While on occasion we hear in New Hampshire and Massachusetts news of a bookkeeper who has embezzled money from a company, many such embezzlements are resolved by private restitution agreements and therefore do you get to the public eye. Theft by employees does occur in the workplace and employers should take steps to curtail the opportunity for employees to steal. For a small company, a basic step to prevent an employee with check-writing authority to write checks to themselves or for their own benefit and then falsify the check purpose in the accounting system as one that appears legitimate is to make sure that the bank account statements are mailed to the home address of one of the executives that does not have check-writing and signing authority. That executive would be responsible for reviewing the actual checks and investigating any discrepancies. If a check writing employee knows of this procedure she may be less likely to consider theft and if she still does she can be caught before a lot is stolen by her.
Another potential theft is of product or materials. Companies are allowed in New Hampshire to have hidden cameras with no audio in storerooms, warehouses, or other places where the expectation of privacy should not be had by the employee. In other words, you should not put a video camera in the bathroom or uniform changing room. As noted above, you cannot under New Hampshire law record someone with audio without their knowledge and therefore the video recording should not have any audio.
Theft of time is also grounds for firing an employee; whether they be hourly or salary. The employee could be off running personal errands or doing his second job while on the company time. For an hourly employee who had fraudulently reported their time worked to get paid for time they have not actually worked, depending on the level of that theft of hours, it is possible that law enforcement may be willing to take a look at it as a criminal action. However, for salaried employees, you are required to pay them for their full weekly salary for any hours that they worked so the salaried employee’s theft of time may only effect his claimed accrued but unused personal time off or vacation time which is still theft of time hurting the company. However, under both the hourly and salaried employees who have lied to you about their work hours, your company certainly has the ability to take a variety of disciplinary actions including, but not limited to firing the employee.
In New Hampshire you can legally terminate someone’s employment under the employee-at-will doctrine for such theft and it is even quite possible, depending on the circumstances, that the fired employee may not be able to receive unemployment compensation. However, the employer should consider: (i) what was stolen in that a few office supplies may be dealt with differently than hundreds or thousands of dollars of materials or a fraudulent check scheme; (ii) the cost of replacement of that employee if they are otherwise a good employer; (iii) the morale loss by the firing or retention in that a firing over a few pens may decrease morale wherein the retention of the embezzling bookkeeper that is a relative of the owner may also decrease morale; and (iv) the risk of a lawsuit by the employee claiming that the firing for theft was really a pretext for the firing due to a an illegal cause such as protected class or act in violation of state or federal statute. Before firing an employee, the company should speak with its employment counsel.
Depending on the type of employee theft, some companies may prefer, and the local police often encourage, private restitution agreements in lieu of a criminal prosecution. My experience is that law enforcement and the criminal justice system is better at retribution than restitution. A private restitution agreement might recover the company’s losses better than a criminal restitution order that takes place once the person is out of prison. While the employee who has stolen may to some extent be getting a windfall for avoiding jail time for their criminal activities, many of my clients are more interested in, once that employee is no longer working for them, recouping their losses rather than retribution. A private restitution agreement can therefore provide benefits to both the company and the former employee who embezzled from the company.
In summary, taking steps to decrease the opportunity for employees to steal is an important step in the financial security of your company. If there is such theft, speaking with your company’s employment counsel as to how best to handle that situation consistent with the company’s goals, whether it be retribution or restitution, is prudent.
J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].