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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 6770
Experience:  Significant experience in all areas of employment law.
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Hi Lawyers, I have an employee who I designated as manager

Resolved Question:

Hi Lawyers,

I have an employee who I designated as manager of one of our retail locations. I recently found out after having my doubts that she is voiding most of the cash sales on our POS system and pocketing the money. It has been going on for months. She did not know that the POS software we have keeps a log of all void transaction including when it got voided. She is the only one who has the access code. I did check on our camera that she was the one who was voiding it based on the log file.

I wanted to know my options on how to approach this legally (EDD, accusing her of Grand theft, calling the cops etc.)

I was thinking of just letting her sign a letter of resignation and a non-disclosure agreement since she knows company trade secrets being on the managerial level. Appreciate your kind advise. Thank you
Submitted: 9 months ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 9 months ago.

Good evening and thank you for your new question. I hope you have been well since we spoke back in July about UI premiums.

I am very sorry to hear about this employee's theft. Fortunately, an employer in your circumstance retains vast discretion with regard to handling these sorts of situations. Absent an agreement to the contrary, employment is "at will" and as such can be terminated at any time, subject to very limited exceptions.

Obviously, theft is a terminable offense. It sounds like you have more than sufficient evidence to support a denial of unemployment benefits, which requires showing the employee engaged in "misconduct" (defined as a willful or grossly negligent disregard for the interests of the employer).

You can also report this theft to your local police, and with the evidence that you have, you may even get the DA to file charges.

It sounds counter-intuitive, but even though you are terminating this employee for cause, she is entitled to payment of her final wages immediately upon being let go. The failure to make such timely payment will result in a penalty assessment for each day the wages go unpaid up to 30 days, so that is a costly blunder you want to avoid making.

Any employee who routinely comes into contact with their employer's trade secrets as part of the employee's job already has a legal obligation not to reveal that sensitive information You could offer to have the employee sign a nondisclosure agreement in exchange for "letting" her resign, but most likely you don't have to get the non-disclosure in order to ensure the protection of your trade secrets.

As a practical matter, if this employee is dishonest enough to commit habitual register theft, how likely are they not to steal trade secrets simply because they signed their name on a contract so prohibiting? I'd venture to guess not much more likely than if they signed anything at all--if anything perhaps less likely since now you have indicated how important the information and knowledge they have actually is.

I hope this provides you with some food for thought moving forward. As always, p do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

Customer: replied 9 months ago.

Thank you for your answer. Should I still pay her last wages as she stole over 20,000 dollars since March to present which I have evidence, how about the money stole?

Expert:  Patrick, Esq. replied 9 months ago.
The Industrial Welfare Commission Wage Orders permit deductions from wages to offset losses incurred through willful misconduct, such as theft. However, the DLSE has cautioned that the IWC regulations which permit deductions of this kind may, in fact, not comply with the California Labor Code and various California Court decisions. In other words, deductions from wages to offset theft may or may not actually be legal--the law is not entirely clear on this point.

In my private practice, I usually advise my employer clients against deducting from employee wages, even in instances of provable theft, as doing so simply invites trouble. Even if your position is determined to be legally justified, you still lose if you're sued and have to hire an attorney to defend your business in court.

Given the amount stolen and the strong evidence you have to support the charge, I can't imagine the DA not pressing charges and a restitution order (meaning an order that this employee pay back what they stole) as being part of the punishment imposed.

I hope this provides some clarification. Please let me know if I can be of any further assistance.
Customer: replied 9 months ago.

Thank you for the clarification. With EDD, do they ask for evidence that she did a misconduct (theft)? Do I have to prove that with them? And since I am offering her just to file a resignation instead of pressing charges, would that not be coercing her to sign the letter of resignation when she reports it to EDD?

Expert:  Patrick, Esq. replied 9 months ago.
Yes, the EDD will ask for evidence of the misconduct and you will need to to provide it to them to the extent you wish to have this employee disqualified from benefits.

I am not sure I understand your last question. Can you clarify what you mean here: "And since I am offering her just to file a resignation instead of pressing charges, would that not be coercing her to sign the letter of resignation when she reports it to EDD?"

Thank you.
Customer: replied 9 months ago.

What I meant was, normally EDD does not give benefits if the employee resigns on her own. But since I am offering her to just resign instead of pressing charges for the misconduct, which I think she will choose to the former which is to resign . Am just concerned when EDD calls her, she will state that she was forced to submit a letter of resignation.

Expert:  Patrick, Esq. replied 9 months ago.

Thank you for clarifying. Usually a resignation in these circumstances is just "for show"--something the employee can use to save face when applying for other jobs. She is always obligated to be truthful in her application for benefits. The problem for her is that being truthful is not going to get her any closer to succeeding with her claim, since the real reason she is now unemployed is do to easily provable misconduct.

I wouldn't worry about this.

Patrick, Esq., Lawyer
Satisfied Customers: 6770
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Expert:  Patrick, Esq. replied 9 months ago.

Jason,

I just wanted to say thank you so much for your positive rating of my service and kind bonus. It was truly my pleasure to be able to assist you.

If you have any further questions or concerns regarding the above, please do not hesitate to contact me. I am available for followup at no additional charge.

Also, in the next day or so, you may receive a survey from Just Answer asking about your experience with me. I would be tremendously grateful if you'd take a moment to provide high marks, as your opinions are extremely valuable to the site and of course to me as well.

Very best wishes to you.

Customer: replied 9 months ago.

Hi Atty,


I would like to know if an NDA is enforceable in California. I plan to include the clients and trade secrets?


 


I will have this signed by the manager I caught stealing money from us.

Expert:  Patrick, Esq. replied 9 months ago.
Jason,

Thanks for your reply.

NDAs are enforceable with regard to legitimate trade secrets and client lists are protected only if they quality as a trade secret. A trade secret is information which (i) derives independent economic value, actual or potential, from not being generally known, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

See here for a detailed discussion as to whether and in what circumstances client lists qualify as trade secrets: http://scholar.google.com/scholar_case?case=3664324957067638309&hl=en&as_sdt=2&as_vis=1&oi=scholarr As a warning, the standard is quite high.

Please let me know if I can be of any further assistance.
Customer: replied 9 months ago.

Thank you for your prompt reply. Since she committed grand theft, I have decided that I will just have her sign a NDA in exchange for her to sign a letter of resignation and leave peacefully.


 


My concern is what if she denies the allegation even with the evidence laid in front of her? What are my options? I am going to confront her tonight during our meeting.

Expert:  Patrick, Esq. replied 9 months ago.
Obviously you can't force her to admit anything but given the compelling evidence she should. I'm not sure I have anything further constructive to add here. I wish you the best with this. Good luck tonight.
Patrick, Esq., Lawyer
Satisfied Customers: 6770
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you

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