Tips for Loss Prevention Policies; Employee Theft Solutions
by Stuart R. Buttrick, Baker & Daniels. It goes without saying that all employers are concerned about employee theft. As a result, employers are constantly looking for tools to prevent their, or their employees', property from becoming the victim of "sticky fingers." One of the most common practices used by employers to combat workplace theft is to search employees' personal belongings. However, as will be discussed below, there are a host of legal considerations that employers must take into account before it embarks on employee searches. What follows is a short discussion of some of the hazards of incorrectly conducted employment searches and suggestions that should be considered when drafting a loss prevention policy.
When the concept of employee searches is discussed, most people immediately think of the United States Constitution's prohibition against unreasonable searches and seizures. What many people do not realize, however, is that unless an employer is an agency of federal, state, or local government, the Constitution does not regulate such conduct. As a result, before an employer conducts an employee search or contemplates instituting an employee-search procedure, the employer must first determine if it is governed by constitutional limitations. Although it is possible for public-sector employers to conduct employee searches without contravening the Constitution, such as by establishing protections to ensure that the searches are "reasonable," such protections must be carefully tailored. Accordingly, public-sector employers are encouraged to speak with counsel before conducting any such search.
Although the Constitution's protections do not extend to private-sector employers, private-sector employers should not believe that they have an unfettered ability to search employees' property. Rather, there are host of legal theories by which a private-sector employer can be found liable if it does not conduct its searches properly. For example, plaintiffs subjected to workplace searches have brought claims against employers under such diverse legal theories as invasion or privacy, intrusion upon seclusion, false imprisonment and defamation. In addition, employees, or former employees, also commonly file administrative actions in agencies like the Equal Opportunity Employment Commission, state civil rights commissions and the National Labor Relations Board against employers for allegedly discriminatory workplace searches. Similarly, in workplaces where employees or former employees have the ability to avail themselves to labor arbitration, issues related to employee searches are also common.
Although there are significant pitfalls to conducting employee searches, private-sector employers should not be discouraged from using them if warranted by the circumstances. However, so as minimize the potential liability connected with an employee search, it is highly recommended that the private- sector employers have a loss prevention policy articulated in its employee handbook. What follows are suggested provisions and tips for such policies:
- Communicate to employees in advance that certain areas or objects will be subject to searches so as to eliminate any expectation of privacy. For example, if the employer intends to search employees' desks or lockers, inform employees that these areas are the property of the company and that only company-issued locks and keys are to be used. This message will signal to employees both the employer's intent and ability to search these areas. Similarly, clearly identify personal items that will be subject to searches. Avoid searching the body or person or employees -- it is simply too intrusive.
- Conduct the searches in a consistent, nondiscriminatory manner. If the employer intends to randomly conduct searches, inform employees of this fact in the terms of the loss prevention policy.
- When conducting the search, take precautions to protect employees from public humiliation and embarrassment. However, be sure to have at least one additional member of management witness every search. If your employees are unionized, have a union representative watch (but not participate in) every search.
- Provide for disciplinary penalties for employees' failure to cooperate. However, it is important to distinguish between discipline for failure to cooperate in a search and presuming that an employee is stealing because he/she refuses to be searched. The latter could result in a defamation claim whereas the former is permissible.
- Never physically restrain or detain employees. Ask all employees selected for searches to cooperate. If they refuse, remind them of the potential disciplinary consequences. If they continue to refuse, allow them to leave the premises. Afterward, take whatever disciplinary action is appropriate. Detaining employees against their will, even briefly, can give rise to a claim of false imprisonment.
- If you find illegal drugs, call the police immediately. Taking possession of the narcotics for a substantial period of time may result in the criminal prosecution of the employer for the possession.
- If the search is at the request of, or in cooperation with, law enforcement, consult with counsel prior to conducting the search. If not done correctly, a private-sector employer's cooperation or participation in such a search could provide an argument that the private-sector employer is a state actor and thus the aforementioned Constitution protections could applicable.
- Keep any discussions about the search, or the results of a search, to management officials with a "need to know." Excess discussion of an upcoming search can make the employer lose the element of surprise. In addition, discussions amongst the workforce about the search, or individuals subjected to the search, could subject the employer to potential defamation claims.
- Consistently discipline employees under the policy. As with any other workplace policy, inconsistent enforcement presents the argument to an affected individual that he/she was treated discriminatorily.
- Have employees sign an acknowledgement that they have read and understand the terms of the loss prevention and employee search policy and that they understand that they do not have any expectation of privacy to the areas subjected to search.
It should be noted that in unionized workplaces, the National Labor Relations Board has held that search policies are mandatory subjects of bargaining. Accordingly, a unionized employer cannot unilaterally implement a search policy without first bargaining to impasse with the union about the search policy.
When properly implemented, employee searches can not only be an invaluable tool in discovering workplace theft, they can also deter such theft from even taking place. However, in order to maximize their effectiveness, and minimize potential liability, it is advisable that employers conduct workplace searches pursuant to a clearly articulated and widely disseminated loss prevention policy. Without such a policy, the only thing many employers conducting workplace searches will find is litigation.
Stuart R. Buttrick
Associate, Baker & Daniels
Phone: (317) 237−1038
"The above article has been reprinted from the Indiana Employment Law Letter, published by M. Lee Smith, LLC."
With over 40 members currently practicing throughout its offices, Baker & Daniels' Labor and Employment Law Team is the largest in Indiana, and among the largest nationwide.
Representing employers in both the private and public sector, we handle the entire range of labor and employment law matters facing industry, business, construction, health care and educational institutions, as well as state and local governments. Team members work with clients of all sizes across the United States.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.