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Prosecution or Restitution - A Business Approach

Posted on 2/26/16 9:54 AM

Courtroom law Our legal system allows us to seek remedies when we are the victim of theft. We can pursue criminal charges or we can seek civil recovery of the loss, and sometimes both. Often we can pursue financial compensation for the cost of our security efforts. When strangers are involved, resolution is a straightforward and rational enterprise. A substantial amount of business losses, however, is the result of employee theft. Employee theft can create an emotional response that adds to the complexity of the situation. Since employees are trusted “members of the family,” the theft can feel very personal. In that psychologists contend that ninety percent of our decision-making is emotional (not you and I, we are completely rational decision makers of course), it is critical that a company develops clear prosecution and restitution guidelines in advance of a specific theft situation.

Defined guideline for prosecution, restitution or the combinations of both has many benefits. The greatest is they create objective decisions in advance of emotional situations. Additionally, these guidelines can steer a company towards decisions that provide the best financial and cultural outcomes. There are no “hard and fast” rules for these decisions, but a prudent company uses three factors for the framework. These factors are Prosecutable, Cost, and Consistency, and with proper treatment, they help reveal a clear decision that will be best for your company.


The legal term for theft is “larceny” and it consists of two levels of severity - a misdemeanor and a felony. Criteria vary by jurisdiction, but the dollar value involved is the predominant element for categorization. (Thefts that includes violence or a weapon are robberies) In some states, a hundred dollars may constitute a felony charge; in others, two thousand dollars may be required. The charge, however, is separate from the “prosecutability” of the case.

The legally defined severity of the case is important, but consideration of the evidence is the most important factor when seeking prosecution. Does adequate evidence exist in the form of documents, video, and employee’s written admission? Will law enforcement and a court believe the case has merit? Would a reasonable person understand the facts of the crime? (If it takes hours to describe how the employee beat the system the answer is “no.”)

The crime’s dollar amount defines the legal charge, but a retailer must also consider the perceived nuisance of small dollar cases. The congested legal system might not react well to a twenty-five or even hundred dollar crime. They will of course react, but the cost and efforts of pursuing such may be greater than the actual benefits. Which is why the “I want them to go to jail,” emotional factor should be removed from the decision.

Cost of Being Right

Hidden costs exist within the prosecution of a dishonest employee. The police may require additional statements, employees may need to make several court appearances, and the company may need to respond to defense inquires. These activities have payroll and travel costs. In addition, there is the loss of productivity by the witnesses involved. If a theft incident merits the full force of the law, these costs are acceptable. There is, however, a fine line between the value of “being right” and the “cost of being right.” Guidelines will help a company determine where that line lies.

Many times the best remedy is a civil agreement with the dishonest employee. Restitution agreements allow a company to pursue reimbursement for the loss and in many cases the cost of the investigation. The “emotional” satisfaction of prosecution may be absent, but from a business perspective, restitution can prove a more efficient and cost effective solution. Restitution is especially useful when evidence doesn’t support easy prosecution or when the involved dollars are less than the cost of that prosecution. Restitution also allows recovery of losses from those whose prosecutions require special considerations such as the very young, the very old, or the very ill. The restitution process can be further enhanced using professional firms who specialize in restitution collection. In addition, there are added benefits in the selection of firms that possess the legal knowledge to pursue all of a company’s civil collection rights.


Employee theft situations vary. A well-defined guideline for their treatment should not. The company’s goal is to define guidelines that ensure the consistent treatment of dishonesty. While exceptions may exist for the very young, the very old, and the very ill, those exceptions must be applied universally to the defined group. In addition, once we define our guidelines in terms of evidence, dollar amounts and circumstance then they should apply to everyone who meets the criteria. Guidelines, which provide for subjective decisions risk inconsistency and potential accusations of biased or unfair treatment of employees. The consistency factor should apply to the restitution collection methods as well, to ensure each collection attempt occurs in the same professional and documented manner.


Employee theft will always have an emotional impact. Established guidelines help navigate the emotional waters and help maintain clarity of goal. A consistent and rational decision-making approach saves time and resources, removes the emotional factors, and ensures uniform and defendable treatment of dishonesty.

It is impossible to know in advance the conditions surrounding every internal theft incident. Guidelines, however, can seek to provide a framework based on dollar amounts, evidence requirements, restitution processes, and the circumstances that warrant special considerations. Prosecution and restitution guidelines should contemplate the legal requirements by state to ensure they are applicable across the broadest range of jurisdictions. Prosecution considerations should be framed in terms of the business goals and not as a statement of company culture. “Zero Tolerance” is an excellent policy for employment decisions; however, it should not be the guideline for prosecution determination. Guideline construction should include representatives from Operations, Human Resources, Loss Prevention, Finance, and Legal, to ensure the input of all viewpoints and to ensure agreement and support for the final product


 Authored by:LP Innovations

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Topics: employee theft, policies and procedures, Audits and Investigations

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