69 The Alabama Lawyer 30 (2008). You've Caught a Thief Amongst You ? What Now? Options Available to Employers in Attempting to Recover from Employee Theft.

• Author: BY Douglas B. Kauffman

The Alabama Lawyer

2008.

69 The Alabama Lawyer 30 (2008).

You've Caught a Thief Amongst You ? What Now? Options Available to Employers in Attempting to Recover from Employee Theft

You've Caught a Thief Amongst You ? What Now? Options Available to Employers in Attempting to Recover from Employee TheftBY Douglas B. Kauffman The United States Chamber of Commerce estimates that loss from employee theft is over $20 billion per year. Virtually every employer is faced with the harsh reality that some employees will steal if given the opportunity. A proper investigation designed to collect the necessary evidence and prove guilt is always the first step. However, the adventure does not end when the suspect is fingered. Just like the old adage goes, once the dog catches the car, what does it do with it? Likewise, after an employer has performed a proper investigation and has convincing proof of the theft, what are the employer's options to legally recover what has been wrongfully taken from it? Often these decisions must be made quickly due to the individual's immediate pending discharge from employment. Employers often seek help from their attorneys on the best course of action to take, but sometimes the answers are not always clear. This article discusses some of the options available to employers to recover from current and former employees who have stolen, embezzled or misappropriated money or property.

One Option Really Is To Do Nothing

When faced with the risks associated with other options, some employers prefer to let it go and do nothing, other than perhaps re-examine internal controls or audit practices in an attempt to avoid any further similar losses in the future.

Generally, there is no legal obligation requiring an employer to collect or otherwise pursue money or property that has been stolen by its employees or former employees. Of course, an issue involving millions of dollars or an officer of a public company may require specific action and should be more closely and specifically examined. Further, in the event of insurance coverage for the loss, the applicable insurance policy should be reviewed to determine if the company must make certain attempts to collect prior to recovering any insurance funds. However, absent these or other unusual circumstances compelling some obligation to attempt to recover lost amounts, a decision as to whether to attempt to recover the loss most likely will be completely up to the discretion of the employer. Even in the corporate law context, such decision fall under the business judgment rule, meaning that the courts will not second-guess the company's decision as long as there is a rational basis for the decision...