Small Business Report: Employee Theft Rarely Reported

A new survey finds a large number of employee thefts, even after discovered, are never reported.

The survey, which was performed by the University of Cincinnati, looked at how often small businesses report crimes that were committed by their employees. Surprisingly, the survey found that employers only report employee crimes 16 percent of the time, a very small percentage compared to how many go completely unreported.

Several reasons account for why businesses likely avoid reporting employee crimes, including

  • not wanting to be involved in legal battles.
  • being worried about insurance premiums.
  • a connection they have with their employees.

Employee-related crimes are quite common, many of which are discovered by their supervisors. They range from stealing money and goods from the company they work for to giving discounts to friends to vandalizing the business property. No matter how small of a crime, the business suffers from the loss. However, theft tended to be the most common crime, and what this study was looking at.

The University of Cincinnati survey of small businesses found that a big reason employers don’t report these crimes is that they don’t want to get the police involved and deal with legal disputes.

This is regardless of the fact that 74 percent of the small businesses participating in the study, had dealt with employee theft above other crimes.

Researchers believe this doesn’t just affect the companies themselves, but the entire economy. Jay Kennedy, a criminal justice doctoral student at University of Cincinnati, and author of the study, said of the survey:

“It’s important to look at this topic because such theft represents a loss to the tax base and would also seem to put such businesses at risk, and so, put our overall economy at risk.

Why Small Businesses Don’t Report Employee Thefts

There were four main reasons found as to why small businesses fail to report employee theft. These include:

1) Not believing anyone was a big victim.

2) Their attorney advising them not to.

3) Emotional ties with the employee.

4) Not trusting in their local judicial system.

There are other reasons however. If the small business owner didn’t believe the theft to have a large impact, they rarely reported it, aside from firing the employee. Many attorneys also believe the costs and time involved in going to the authorities wouldn’t be worth it in the end. Some employers also have emotional ties with the employee that committed the theft, and while they may suspend or fire them, do not want them to get into a legal battle.

According to this survey, the most common item stolen from a small business by an employee was cash, ranging from just $5 to over $2 million. The average amount was a shocking $20,000.

If you own a small business, getting a crime insurance policy and employee dishonesty coverage is highly beneficial for protecting against the loss.