If you suspect that an employee is stealing from you, the first thing you should do is secure the evidence and keep your suspicions to yourself. Before you confront or fire anyone, get legal counsel involved. When handled in that order, a theft investigation protects your business and keeps every option open, from a clean termination to a full recovery.
Figuring out what to do if an employee is stealing is mostly a question of sequence: investigate first, terminate second, and recover third. If you do things out of order, like accusing someone without proof or docking their final paycheck to cover your losses, you could end up the defendant in a defamation or wrongful termination suit. The NH business law attorneys at Shaheen & Gordon advise employers through all three stages.
What counts as employee theft in New Hampshire?
Employee theft is when someone who works for you takes money or property from your business. It doesn’t have to be dramatic. Cash missing from the register counts, of course, but so do padded time sheets, personal charges on company credit cards, inventory you can’t account for, and vendor payments that end up in the employee’s own bank account.
Under RSA 637:3, a person commits theft by exercising “unauthorized control over the property of another with a purpose to deprive him thereof.” In other words, the bookkeeper who diverts deposits commits the same crime as the cashier who pockets $50 from the drawer. Only the dollar amount changes the penalty.
Certain employees may qualify as fiduciaries; fiduciaries have a duty to act in their principal’s best interest. A principal is the party that permits the fiduciary to act on its behalf. If a fiduciary is unlawfully taking their employer’s funds, they may be breaching their fiduciary duty.
Should you confront the employee right away?
No. Suspicion alone is not enough to confront an employee. Given the seriousness of a theft accusation, and the potential criminal implications, employers should consult an attorney prior to speaking with the suspected employee. False accusations of theft can expose an employer to claims like defamation if they are communicated to others without a factual basis. Even though New Hampshire generally follows at-will employment, employers can still face legal claims if a termination violates an employment contract, anti-discrimination laws, retaliation protections, or other legal obligations.
Treat suspected theft like any other serious business risk: thoroughly documented, quietly and strategically. Limit the investigation to the people who need to know. Don’t share your suspicions with the rest of your staff. And resist the urge to withhold the employee’s final paycheck to cover the loss. It is unlawful to withhold an employee’s paycheck in New Hampshire based on a suspected theft.
Once your records are in order, you can consider conducting a documented interview. Always have a witness to conversations, ask questions instead of making accusations, and document every answer. What the employee says in that meeting may become key evidence in a later criminal or civil case.
What steps should a small business take when theft occurs?
When theft occurs at a small business, evidence disappears fast. Act within days, not weeks:
- Preserve the records. Pull register data, company credit card statements, payroll reports, inventory counts, and account access logs. Keep originals.
- Save surveillance footage. Many systems overwrite video in 30 days or less.
- Restrict access. Change passwords and remove the employee’s authority over cash, purchasing, and accounting software while you investigate.
- Total your losses in writing. Note dates, amounts, and the document supporting each one. That number determines how any criminal charge is graded.
- Check your handbook. If your policies promise progressive discipline or an internal hearing, follow them before you terminate.
- Talk to legal counsel before the termination meeting, not after it.
When do criminal charges apply?
Criminal charges can apply to any provable employee theft. In New Hampshire, RSA 637:11 grades theft of $1,000 or less as a misdemeanor, theft over $1,000 up to $1,500 as a class B felony, and theft over $1,500 as a class A felony. The math adds up faster than most business owners expect. A clerk taking unauthorized amounts of $75 a week from deposits crosses the class A felony line in about five months ($75 x 21 weeks = $1,575).
Whether to report is your decision. Detailed records are very useful. Your diligent documentation can save the police and your attorney significant work. A court may also order restitution, requiring the employee to repay some or all of the losses.
Can you sue to get the money back?
Yes. A civil lawsuit, or a small claims case for modest amounts, may permit you to pursue repayment–whether or not prosecutors bring charges. The lower burden of proof in civil court works in your favor: you need to show it’s more likely than not that the employee took the property, not prove it beyond a reasonable doubt. A civil suit also provides you the opportunity to resolve your dispute with a settlement; settlements allow both parties to collaborate on a mutually satisfactory resolution without the time, expense, and stress of court.
Be realistic about collection, though. Many employees who steal have already spent the money. Before you invest in litigation, check whether your commercial insurance policy includes employee dishonesty coverage, which can reimburse the loss directly. Our business litigation attorneys in New Hampshire can tell you which route makes financial sense for the amount involved.
How do you prevent employee theft going forward?
Build anti-theft controls into your routine so no single person handles money without a second set of eyes. Separate duties, so the person who reconciles the books never makes the deposits. Run surprise inventory counts and periodic outside audits. Screen new hires with lawful background checks. And give staff an anonymous way to report what they see; coworkers spot theft long before owners do. Put the policy in your handbook in plain language: what counts as theft, how to report it, and what happens when it’s discovered.
Remove emotion from the equation. Many business owners feel personally betrayed and violated when they discover that an employee has been stealing from them. This is normal and understandable. An objective assessment about theft prevention, or theft response, may highlight blind spots in your businesses systems and procedures.
Talk to a business law attorney
Shaheen & Gordon has represented business owners since 1981, with 70+ attorneys serving clients across New England. Our expertise in business and employment matters means one firm can guide the investigation, the termination, the insurance claim, and any civil recovery.
If you suspect an employee is stealing from you, call (800) 451-1002 or contact us online to speak with our business law team.
