Protecting Against Employee Theft


No matter what type of business you run, you’re vulnerable to employee theft motivated by greed, anger, dissatisfaction, or an “above the rules” attitude. Which of these ways employees steal are areas of vulnerability for your business?

Payroll theft: Are your employees really working the hours they claim to be? Do you have controls to stop buddies from punching in and out for each other?

Embezzlement: Do you audit expense reports, invoices and company credit card statements to look for personal use and forged expenses?

Office supplies: Employees have been known to steal everything from copier toner to toilet paper.

Merchandise: Point-of-sale technology has made it easier to figure out who’s doing what and when they’re doing it in retail and restaurants.

Financial Assets: Use accounting software and online banking so you can keep watch over your business accounts. Always have two employees verifying financial tasks and transactions.

Intellectual property: You’re especially at risk when employees have access to customers’ confidential information, but have you also considered how to best protect your intangible business assets, like source codes, from theft by current and former employees?


Does Insurance Cover Employee Theft?

You may believe your commercial insurance property policy protects your business from all types of employee theft, but that isn’t always the case. In general, commercial property policies that are written on an all-risks basis cover most types of employee theft, including the stealing of inventory and contents.

However, cash and securities aren’t considered property in this context, so they’re not covered. You’ll need a crime policy to cover the theft of money and securities inside and outside your physical premises.

Employee benefit plans can also be covered under this type of policy. The Employee Retirement Income Security Act (ERISA) requires employers to carry insurance equal to 10 percent of the funds administered. The minimum amount of coverage ERISA requires is $1,000 and the maximum is $500,000.

An employee theft policy can also be written to include 401(K) plans, profit sharing plans, pension plans and medical, dental, vision, life and disability insurance plans. ERISA also requires that those who administer employee welfare or benefit plans be bonded. An employee theft policy can be used to satisfy this requirement. Each of the plans must be added to the name insured on the policy in order to activate the coverage.