Employee theft is an age-old problem. Hotels present numerous opportunities for theft from guests and the house. No employer hires an employee thinking he or she is someday going to steal. Hoteliers need to take steps to prevent theft and be cautious in taking action against an employee after a suspected theft. Both have practical and legal implications.
The first step is prevention. Regularly review your hotel’s security measures and processes. Ensure your guestroom locking systems and room safes meet industry standards. Prepare, review and update employment policies related to package passes, lost and found procedures, and guestroom access by employees.
When it comes to identity theft, make certain your hotel is in compliance with the payment card industry security standards. Implement best practices related to credit card and identity documents, and carefully limit the employees who have access to guest identity and credit card information.
Prevention includes proper employee screening. Consider criminal background checks on applicants and employees with access to guests, their property and hotel property and credit checks on applicants and employees who have access to financial assets. Require employees to report any criminal convictions during the course of their employment, and conduct periodic criminal background and credit checks during employment.
Criminal background checks pose some legal risks at any stage in the employment process.A criminal and credit check policy should be tailored to comply with Equal Employment Opportunity Commission guidance and state and local laws that restrict or prohibit criminal background and credit inquiries. The Fair Credit Reporting Act requires authorization by an individual to conduct the background check and has strict notification requirements if a hotel does not hire an applicant based on the background check.
Responding to suspected theft
While an employer has the right to discharge an employee who steals, doing so can involve hidden traps. Case law is rife with examples of lawsuits by discharged employees for wrongful termination, malicious prosecution, defamation, false imprisonment, false arrest and invasion of privacy. Surveillance of employees might be illegal under federal or state anti-wiretapping laws. Forcing a suspected employee to attend an investigation meeting can lead to a false imprisonment claim. Searching an employee’s personal items can lead to an invasion of privacy claim.
Maintain a well-publicized policy covering searches of employees’ lockers or personal belongings. Conduct searches in a manner that minimizes confrontation, is minimally invasive and conducted with the dignity of the employee in mind.
While many law enforcement agencies still include a polygraph examination in investigations, employers are limited in the use of polygraphs. The Employee Polygraph Protection Act prohibits most private employers from using lie detector tests. Employers conducting polygraph tests under permitted circumstances are subject to strict standards for the conduct of the test, covering pretest, testing and post-testing procedures.
Prosecute, terminate or both?
Risks arise again when the hotelier makes a decision about what to do with the employee after a theft investigation. Carefully consider whether police involvement makes sense. Have some idea as to how seriously the police will respond to allegations of employee theft. Some police departments are too overwhelmed with violent crimes to do more than write a report of the complaint. Ultimately, no police involvement is better than limited or poorly handled police involvement.
Attempting to recoup monetary losses from employee theft can be tricky business. Before engaging in efforts to recoup losses, strongly consider whether it is worth the effort. Making deductions from a last paycheck might implicate the federal Fair Labor Standards Act, and there are numerous state laws around the country that make the paycheck deduction either unlawful or risky. Consult with trusted labor and employment law counsel in your particular state before making this decision.
Approach the inevitable unemployment compensation claim with care. If the employee has counsel, that attorney likely will attend the hearing and question witnesses. Take the time to prepare witnesses fully and make sure they understand the importance of the proceeding. If an employer loses an unemployment compensation claim related to employee theft, the employee could become emboldened to assert other claims. If you cannot spend the time, energy and effort needed to fully prepare for the unemployment hearing, it might be better to not contest the claim at all.
While hoteliers can take steps to reduce employee theft, eliminating it entirely is likely an impossibility. The best loss prevention involves good procedures for hiring, training and supervision of employees. By following a few best practices, employers can limit the potential liability in employee theft situations and diminish the potential for the insult of an expensive lawsuit on top of the injury of employee theft.
Andria Ryan is a partner in the Atlanta office of Fisher & Phillips LLP, which represents employers across the country in labor, employment, civil rights, employee benefits, OSHA and immigration matters. She can be reached at (404) 240-4219 or at aryan@laborlawyers.com.
This document is intended for general information purposes only. It is not a complete or all-inclusive explanation, and it should not be construed as legal advice on any specific facts or circumstances. Numerous regulations, interpretations, and other authorities must be evaluated in applying these principles. You are urged to consult legal counsel concerning your situation and any specific legal questions you might have.
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