To report employee theft to the police, call your local police department’s non-emergency line, tell them you need to report a workplace theft, and be ready to hand over an organized evidence file with a clear timeline and dollar figure. The call itself is straightforward. The work that decides whether the case goes anywhere happens before you pick up the phone, and the decisions you make in the days after can either recover your losses or produce a lawsuit against your own business.
Build Your Evidence File First
Police take employee theft reports more seriously when you arrive with a documented case rather than a suspicion. Rushing to accuse someone without proof can also backfire: a shaky accusation can produce a wrongful termination or defamation claim from the employee you fired.
Start with the financial records. Pull profit and loss statements, daily cash drawer reports, bank statements, and transaction logs that show where money went missing. For inventory theft, compare shipping logs and purchase orders against physical counts. You want specific discrepancies tied to specific dates and amounts, not a general feeling that something is wrong.
Then layer in the corroborating evidence:
- Surveillance footage placing the suspected employee near the point of loss during the relevant time window. Save it and back it up before it rolls off the system.
- Digital records: computer access logs, badge-in timestamps, point-of-sale entries, email communications. These establish who had access and when.
- Names of coworkers or vendors who may have seen something. Note them, but do not interview them yet. Premature interviews tip off the suspect and create inconsistencies a defense attorney will use later.
Keep everything in one secured location with restricted access, and log who touches it. If evidence passes through many hands with no record, the defense will argue it was tampered with. A simple sign-in sheet is enough to establish a credible chain of custody.
Finally, arrange the facts into a chronological timeline running from the first sign of trouble through each discovered loss. This is the single most useful document you can hand an officer. Cases stall when the reporting party can’t explain the sequence of events cleanly.
Watch the Legal Traps While You Investigate
The same steps that build your criminal case can create employment law exposure if you handle them carelessly.
Searching Company Property
You generally have the right to search company-owned desks, lockers, and devices, especially if a written policy tells employees these areas are subject to inspection. That policy reduces the employee’s expectation of privacy. Without one, a court weighs your justification against how intrusive the search was. Searching a company computer is far less risky than going through an employee’s personal bag.
One line not to cross: do not physically prevent an employee from leaving during a search. Even without locks or force, telling someone they can’t leave can support a false imprisonment claim. If they want to walk away, let them.
Bringing in an Outside Investigator
If you hire a forensic accountant or private investigator, the Fair Credit Reporting Act matters. FCRA normally requires advance notice to an employee before you obtain a “consumer report,” but investigations into suspected workplace misconduct are excluded from that definition, so the usual advance-disclosure requirements do not apply during the investigation itself.1Office of the Law Revision Counsel. 15 U.S. Code 1681a – Definitions; Rules of Construction If you later take adverse action against the employee based on the investigator’s findings, you must then provide a summary of the nature and substance of the report.2Federal Trade Commission. Why 603(y) Doesn’t Apply
Whether to Fire the Employee Yet
Most owners want to fire the suspected thief immediately, and in at-will employment states, you technically can. Timing still matters. Firing before you file the police report cuts off your view of the employee’s workplace behavior and can look retaliatory if they later claim the accusation was pretextual. Keeping them on the job means they keep access to whatever they were taking.
The safer middle ground is usually a suspension, paid or unpaid, while the investigation runs. That limits further losses without triggering the complications of a premature termination. An employment lawyer should weigh in based on the strength of your evidence and your company’s own policies.
Talk to a Lawyer Before You File
Spend the money on an employment lawyer before making the police call. This is the step most businesses skip and later regret. A lawyer reviews the evidence file and tells you whether it is strong enough to support both a criminal report and the likely termination. A weak accusation that leads to a firing can produce a defamation claim, though many statements made within the normal course of business carry legal privilege.
Your lawyer should also walk you through the split between criminal and civil. The criminal case is the government versus the employee. You report it and cooperate, but the prosecutor decides whether to charge. A civil lawsuit is your business versus the employee, aimed at recovering the stolen money or property. You can run both at once, and the civil case uses a lower burden of proof, so it can succeed even if the criminal case doesn’t.
Loop in HR to make sure any discipline follows your own written policies. Inconsistency is what sinks employers in wrongful termination cases. If your handbook promises a written warning before termination for policy violations and you skip that step for this employee, the gap becomes the centerpiece of their lawsuit.
Making the Call
Call your local police department’s non-emergency number. Do not call 911 for a theft that has already occurred and is not in progress.3National 911 Program. Frequently Asked Questions About Calling 911 The non-emergency line is typically staffed around the clock. Say you need to report employee theft and ask how they prefer to take the report.
The department will either send an officer to your business or ask you to come to the station. Either way, bring the person most familiar with the investigation, whether that’s the owner, the controller, or whoever built the evidence file. Arriving with an organized binder and a clean timeline signals a serious documented case rather than a workplace dispute in criminal clothing.
Stick to what you can prove. “We’re missing $14,000 based on these register discrepancies” is far more useful than “I think she’s been stealing for years.” Offer copies of surveillance footage. If the financials are complex, a one-page summary of the total documented loss helps. You will receive a case number. Write it down in multiple places. You’ll need it for follow-up calls, your insurance claim, and possibly your tax records.
What Happens After You File
What comes next depends on the dollar amount and the department’s caseload.
The Amount Shapes the Charge
Every state sets a dollar threshold above which theft becomes a felony rather than a misdemeanor. Thresholds range from as low as $200 to as high as $2,500, with most states drawing the line around $1,000. Felony cases get more investigative attention and carry harsher penalties, including possible prison time. If your total sits near the threshold, document every dollar carefully because the total determines the charge.
Watch the statute of limitations too. Time limits on theft prosecutions run from one to ten years depending on state and offense type. Embezzlement involving a fiduciary relationship or public funds often carries a longer window, and some states start the clock when the theft is discovered rather than when it happened. That matters because employee theft schemes often run for years before anyone notices.
Investigation, Then the Prosecutor
If resources and the dollar amount justify it, a detective is assigned. The detective may re-interview witnesses, question the suspect, and work with the prosecutor’s office to obtain subpoenas for bank records, phone records, or other documents. Cooperate fully with any follow-up requests.
Don’t expect frequent updates. Investigations can take weeks or months, and detectives typically carry dozens of active cases at once. A polite check-in referencing your case number after 30 quiet days is reasonable.
The police don’t decide whether to charge. If the investigation produces probable cause, the case goes to the local prosecutor, who decides whether the evidence is strong enough to try. Prosecutors sometimes decline cases not because they doubt the person did it, but because gaps in the evidence would make trial risky.
Your Rights as the Victim
If the case moves forward, federal law and most state laws give crime victims notice of court proceedings, an opportunity to be heard at sentencing, and timely information about any plea deal the prosecutor negotiates.4United States Department of Justice. Crime Victims’ Rights Act Plea agreements are common and can move on short notice, so make sure the prosecutor’s office has current contact information for you or a designated company representative.
Getting Your Money Back
Filing the report isn’t the only path to recovery. Four channels exist, and you can pursue them together.
Criminal Restitution
If the employee is convicted, the sentencing court can order restitution, meaning the defendant must repay the business as part of the sentence. For federal property offenses, restitution is mandatory and covers either return of the stolen property or payment equal to its value.5Office of the Law Revision Counsel. 18 U.S. Code 3663A – Mandatory Restitution to Victims of Certain Crimes State laws vary, but most provide restitution for theft. Some costs are not eligible, including your own legal fees, tax-related expenses, and anything characterized as pain and suffering.6United States Department of Justice. Restitution Process
Restitution sounds good on paper, but collection is another matter. Payments often trickle in over years, and if the defendant has no income or assets, you may see very little. That’s why the other channels matter.
Civil Lawsuit
A civil suit lets your business sue the employee directly for the stolen amount, plus additional damages in some states. Because civil court uses a lower burden of proof, you can win a civil judgment even if the prosecutor declines to file charges or the criminal case ends in acquittal. Your lawyer can tell you whether the likely recovery justifies the litigation cost, especially if the employee has few attachable assets.
Insurance
If your business carries commercial crime insurance or a fidelity bond, file the claim as soon as you can after discovering the theft. Most policies require written notice within 30 to 60 days of discovery and a formal proof of loss within four to six months. The proof of loss should include your police case number, the evidence file, financial statements showing the loss, and the employee’s relevant employment records.
Read the policy before submitting. Some cover investigation costs, including a forensic accountant, but may require the insurer’s prior approval. Expect the insurer to scrutinize whether your company had reasonable anti-fraud controls in place. Showing that the theft breached established policies rather than exploited an obvious gap strengthens the claim.
Tax Deduction
Employee theft that leaves a net loss on the books is generally deductible. The IRS treats theft losses for business property separately from personal casualty losses, and business theft losses are not subject to the disaster-declaration restrictions that limit personal theft deductions.7Internal Revenue Service. Topic No. 515, Casualty, Disaster, and Theft Losses Report the loss on Form 4684, Section B, in the tax year you discovered the theft, not the year it occurred.8Internal Revenue Service. Instructions for Form 4684
One rule to keep straight: reduce the deduction by any insurance reimbursement you receive or reasonably expect to receive. If your insurance claim is still pending at tax time and there is a reasonable chance of recovery, you can’t deduct that portion yet. Take the deduction in the year you become reasonably certain the amount won’t be reimbursed.