, most businesses lose about 5 percent of their revenue to employee theft. The article goes on to include these unfortunate statistics:

The takeaway? Expect employee theft. The problem is, employee theft is often hard to identify. The workers who are bold enough to skim from your bottom line are often savvy enough to fly under the radar. Most of the time, employee theft is only caught because of some small discrepancy or because someone followed a hunch. Many cases of employee theft aren’t caught until it’s too late.

What to Do When You Expect Employee Theft

It’s estimated that about one-third of all new businesses end up shutting their doors on account of employee theft. But what does employee theft look like? Take a look:

But when you suspect employee theft, you must take the proper steps to ensure that the tables aren’t turned. If you accuse an innocent employee of theft and that employee is a member of a protected class (women, minorities, the disabled, religious groups, and workers over the age of 40), they could accuse you of workplace discrimination. Here’s what you need to do:

To Terminate or Not to Terminate?

By this point, you either will or won’t have evidence to support your case. If you don’t have evidence, it may be risky to fire an employee – even though you have the right to do so. In most states, you don’t have to provide a reason for the termination of at-will employees.

But an employee could still feel that they were treated unfairly, especially if they are a member of a protected class, ill, or pregnant at the time of the firing. In that case, they could sue your business and win. This is more likely when:

To learn more about how you can dismiss employees and protect yourself from discrimination lawsuits, read “The Small Business Guide to Avoiding Discrimination Charges when Firing Employees.”

Small Business Insurance Policies to Protect You from Employee Theft

There are certain small business insurance policies that may be able to help you shoulder the financial burden of employee theft. Some employers may look into what’s called “Employee Dishonesty Insurance,” which reimburses you when employees steal money, securities, or property. However, this coverage isn’t available to all industries.

You can also purchase Employment Practices Liability Insurance, which pays for the cost of discrimination and harassment lawsuits. For more information, read “What Is Employment Practices Liability Insurance (EPLI)?

This post is part of an ongoing series on Employment Practices Liability Insurance, the high cost of employment discrimination lawsuits, and EEOC laws. Stay tuned for more on what can go wrong when hiring (and firing) employees.

know your business risks


EPLI | Errors & Omissions | Errors and Omissions Insurance | Risk Management | Small Business | Small Business Risk Management | Tips for All Small Businesses

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