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Jan 15, 2013

Employees can go to jail for defrauding employer

It is rare, but possible
By Stuart Rudner

Employers often feel as though employment law is the legal equivalenet of a one way street — it protects employees but offers no assistance to employers.

When I work with clients, I am occasionally asked whether they can legally pursue an employee that has cost them money, either deliberately or negligently. In the case of negligence, such a claim will be difficult. However, fraudulent and other intentional misconduct can, in the right circumstances, result in legal liability to the victim employer. Furthermore, theft, fraud and similar behaviour is criminal conduct and can result in imprisonment. While quite rare, it happened recently in Alberta.

As the Edmonton Journal reported, an employee with a gambling addiction submitted forged invoices to her employer and fraudulently obtained about $200,000 for herself. She has been ordered to serve two years in jail and pay restitution to her former employer.

As discussed in previous posts, I do not recommend that employers take any action before they undertake a proper investigation. However, if the investigation reveals criminal conduct, then involving the police may be an option to consider.

Stuart Rudner is a leading HR Lawyer and a partner in the Labour & Employment Law Group of Miller Thomson LLP, a national law firm. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at 416.595.8672 or You can also follow him on Twitter @CanadianHRLaw and join his Canadian HR Law Group on LinkedIn.
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Would you fire an employee for theft - not at work?
Tuesday, February 05, 2013 11:39:00 AM by Guy Parent
The "come in sick, never absent, first in last out, balks at taking vacation or takes one week at a time" is the most common indicator that someone is up to something... not always but often. A rhetorical question may be: If an employee has been caught in a theft outside work unrelated or without impact to the they have the capacity to steal from their employer?
Would you fire an employee for theft - not at work?
Tuesday, January 15, 2013 6:22:00 PM by Stuart Rudner
Joy, as you know off-duty conduct can result in dismissal. Generally speaking, the employer would have to show a direct connection to their employment, and some negative impact on the employer or the relationship.
Would you fire an employee for theft - not at work?
Tuesday, January 15, 2013 3:45:00 PM by Joy Vas, CHRP
Hi Stuart,
Just wondering...would you terminate an employee for theft, shoplifting or similar (small) criminal activity that did not involve their place of work or your own business?

Interestingly, in St. Catharines we refer to the Lucy Magda case. (No internal control over separation of duties.) Lucy was both accounts receivable clerk and cashier at the local newspaper. In her long career she was never sick and never took holidays. Great employee! Nope! She did get sick and it was found that she had discovered a way to allocate the cash to herself. Not to be discovered by a "richer lifestyle" - she bought and hoarded. When arrested - her house was full. Liability? Yes, sir!