investigate

The term “theft” can be used to describe a wide range of activities employees can commit. Employers themselves can be the victims in cases where an employee steals merchandise or money, but employees also have opportunities to steal from customers, whether by taking credit card information or shorting them on change.

Most employers assume that discharging an employee for a proven theft would involve little risk of a claim being made by the employee against the employer. The reality is quite the opposite.

Because of the seriousness of the allegation, employees discharged for theft often bring wrongful discharge claims. The likelihood of claim increases significantly if authorities are involved and charges against the employee are dismissed. As such, employers need to exercise special caution in such cases, and they must plan and execute investigations designed to stand up to any later wrongful discharge claims. The following guidelines will assist employers in this process.

The Investigation

In virtually every employment lawsuit arising from a termination for wrongdoing, the first step of the termination process — the investigation — becomes the most critical when scrutinized in front of a jury. The investigation is even more important when theft is involved.

An allegation of theft is a powerful accusation and one that should never be taken lightly. While ordinarily you bear no burden of proof at trial, the jury will often look to you to prove theft beyond a reasonable doubt. Thus, the employee’s first tack in a trial will be to attack the quality of your investigation.

The Appropriate People Should Conduct the Investigation

At least two individuals should be involved and, optimally, one should not be personally acquainted with the subject. This will help avoid claims that the allegation was trumped-up against an employee by a hostile or biased investigator.

Make Sure the Accused Tells Their Tale

You must allow any employee being investigated to tell their story, and you must include the account in your record of the investigation. Otherwise, a jury may think the employee was railroaded.

Follow Your Own Internal Policies

If your company has a protocol for investigations, it must be followed to the letter. Juries demand that employers follow written procedures. Failure to do so can serve as evidence of pretext, a justification for a course of action that is found to be false. This could defeat your efforts at winning the case on written motions rather than going all the way to trial.

Make Sure Your Witnesses Provide Their Own Testimony

It is important for witnesses to write their statements in their own handwriting and using their own words. Nothing undermines the credibility of a witness faster than when they don’t understand the meaning of words used in “their” written statement when testifying on the stand.

Preserve Records and Recordings

Even if you obtain a written confession of theft, it will be no substitute for a complete investigative file. When a written confession is the only evidence, employees will claim the confession was coerced and/or they were told they would not be reported if they agreed to sign it. Your investigator must organize and store all the records of the investigation for future use. Nothing should be destroyed.

If you plan to use business records or recordings that are ordinarily destroyed in accordance with your company’s record retention and destruction protocol, they must be moved from their usual location and preserved. Just as video footage of an employee pocketing a $20 bill is solid gold in a court, not having that video footage is solid gold for the plaintiff in an employment trial. If the video is missing, no explanation will overcome a jury’s assumption that you did not want them to see the video for some nefarious reason.

Likewise, if an investigator reviews evidence, such as financial reports, stored on a computer, they should create copies of these records to be included in the investigation file.

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Problems to Avoid

Listening Devices

Hiding baby monitors or other electronic listening devices in break rooms to try to catch employees talking about stealing is likely illegal under federal anti-wiretapping laws and state privacy statutes.

Trapping the Employee

Do not prevent an employee from leaving an interview and do not block their access to the exit. Doing so could lead to a false imprisonment claim and make it appear a confession was coerced.

Unauthorized Searches

Digging through an employee’s purse or other personal belongings looking for stolen merchandise without consent to search could generate an invasion of privacy claim.

Lie Detectors

Using a lie detector during an investigation of monetary loss could open you up to legal claims, given strict federal regulations on the subject.

The Termination Meeting

The termination meeting should not be the first time the accused is informed they are suspected of malfeasance. However, even if you have done some legwork into the matter and feel you have a rock-solid case before talking with the suspected thief, you should carefully consider your plan for carrying out the disciplinary action.

Consider a ‘Suspension Pending Investigation’

Regardless of any benefit to keeping the employee in the dark about your suspicion while you conduct a covert investigation, and even if termination is essentially a foregone conclusion at the time of your interview with the accused, you should hold off on making a termination decision and communicating that sort of message during that first interview.

It is far better to suspend the employee pending the outcome of the investigation. Many times, the employee will not return for a follow-up meeting and can be terminated as having abandoned their job. There are far fewer facts to argue when an employee is terminated on these grounds.

Your Words Matter

How the termination meeting is to be conducted depends heavily on the strength of your evidence. If all the signs point to theft but you don’t necessarily have anything conclusive, you should not use terms like “theft,” “dishonesty,” or even “suspicion of theft” as reasons the employee is being terminated. This does not mean you cannot terminate the employee, but accusing an individual of a crime is per se defamatory in many jurisdictions, and you may be required to prove in court that the employee did, in fact, commit a crime.

Language centering on your lack of trust in the employee — “we are terminating you because we have lost confidence in your ability to perform your job up to our expectations” — is much less likely to be considered defamatory.

Focus On Your Policies, Not the Criminal Code

Another way to couch your justification for termination if you are less than 100 percent certain of the employee’s guilt is to cite a violation of your company policies and not any allegation of criminal wrongdoing. In this scenario, you should tell the employee you have not reached a conclusion as to their culpability for a crime, but you are terminating them because proper company procedures were not followed.

While employers can make an effort to reduce employee theft, eliminating it entirely is an impossibility. By following these guidelines when investigating, employers can greatly diminish the risk that the insult of an expensive lawsuit will be added to the injury of theft.

This article is for informational purposes only and does not constitute legal advice.

Ed Harold is regional managing partner of Fisher Phillips‘s New Orleans office and chair of the firm’s Retail Industry Practice Group. You can contact him at EHarold@fisherphillips.com or 504-522-3303.

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