75% of employees have admitted to stealing from their employers. The trust between an employee and their employer is what keeps a company running smoothly. When employees steal from your business, it can cause financial devastation and a break in trust.
Not every employer understands employee theft laws and shoplifting laws. Knowing what qualifies as employee theft can help you take action and prevent future instances of theft.
These five employee theft laws will guide you through an employee theft event and help you to avoid huge financial losses.
1. The Danger of Time Theft
Time theft happens when an employee gets paid for hours they did not work. Companies that pay employees hourly are the most common victims of time theft. Time theft happens when an employee logs extra unworked hours, changes timekeeping data, or does not work while clocked in.
To stop employee theft, you need to catch them in the act. This is one of the hardest forms of employee theft to prove. If you fire an employee without solid proof, an employee can file a wrongful termination suit. HR managers can check for unauthorized overtime and monitor employee timestamps.
Buddy punching is when an employee clocks in or out for an employee that is not there. If HR notices employees clocking in at unscheduled times, you can use it as evidence.
How to Combat Time Theft
Paper timesheets are easy for employees to alter. Implementing a digital system can automatically prevent early clock-ins and outs. It can also easily combat buddy punching because digital systems can send employers discrepancy alerts.
Strong attendance policies can make it clear for employees when they are allowed to clock in or out. It also gives you a reliable enforcement method. Disciplining or firing employees who violate these policies can deter future time theft.
2. Employees Taking Supplies
If an employee takes supplies home without permission, this is a form of employee theft. The financial cost of stealing supplies can start small, but it can easily grow into a huge financial loss if it continues.
Employee Theft Solutions
Start by creating a system that identifies where items go. If an employee constantly needs new items, keep a record of what items they request. When a pattern appears, you can make a theft case.
Perform background checks and ask employees for theft prevention ideas. Knowing everything possible about your employees and making them feel included in the process can make them feel more at home.
Finally, create a clear policy for supply theft that all of your employees understand. Clear policies make it easy to hold employees accountable. Having employees sign the policy also verifies that employees have seen and read the policy.
3. Money Theft
Money theft happens when employees steal from registers, commit credit card fraud, or use fake checks. When working the register, your employee might take a few dollars here or there. They might falsify data when recording closing or opening the register.
The danger of money theft is you are immediately losing profits. If they are committing credit card fraud, it can put the identity of your customers at risk. When customers feel their finances are at risk, they are less likely to shop with your business.
How to Prevent Employee Theft
The biggest way is using a point of sale system that requires employees to log in and out while using the register. This will give you a record of every employee that used the system throughout the day. If you notice the money going missing on days that have the same person working, it gives you someone to look into.
Installing a camera that can see the register is another way to stop theft. A camera can provide instant proof.
Creating a strong relationship with your employees is one of the key employee theft solutions. When employees feel at ease talking to you, they are more likely to report suspicious activity. Catering an employee's work life to the employee can make them feel more comfortable at work and less likely to commit theft.
4. Merchandise Theft and Shoplifting
U.S. businesses lose $50 billion a year to employee theft. Employee shoplifting happens when employees steal merchandise for sale. No one knows your store better than your employees, so they can easily steal merchandise more effectively than a traditional shoplifter.
There are different forms of employee merchandise theft. Employees buying products with their employee discount and reselling them is a common problem for clothing retailers. Traditional theft and purposefully not ringing up items correctly are other ways merchandise theft happens.
This loses your business money because products that customers need won't be available to them. You will also need to purchase replacement merchandise.
Shoplifting Solutions
Shoplifting protections in place for customers who steal can be elevated by solutions combating employee theft. Adding more cameras to your store can make catching theft easier. It also acts as immediate proof.
One of the easiest ways for employees to steal merchandise is with trash removal. They can hide products in the disposal area and pick them up before they go home.
To prevent this from happening, assign designated trash times or have employees take out the trash in pairs. Monitoring who is taking the trash out, and when, can create a record in the event that merchandise is stolen. Another method is only allowing managers to access trash areas so an employee is always with an authority figure.
Limiting the number of part-time employees you accept can also combat theft. Some part-time employees will work at a store for a discount. To prevent discount abuse, limit the number of employees working for you to only what you need.
You also need to improve your inventory management systems. Keeping an accurate inventory can make theft even more obvious.
5. Illegally Sharing Company Information
The theft of confidential information law protects private information from both companies and customers from theft. The Uniform Trade Secrets Act protects trade secrets. When data is stolen by either employees or outside criminals, a business can file lawsuits.
Knowing if an employee shared customer or company information can be easy to spot. Social media and news networks both look for sources. Records of what information employees have access to can also lead you to which employee shared information.
Combating Illegally Sharing Information
When this form of theft happens, it can lead to termination and lawsuits. Severe cases can lead to a criminal trial.
One of the best ways to combat illegal information sharing is having firewalls and detailed log-in practices in place. Creating a secure network that keeps records of employee usage will be a clear guide to who has access to what. This method also prevents lower-level employees from accessing trade secrets.
A strong point of sale solution can also monitor who is using equipment and when. You can use this point of sale system to assign each employee their own permissions, which means they only see what you allow them to. This can be more affordable, just as safe, and easier to use than high-level security systems.
Having employees sign a nondisclosure agreement or general contract that prevents sharing of information is another solution. Signed documents act as legal, binding paperwork that your employees will not want to break.
Use Employee Theft Laws and Shoplifting Laws to Protect Your Business
Employee theft laws and shoplifting laws are created to protect business owners. Many forms of theft end simply by terminating the employee, but others require legal action. Taking action can help prevent theft before it happens.
The biggest way to combat theft is by implementing a reliable point of sale system. POS Nation is a modern, up-to-date point of sale system that is fully customizable. You can create a more secure transaction process for your employees and protect your business.
Schedule a demo today to modernize your point of sale system and keep your business running.
