What to do when you suspect an employee is stealing from you.

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Few HR dilemmas are as sticky as dealing with the possibility that an employee is stealing from the company. You need to handle it with almost surgical precision to guarantee the company does not overstep its bounds and expose itself to liability.

If you suspect an employee is stealing, you will have to decide either to conduct an internal investigation or to call in outside expertise, perhaps your attorney, to find out what is happening.

An internal investigation will probably cost less, but consider whether you can do so fairly and without bias, and whether you have the necessary resources.

Your company's insurance carrier can provide assistance. If you decide to involve your carrier, promptly notify it and comply with all policy provisions. Note that many insurers require the police to be involved in internal theft investigations.

Elements of an investigation

Whether performed in-house or through an outside investigator, your investigation should include the following steps:

* Gather facts and compile documentation (information about witnesses, documents and physical evidence).

* Audit computer files, financial records, etc.

* Preserve evidence, such as documents, computer files and emails.

* Maintain a chain of custody to document the movement of physical evidence. Later, you may have to prove exactly who held the evidence and whether anyone had an opportunity to manipulate it.

* Conduct interviews.

Document all investigative steps taken and summarize your interviews. The resulting investigative report may be a key document in the event of any subsequent legal action.

Conducting interviews

When getting ready to interview the suspected employee and any witnesses, you should be prepared. Create an outline for the interviews so you can anticipate difficult issues. Know the company's policy if an employee refuses to be interviewed. Will that refusal subject the employee to discipline?

In a union setting, an employee has the right to have a union representative or co-worker (not a lawyer) present during any interview that the employee reasonably expects could result in the imposition of discipline.

Evaluate whether to administer a lie detector test. The federal Employee Polygraph Protection Act governs the use of polygraph exams in the workplace.

Decide whether to discipline...

If your investigation shows misconduct, decide which type of discipline to impose. First, review the employee's past disciplinary record to see whether there have...