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No amount of money the employee pays back can prevent the filing of criminal charges. If returning what was stolen prevented prosecution, then anyone who shoplifted or stole anything ever would simply return it if caught and then be immune from any effort to prosecute them.
Returning the money is certainly something the District Attorney and judge would consider when deciding how to prosecute and sentence the crime. It may even cause the DA to decline to pursue the matter altogether, though that is never a guarantee. So, returning the money helps but does not in any way ensure that the employee won't be prosecuted.
Now, if the employer is demanding MORE money than what their losses were in exchange for not reporting the crime, that can be construed as extortion, which itself is a criminal offense. However, this does not offset or somehow nullify the original criminal offense perpetrated by the employee, which can be prosecuted no matter what. However, the extortion can be reported to the police separately, and the DA may prosecute that crime against the employer.
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