Understanding Employee Theft and How to Stop It

By Michael Klazema on 7/10/2018

According to a study conducted by insurance provider Hiscox, United States businesses victimized by employee theft in 2016 lost an average of $1.13 million per business. 68 percent of the employee theft cases identified in the survey involved small- or mid-sized businesses with fewer than 500 employees. Employee theft is a major issue for SMBs and something that can affect any company, regardless of industry.

Not all employee theft takes the form of large-scale embezzlement. While perpetrators of employee theft do sometimes steal hundreds of thousands of dollars from their employers, smaller instances of employee theft can add up fast, including:

  • Payroll fraud. Employees who falsify their timesheets, claim more hours than they worked, or cheat with their timecards are committing employee theft.
  • Stolen cash. This category can range from cashiers taking money out of the cash register to employees forging checks. Moving company money from corporate accounts to personal accounts and using company credit cards to pay for personal expenses fit into this category, too.
  • Stolen property. This one might be the area of employee theft that the most people commit, but the fewest people think about. It might not feel like stealing from an employer to take pens, printer paper, staplers, scissors, or other office supplies, but those small thefts can escalate into costly annual losses. More severe types of company property theft include instances of employees stealing merchandise that their company makes, stocks, sells, or distributes.
  • Intellectual property theft. On the extreme side, this type of theft might mean an employee stealing trade secrets from a company and selling them to a competitor. More minor examples include the theft of email contact lists for customers or leads.

There are several strategies employers can use to prevent each of these types of employee theft. Limiting access to financial accounts, implementing checks and balances to monitor cash handling and expense reporting, and using surveillance systems and other security strategies can help. At the root of every employee theft issue is the trustworthiness of the employee who commits the crime. Thorough background checks are the best strategy available to make sure you know who your employees are and what they might do.

Criminal history checks are a start. If someone has ever been convicted of embezzlement or a similar offense, you need to know. Just because someone’s criminal record is clean doesn’t necessarily mean you can trust them, so using verification checks for resume details like education and work history can tell you whether a candidate is willing to lie to you. Where permitted, credit history checks can give you a window into a person’s financial habits to see if they are good at managing money. Checking references or communicating with former employers can tell you whether the person has a history of workplace theft or bogus timesheets.

At, we provide background checks designed to help companies like yours put together a comprehensive screening strategy for every position. Whether your business has recently been affected by employee theft or you are trying to limit your risk for embezzlement, we can help.



Tag Cloud
Recent Posts

Latest News

  • January 15 A viral news story at The Cleveland Clinic has reignited the debate over social media background checks. The hospital recently fired a medical resident with a history of anti-Semitic tweets.
  • January 10 To remain a competitive employment option for retail workers, Best Buy will begin offering childcare options for parents. 
  • January 07 The rise of the "gig economy" was rapid, and questions about safety for users of these new services grew along with the industry. Background check policies in the gig economy can be unclear or unevenly applied, leading to barriers for some seeking jobs.
  • January 04 A new service that offers background checks for babysitters has come under fire for racial bias, invasion of privacy, and non-compliance with FCRA requirements. Predictim has paused its launch due to controversy.
  • December 20 Trust between patient and practitioner is a critical part of a strong healthcare system. An investigation uncovered hundreds of doctors practicing in new locations after giving up their licenses following serious mistakes.
  • December 13

    As the food truck fad proves it has staying power, many local governments have looked for ways to protect their communities without constraining economic activity. The effort to strike the right balance is ongoing.

  • December 11 The Department of Health and Human Services Office of the Inspector General criticized a migrant youth detention center on the border for not running the proper background checks. Federal law requires the facility to screen all employees with FBI fingerprint checks.
  • December 11 What are education verification checks and why are they important? We look at why and how employers confirm the education histories of the people they hire.
  • December 06 In a bid to combat money laundering and illicit funding sources for terrorists flowing through the country's real estate sector, Singapore's government now mandates background checks for buyers purchasing properties prior to development.
  • December 04 What is a reference check? How does it vary from a work history check? We explore these questions and others.