Can You Sue an Employee for Stealing?

Dealing with customer theft is one thing, but what happens when it's your own employees stealing from your store? Of course there are criminal laws against theft, but that may not get you the full value of what was stolen.

So can you file a lawsuit against an employee for theft? And, if so, what kinds of theft are covered?

Paycheck Penalties

If your state allows, and if you've decided not to fire the employee, you could consider deducting the amount of the theft from his or her paycheck. Just be careful: some states (like California) prohibit this entirely, and some states have certain restrictions on when employers can deduct wages and how much they may deduct. You don't want your attempt to deal with theft to end up in a lawsuit against you.

Conversion Claims

If you're talking about simple or petty theft of cash or merchandise, you may be able to sue the employee for conversion. Conversion is an intentional tort that involves the unauthorized deprivation of a person's property without his or her consent. Therefore, you could sue the employee for depriving your business of its property.

If the employee has been criminally charged with embezzlement, you may be entitled to repayment for the stolen amount. And if the employee fails to pay restitution, you could use the conviction and restitution order as the basis for a civil suit.

Contract Claims

If a current or ex-employee is compromising your trade secrets or stealing your data, you may want to bring a breach of contract claim, depending on the nature of his or her employment contract. If an employee violates his or her contract or non-disclosure agreement, you could be entitled to damages equal to or greater than the amount stolen.

If the issue is a simple case of fraud, there are extensive state and federal statutes allowing civil lawsuits for employee fraud, depending on the method and amount stolen.

Before suing an employee for theft, you may want to discuss the case with an experienced employment attorney near you.

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Related Resources:

• Need legal help for your small business? Get your small business issue reviewed for free. (Consumer Injury)
• 5 Tips on How to Handle Employee Theft (FindLaw's Free Enterprise)
• Employee Discipline and Theft on the Job (FindLaw)
• Protecting Your Business Against Employee Fraud (FindLaw)