How to Take Legal Action Against Employee Theft? Protecting Your Business in California

legal action against employee theft

Employee theft can be a devastating blow to any business, both financially and emotionally. Discovering that someone you trusted has been stealing from your company can feel like a betrayal, leaving you wondering how to proceed and what legal actions are available to you. If you find yourself in this unfortunate situation, it’s crucial to understand your rights and the steps you can take to address the issue effectively.

What Constitutes Employee Theft?

Employee theft encompasses a wide range of activities, from embezzlement and misappropriation of funds to theft of company property or confidential information. It consider as a serious crime and it can manifest in various forms, including:

  1. Embezzlement: Diverting funds or assets for personal use.

  2. Fraudulent Activities: Manipulating financial records, submitting false expenses, or forging checks.

  3. Misuse of Company Resources: Unauthorized use of company credit cards, vehicles, or equipment.

  4. Theft of Intellectual Property: Employee stealing trade secrets, customer lists, or proprietary information.

  5. Inventory Theft: Pilfering goods or supplies from the workplace.

  6. Disclosure of confidential information: Sharing sensitive company data with unauthorized individuals.

What To Do If An Employee Steals From Your Company?

Discovering that an employee has stolen from your company can be distressing and overwhelming. However, it’s crucial to respond swiftly and strategically to mitigate damages and pursue justice. Here are the essential steps to take:

  1. Review Financial Records: Conduct a thorough review of financial records, including bank statements, invoices, and transaction logs, to gather evidence of theft.

  2. Conduct a Thorough Investigation: Initiate an internal investigation to gather evidence, interview relevant parties, and document findings. Consider involving forensic accountants or legal experts to ensure a comprehensive assessment.

  3. Consult with an Employment Lawyer: Seek legal guidance from an experienced employment lawyer specializing in theft cases. They can provide valuable advice on your rights, obligations, and the best course of action to take.

  4. File a Police Report: If criminal activity is suspected, file a police report to initiate a formal investigation. Provide law enforcement authorities with all available evidence and cooperate fully throughout the process.

  5. Press Charges: Depending on the severity of the theft and the evidence gathered, you may choose to press criminal charges against the employee. Your attorney can guide you through the legal proceedings and represent your interests in court.

  6. Protect Confidential Information: Take measures to protect your company’s confidential information and prevent further unauthorized access. Change passwords, restrict access to sensitive data, and implement additional security measures as needed.

California Laws on Employee Theft

In California, employee theft is governed by state laws that outline the rights and responsibilities of both employers and employees in cases of theft or fraud. Key provisions include:

  1. Embezzlement Laws: California Penal Code defines embezzlement as the fraudulent appropriation of property by a person to whom it has been entrusted. Depending on the value of the stolen property, embezzlement can be charged as a misdemeanor or felony.

  2. Civil Remedies: Employers may pursue civil remedies against employees who engage in theft, including seeking restitution for damages incurred. Civil lawsuits can be filed independently or in conjunction with criminal proceedings.

  3. Labor Code Violations: Employers must comply with California Labor Code provisions when taking disciplinary action against employees suspected of theft. This includes providing notice and conducting fair investigations to avoid potential wrongful termination claims.

Detecting Employee Theft

Detecting employee theft requires a combination of vigilance, data analysis, and effective internal controls. Employers can implement the following strategies to identify suspicious activities:

  1. Regular Audits: Conduct regular audits of financial records, inventory, and other critical areas to detect discrepancies or irregularities.

  2. Monitor Inventory: Keep a close eye on inventory levels and compare them to sales records to identify potential theft or shrinkage.

  3. Review Cash Register Transactions: Analyze cash register transactions for voids, refunds, or unauthorized discounts that may indicate theft.

  4. Reviewing Financial Records: Scrutinize financial statements, bank reconciliations, and expense reports for any anomalies or unauthorized transactions.

  5. Employee Behavior: Pay attention to changes in employee behavior, such as sudden displays of wealth or lifestyle changes that may be indicative of theft.

Discovering that an employee has committed theft can be a distressing experience for any employer. However, knowing your legal options is crucial for taking the appropriate steps to address the situation. Here’s a concise overview of the legal actions available:

  1. Civil Lawsuits: Employers can file civil lawsuits to recover financial damages caused by theft, seeking repayment for stolen assets, legal expenses, and other losses.

  2. Criminal Charges: Employers can report theft to law enforcement and pursue criminal charges, potentially leading to fines, probation, or imprisonment for the employee.

  3. Restitution Orders: If convicted, courts may order employees to pay restitution to the employer for stolen property or funds, enforced through wage garnishment or other means.

  4. Termination of Employment: Employers have the right to terminate employees caught stealing, ensuring actions comply with laws against discrimination or retaliation.

  5. Civil Recovery Programs: Employers may participate in civil recovery programs to seek restitution outside the criminal justice system through civil penalties or settlements.

Penalties for Employee Theft

The penalties for employee theft in California vary depending on the nature and severity of the criminal offense. In cases where criminal charges are pursued, convicted employees may face the following consequences:

  1. Fines: Individuals convicted of theft may be ordered to pay fines, restitution, or other financial penalties to compensate the employer for losses incurred.

  2. Probation: Some offenders may be sentenced to probation instead of jail time, during which they must adhere to specific conditions, such as regular check-ins with a probation officer or completing community service.

  3. Jail Time: For more serious offenses or repeat offenders, jail time may be imposed as part of the sentence. The duration of incarceration will vary depending on the circumstances of the case and applicable sentencing guidelines.

  4. Criminal Record: A conviction for theft can result in a permanent criminal record, which can have long-term consequences for employment, housing, and other aspects of life.

Additional Consequences of Employee Theft

In addition to legal penalties, employee theft can have far-reaching consequences for both the employer and the employee involved. These may include:

  1. Damage to Reputation: Theft allegations can tarnish an employee’s reputation and credibility, making it difficult for them to secure future employment or rebuild trust within the community.

  2. Loss of Employment: Employees found guilty of theft are likely to face termination of employment, which can impact their financial stability and career prospects.

  3. Civil Lawsuits: Employers may pursue civil lawsuits against employees to recover damages caused by theft, including lost profits, investigative costs, and attorney fees.

  4. Personal Relationships: Theft allegations can strain personal relationships and lead to alienation from friends, family, and colleagues.

  5. Psychological Impact: The stress and stigma associated with being accused of theft can have a significant psychological impact on the accused employee, leading to anxiety, depression, and other mental health issues.

Preventing Employee Theft

Preventing employee theft requires a proactive approach and the implementation of effective policies and procedures. Some steps that employers can take to prevent employee theft include:

  1. Conducting Background Checks: Before hiring employees, conduct thorough background checks to screen for any past criminal behavior or financial issues.

  2. Implementing Internal Controls: Implement internal controls and procedures to monitor financial transactions and prevent unauthorized access to company funds or property.

  3. Encouraging Ethical Behavior: Foster a culture of honesty and integrity in the workplace by encourage employees through ethical behavior and providing training on the importance of honesty and integrity.

  4. Monitoring Inventory: Regularly monitor inventory and conduct audits to identify any discrepancies or signs of theft.

  5. Limiting Access: Limit access to sensitive areas of the workplace, such as cash registers or financial records, to only authorized employees.

The Role of an Attorney in Addressing Employee Theft

When faced with allegations of employee theft, the guidance and support of a skilled attorney can make all the difference. Attorneys bring expertise in employment law to assist employers through every step of the process, ensuring their rights are protected and the matter is resolved effectively. Here’s how an attorney can assist:

  1. Legal Guidance: Attorneys provide expert legal advice to navigate employer rights and legal options for addressing theft allegations effectively.

  2. Investigation Assistance: They aid in thorough evidence gathering and navigating legal hurdles during investigations into alleged theft.

  3. Review of Policies and Procedures: Attorneys ensure company policies comply with laws and recommend enhancements to prevent future theft incidents.

  4. Representation in Legal Proceedings: They advocate for employers in negotiations, mediations, or litigations to protect rights and secure favorable outcomes.

  5. Assistance with Criminal Charges: Attorneys provide legal representation and minimize negative consequences if criminal charges are filed against an employee.

  6. Protection Against Defamation Claims: They help mitigate risks of defamation lawsuits stemming from false or an unsubstantiated theft accusation.

  7. Advice on Settlements and Plea Bargains: Attorneys offer counsel on settling with employees or negotiating plea bargains, ensuring optimal outcomes for the employer.

legal action against employee theft

Protect Your Business Today with BLG

Employee theft can have serious consequences for businesses in California, both financially and legally. However, by understanding their rights and taking appropriate action, employers can effectively address instances of theft and protect their businesses. From gathering evidence and conducting thorough investigations to consulting with employment lawyers and implementing preventative measures, there are steps that employers can take to address employee theft and mitigate the risk of future incidents.

Are you facing the daunting challenge of employee theft? BLG is here to guide you through every step of the process, from gathering evidence to taking legal action. Our experienced team of attorneys specializes in protecting businesses like yours from the devastating effects of employee theft.

Contact us today for a free consultation.

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