<em>Legally</em> <strong>Speaking</strong>


Steps to follow when employees go bad
Jim Juliano - Fall 2006

What do you do when an employee commits an act or otherwise assumes a pattern of behavior that you believe warrants his or her discharge?

a. Fire the person on the spot.
b. Go to the police.
c. Confront the person with evidence.
d. Sue the person.

Depending on a number of factors, all of the above may be correct. Although there is no question that certain acts, such as misuse or theft of team funds, should result in firing and perhaps criminal action, the question is: how do you get there legally?

Here are a few questions to ask yourself:

  • IS THERE AN EMPLOYMENT AGREEMENT? This might be a written or an oral agreement. It might be a letter of understanding for terms and conditions of employment from year to year.

    If there is an agreement or a union collective bargaining agreement (CBA), what does it say about the term (length) of employment and the reasons for early dismissal?

  • WHAT IS THE EVIDENCE? In the case of theft, does the accountant have documents? Receipts with the employee’s signature on them? Any witnesses?

  • SHOULD YOU GO TO THE POLICE? This is an important question. Every person has a duty to report a crime. The misuse of an employer’s funds may or may not be a crime. Keep in mind that, once the police become involved, you will lose control over the investigation. Sometimes the employer thinks that the police or prosecutor will drop the whole thing if the employer says so—for example, if there is a settlement with the employee. Not necessarily so, and if this does happen it is due to a courtesy by the police and prosecutor. Legally, they control the case.

  • HOW ABOUT INSURANCE COVERAGE? If you have insurance coverage for employee theft, contact the agent or the claim rep. If you don’t have this coverage, consider purchasing it.

  • WHAT PROCESS SHOULD YOU FOLLOW? Follow any specific procedure in the employment agreement or union CBA. In the absence of an employment agreement or CBA, the concept of “at will” employment comes into play. If your state law supports it, an employee without an agreement is an at will employee, which means the employer may terminate the employment at any time for any reason or no reason, unless ...

This may be a very important unless. State and federal laws protect employees in a number of ways, even without employment agreements. These laws include the Americans with Disabilities Act, the Age Discrimination in Employment Act and the Family and Medical Leave Act. Even in an obvious case, such as red-handed theft, you should consider how these laws might affect the next steps.

The details of how these laws operate will vary with the situation. Generally, it is a good idea to put together a solid evidence case and, before deciding on disciplinary action, to give the employee a list of the charges and offer an opportunity to respond to those charges. Depending on the employee’s response, you may want to investigate further, talk about a severance agreement or just send a disciplinary or termination letter.

If you need to take immediate action to preserve the company assets, you may relieve the employee of all duties and place him or her on administrative leave with pay. Employers do not like to pay people for time off, but this step is standard. Administrative leave with pay protects the employer from potential liability. Once the employer makes a final decision on the discipline, of course, the paid leave is over.

These are a few of many questions that arise in such situations. Always consult your attorney, and do your best to have both sides of the story before taking action.



This website contains general information that should not be considered legal advice or legal opinion concerning individual situations. Legal counsel should be consulted for specific advice.

Copyright 2006 by L. James Juliano Jr.
Legally Speaking® is a registered trademark of the law practice of L. James Juliano Jr.