Dealing With Employee Theft


‘More than $800,000 swindled from White County Memorial Hospital — a crime reportedly orchestrated by its former chief executive officer. At least $50,000 plundered from Lafayette Glass Co., a family-owned and operated business on Teal Road, allegedly by its longtime bookkeeper.

Nearly $50,000 in misappropriated checks, meant only as payments and refunds for customers at a Lafayette optometrist, that the doctor’s office manager allegedly issued to herself’ Source

Unfortunately, I have the privilege of knowing many eyecare offices that have been ripped off by employees. It is a killer, financially and emotionally devastating.  The other part that is scary-I never would have suspected any of the thieves. Technically speaking, anytime an employee takes any product from your office (even a pen) it is considered employee theft.

Most people would think that employee theft is taking something, but it encompasses much much more. Faking on the job injuries for compensation, stealing cash, allowing others to steal, forging and destroying receipts, taking refunds, credit cards, spiff programs without employer approval, shipping and billing scams, falsifying expense records,  and giving ‘non approved’ discounts to family and friends.’ I know of a few employers who consider ‘free frames and lenses’ their property, so that could be construed as employee theft as well. Employee can also be charged for petty and grand theft and embezzlement. Employee theft is also a criminal offense and a civil tort.

Eye Bogglers

  • According to Employee Theft Solutions, the FBI calls employee theft ‘the fastest growing crime in America’
  • Employee theft was estimated to be responsible for 47% of in-store shrinkage.
  • Employee theft represent about $417.6 billion/ year
  • A 2003 study found the average dollar loss per employee theft was to be $1,762.00 compared to $265.40 for the average shoplifting incident.
  • The US Chamber of Commerce estimates the 75% of employees steal from the workplace.
  • 1/3 of all US corporate bankruptcies are directly caused by employee theft.
  • Businesses lose 20% of every dollar to employee theft
  • In 2007- 1 in every 28.2 employees were apprehended for theft.
  • 55% of employee thieves are managers.
  • Each family pays $300 per year extra to subsidize business losses due to employee theft.

Red Flags

  • Declining profits
  • Inventory shortages
  • Rumors
  • Lifestyle above income levels
  • Complaints about bills

How to Prevent Employee Theft

  1. Establish good procedures for hiring, training and managing staff. Background checks are crucial, even if the hiree is recommended and or a friend.
  2. Show a commitment to put theft systems in place.
  3. Get rid of assumptions- Well paid employees and long term employees steal as well.
  4. Evaluate where employees can steal and put in stopgaps to eliminate the temptation. Set up  a system of checks and balances.
  5. Work with optical staff and create a plan to discourage theft. This includes an open door policy so staff can feel free to speak.
  6. Theft can occur if employees are under financial strain. Create incentives and bonus programs.
  7. Create clear, consistent and comprehensive policies in dealing with employee theft. Policies should be in writing and openly discussed.
  8. Reconcile inventory and sales quarterly. Even have ‘surprise inventory’
  9. Separate bookkeeping functions. Do not let the same person who processes checks, also manage the accounts receivables.
  10. Separate buying and bookkeeping functions- This maintains a systems of checks and balances.
  11. Approve any adjustments to the books, no matter how small.
  12. Limit the number of check signers.
  13. Review your bank statements yourself- in fact do it online and do not give out your password.
  14. Petty cash- Allow only a few to disburse petty cash. Require a receipt and a signed voucher to be submitted.
  15. Refunds- Issue refunds only on approval of a third party.
  16. Install mirrors and cameras in ‘hidden corners’

More information can be found on employee thefts:

Claire Goldsmith MidPage


  1. Great informative piece on employee theft. The really serious thieves are your bookkeepers. Items 9 through 13 deserve its own article. When they steal it means big money and can go on for many years undetected. Then the physicians don’t prosecute because they don’t wan the publicity. So the bookkeeper finds a new victim and starts over.

    Using Quickbooks is not a substitute for checks and balances. Its too easy to make ledger changes in the program. I coached small businesses for five years so I saw this first hand. Owners see themselves as technicians and not accountants. They hire a person as a trusted employee and never check on them.

    I suggest having their CPA set up their accounting systems and help them audit from time to time.

  2. “Businesses lose 20% of every dollar to employee theft.” Where is this stat from? How is that possible? It would require a culture supportive of theft. Certainly we have all met dishonest people, but this level of theft would require ubiquitous culture of thievery. One wonders if the study authors are including bathroom breaks, holiday parties and drinking company coffee as theft? If the reported stat is accurate, I am completely out of touch.

  3. […] refused to make their kid wear eyeglasses (a discussion on Facebook) If you knew the doctor had stolen money from a patient ( just happened) you know your doctor is committing fraud, you know your colleagues […]

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