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Private Investigation Blog

Employee Theft Statistics

An estimated 50 billion dollars is lost every year from businesses in the US due to employee theft. Approximately one-third of employees have committed some kind of employee theft, and about half of them will steal from that same employer again. Even small businesses are not immune.

What Counts as Employee Theft?

The definition of employee theft is the use of the employer’s assets without permission. The most common type of employee theft is the theft of wages. Employees will write down hours they did not work on their timecards, and thus receive payment for those hours unless they are caught. Employees will steal office supplies and product display models. Retail employees will overcharge customers and pocket the extra money, or run items as discounted for themselves or others. This particular form of employee theft can be especially dangerous, as overcharging customers can lead to a poor company reputation. Retail employees can also purchase items at a discounted price then return the item later for a full-price refund. Some stores will allow items to be returned without a receipt if the customer claims it was a gift. Bookkeepers and accountants may post false expenses and take the extra money for themselves. The theft of even a pencil or pen can be devastating when added up – approximately 33% of all bankruptcies are caused by employee theft, and it is seen in almost every type of business.

It's Often the Employee You Trust Most...

It takes an average of 18 months for an employer to have his attention drawn to employee theft. It is usually revealed by another employee, or by accident in the form of a slip of the tongue or discovering discrepancies in the finances. It is often the long-time, trusted employee who turns out to be the thief – in other words, the one you expect the least is probably the culprit. Do not exclude “trusted” employees in your search to find the thief in your business.

Preventing Employee Theft

Fortunately, there are several steps employers can take to prevent employee theft. The first step is to screen potential employees before hiring them. Order background checks on all employees and check for any criminal or civil history, driver’s license violations, proof of education, and their reasons for leaving any previous places of employment. Follow up on all references the hopeful employee provides – but be aware that sometimes close friends will lie to make their friend look good. Running a credit check may also prove helpful in weeding out potential thieves.

The more an employee believes that he will be caught if he steals, the less likely they are to steal in the first place. Impose a no-tolerance police for theft of any kind on your employees and be very plain with them. This policy should include blatant theft, taking long lunch or bathroom breaks without approval, doing slow or sloppy work (wasting time and money,) coming in late, leaving early, or calling in sick when not actually sick. Post a written policy on what does and does not qualify as stealing. Do not hesitate to call the authorities if you suspect an employee is stealing from you. This will send a very strong message to your employees that even small thefts are not tolerated.

Who Handles the Money?

One of the most common forms of employee theft is the lone accountant or bookkeeper who rigs the books to have false purchases and takes the money for himself. Avoid this scenario at all costs by not allowing any one person to handle all the finances. No single employee should be responsible for both recording and processing transactions. Perform surprise audits or have a third party audit your books at least once a year. Insist that your bookkeeper and any other employees who have access to the company finances take a vacation every year to examine their records. Insure that all checks, purchase orders and invoices are numbered correctly and check often for missing documents. Stamp all incoming checks with “for deposit only” to prevent employees from cashing them for themselves. Never use a signature stamp and personally sign all payroll check yourself. And possibly the most important thing is to know your margins. If they’re shrinking, find out why immediately.

Pay Attention to These Warning Signs

Most employee thefts will be reported to you from other employees, but a lot of times coworkers will be hesitant to do so. Implement a system where employees can submit complaints or concerns anonymously. Personally look into every employee and customer complaint, especially if they involve not receiving credit for payments or suspicious charges on their bank statements. Small businesses especially should be on the lookout for “phantom” vendors – false vendors that employees will bill you for then pocket the money for themselves. Pay attention to disgruntled or stressed employees, especially if they’ve expressed financial problems. Look for any sudden, significant rises in their living conditions – a new car or expensive purse can sometimes be the first sign that the employee is a thief.

An overall positive work environment has been proven to be a large deterrent for employee theft. Open communication lines, fair employee practices and proper employee recognition will help reduce employee theft. If you suspect an employee stealing from your business, do not hesitate to contact a private investigator such as Tim Wilson Investigations to assist you in discovering the truth.

Let Us Balance the Scales of Justice for You

Call today for immediate professional investigations.

Houston Investigations:  (713) 956-1111
Toll Free:  1 (800) 820-7006

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Let Us Balance the Scales of Justice for You

Call today for immediate professional investigations.

Houston Investigations:
(713) 956-1111

Toll Free:
1 (800) 820-7006

Texas Association of Licensed Investigators TALI Member Logo

License #: A10227

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35657 Mayer Rd, Hempstead, TX 77445