In the last few weeks, I’ve opened the paper – yes, I still read the paper – to see 3 separate articles about long-time employees embezzling significant amounts of money from their employers over a period of time.
I was taken aback by these stories of people stealing between $100,000 to $250,000 from their employers. More shocking was their methods and the great lengths that these employees had gone to.
Many business owners want to believe that they have a great staff and that their employees would never steal from them. While often, this is true… sometimes, quite frankly, it’s not.
According to Statistic Brain, workplace theft costs US business’s more than $50 billion a year.
There are a variety of ways that employee theft is occurring. These may include:
- Cash Theft > overcharging customers and pocketing the difference or stealing from business cash reserves
- Vendor & Credit Card Fraud > ordering personal items with company payment methods
- Loss of Inventory or Shrinkage from Theft > merchandise or supply theft
- Payroll or Expense Fraud > falsifying time sheets or expense items
- Information > customer lists, information or even proprietary company details or products
One way to protect yourself, is to review your crime coverage with your insurance agent. Small limits for employee dishonesty may be included as part of your coverage, but this might not be enough to protect you. The more robust version of this coverage is Employee Dishonesty Coverage. Employee Dishonesty Coverage has 2 parts that trigger coverage. 1) The employee’s act must be dishonest, and 2) The employee must have intent to cause a loss to the insured and personally benefit the employee. Make sure you read your policy’s language to understand your coverage and exclusions.
Prior knowledge is also important. If you knew the employee was stealing and chose not to end their employment, the coverage may be excluded. Strong risk management is the best way to avoid employee theft situations. Make sure you have strong accounting practices and checks and balances in place. Background checks are equally important. In the articles, one of the individuals that had stolen over $100,000 from their Cape Cod employer actually had a prior conviction for stealing from a previous employer.
Lastly, let your employees know that you have a strict employee theft policy and that you will terminate employment and prosecute. Should you have a loss, having proper crime insurance can help make you whole again. If you’d like to learn more about this type of coverage and how it may benefit your Massachusetts business, please reach out to me today.