Employee Theft and Fraud in the Workplace: Legal Considerations

Employee theft ranges from pilfering merchandise off the shelves to stealing trade secrets from your computers. No matter what the form of theft or fraud, it affects your bottom line in one way or another. And yet employers who attempt to terminate or prosecute an offending employee are faced with pitfalls that could make them defendants in a wrongful termination lawsuit, among other unwanted situations.

Here’s a look at the various considerations of employee theft, as written by lawyers and law firms on JD Supra:

Common Mistakes When Terminating Employees For Theft, Part 1 (Fisher & Phillips LLP)

“Employers usually have no choice but to terminate employees who engage in dishonest or even suspicious behavior. But mistakes are sometimes made and you could find yourself not only facing a lawsuit, but finding that your mistakes created potential liability to an individual who stole from your company. In this issue, we’ll look at some common mistakes that have resulted in what should be unassailable terminations going south in court.” Read more »

Terminating Employees For Theft, Part 2 (Fisher & Phillips LLP)

“In [Part 1] we looked at some ideas about how to investigate, catch, and terminate employees who are stealing from the company. In this conclusion, we’ll talk about some ways to avoid – or at least lessen the possibility of – getting sued.” Read more »

Fraud in the Workplace (MSG)

“[E]mployee fraud costs businesses billions of dollars each year. Employee fraud is an ongoing, widespread and varied problem, one that comes in all sizes for all kinds of companies. It can significantly impact a company’s productivity and profitability. The reasons for fraud are not always obvious to the business owner or even their attorneys. However, what is obvious is that it is often overlooked, ignored, and even undetected.” Read more »

Navigating the Minefield Presented by Modern Employee Theft Claims  (Kevin O’Connor)

With the proliferation of computers in the modern-day workplace, employee theft of trade secrets and confidential data is commonplace. The way an employer handles the gathering of evidence in the aftermath is critical and can make or break a claim against the employee. This article discusses two statutes designed to hold employees accountable for their theft of data, and discusses the pitfalls awaiting the attorney who ventures into this area without a thorough understanding of the limitations under the applicable acts. Read more »

Big Brother, Big Implications: Creating an Employee Monitoring Policy Without Creating Additional Legal Liability (McNees Wallace & Nurick LLC)

“According to recent estimates, upwards of 90 percent of employers monitor employee workplace activity in some way or another. The appeal is obvious. When done properly, monitoring can help companies increase productivity and efficiency, protect assets and proprietary information, and identify and hopefully prevent harassing conduct, libel, employee theft, vandalism, hacking, and other inappropriate behavior. But when companies overstep permissible boundaries, their monitoring efforts can have severe legal and financial consequences. There are a substantial number of cases, including several recent decisions, where companies have learned the hard way that their right to monitor employees’ work activities has limits.” Read more »

Court-Sanctioned Employee Theft, or a Workable 7-Part Test to Resolve Employee Taking of Confidential Documents? (Kevin O’Connor)

“A close review of the [Quinlan v. Curtiss-Wright, 204 N.J. 239 (2010)decision shows that…Quinlan provides a workable, 7-part test to be applied in determining whether an employee’s theft of documents in the workplace can constitute protected activity under state employment statutes. The decision most certainly should prompt employers to closely analyze their workplace handbooks and be sure to keep close tabs on, and clearly mark and limit disclosure of, confidential data.” Read more »

EMPLOYERS BEWARE! Questioning an Employee Concerning Potential Misconduct May Lead to Claims of False Imprisonment (Lawrence Wilson)

“While false imprisonment in the civil context typically refers to the detention of a suspected shoplifter by a retail store manager or its in-house security personnel, actionable claims for false imprisonment may exist within the employer-employee relationship as well. And unlike the shoplifter scenario, false imprisonment in the employment context does not always pertain to suspected criminal conduct. For instance, an employee who is “detained” in a conference room and questioned regarding potential violations of company policy may have a claim for false imprisonment, depending on the circumstances of the detainment.” Read more »

Can You Rely on Your Corporate Computer Policies to Sue Ex-employees who Steal Company Data? (Nick Akerman)

“Two recent district court opinions add to the caselaw providing judicial guidance on how employers might update their corporate computer policies to be able to sue ex-employees for stealing company data based on the Computer Fraud and Abuse Act (“CFAA”), the federal computer crime statute. Title 18, U.S.C. §1030. This is a particularly significant problem when employees leave their current jobs to join competitors and attempt to gain an unfair advantage by stealing data from the company computers prior to their departure.” Read more »