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The SESCO Report – June 2008

What to do if you Suspect an Employee is Stealing from the Company

There are few employment dilemmas as sticky as dealing with the possibility that an employee is stealing from the company. Management must handle it with almost surgical precision to guarantee that they do not overstep its bounds and expose itself to liability.

If you suspect an employee is stealing, first contact your SESCO consultant. You will have to decide whether to conduct an internal investigation or contact an outside expert or even the local authorities. Internal investigations typically cost far less, but external resources must be considered if the theft is of significant dollar or product value or involves drugs within healthcare facilities.

Whether the investigation is performed in-house as coached by your consultant or through an outside investigator, the investigation will typically include the following steps:

? Gather facts and compile documentation to include information about witnesses, documents and physical evidence.

? Audit computer files, financial records, etc. within FCRA limits. Preserve evidence such as documents, computer files and emails.

? Maintain chain of custody to document the movement of physical evidence. You may have to prove exactly who held the evidence and whether anyone had an opportunity to manipulate it.

? Conduct thorough interviews and document.

? Document all investigative steps taken and summarize your interviews. The resulting report may be a key document in the event of any legal action.

Pending the investigation and conducting interviews of witnesses as well as those who are suspected, you will determine whether or not to enter into disciplinary action and/or press charges. If the offense is serious, you will want to consider criminal action and that may involve local authorities. If this action is taken, you will want to consider whether or not the employee should be suspended with or without pay pending formal investigation.

As you work through any interview or disciplinary action, be aware of the don'ts:

? You cannot implement a polygraph exam due to the Employee Polygraph Protection Act. Only the authorities can administer such exams in the normal course of an investigative process.

? Be careful about the use of the words "theft" or "stealing". Using the wrong words can expose your organization to a defamation claim.

Prevention is always the best cure. In reality, if not all, most employers have experienced employee theft on a regular basis. Theft is expensive and creates significant cultural problems. Employers should create loss prevention policies and procedures as well as conduct ongoing audits. Ensure employees know that dishonest acts are serious infractions and advise employees that if they know of another employee's dishonesty and fail to report it, they too can be subject to disciplinary action.

The Twelve Elements of Employee Performance

To identify the key elements of worker engagement, Gallup conducted thousands of interviews in all kinds of organizations and industries. The following 12 statements are the result of Gallup's research which best predict employee and work group performance:

1. I know what is expected of me at work.

2. I have the materials and equipment I need to do my work right.

3. At work, I have the opportunity to do what I do best every day.

4. In the last seven days, I have received recognition or praise for doing good work.

5. My supervisor or someone at work seems to care about me as a person.

6. There is someone at work who encourages my development.

7. At work, my opinions seem to count.

8. The mission or purpose of my company makes me feel my job is important.

9. My associates or fellow employees are committed to doing quality work.

10. I have a best friend at work.

11. In the last six months, someone at work has talked to me about my progress.

12. This last year, I have had opportunities at work to learn and grow.

Unfortunately, surveys report that more than half (50%) of employees are disengaged and unproductive. Obviously, the key for highly productive and successful organizations is to determine why employees are disengaged or disenchanted and address those symptoms.

One of the most effective tools management can engage is the use of an effective employee satisfaction survey program. An effective survey program will answer clearly the above 12 engagement indicators and subsequently will provide management with a roadmap to address deficiencies and improve workplace performance.

SESCO conducts surveys for clients and boasts one of the oldest survey tools on the market which includes benchmark databases for banking/finance, healthcare, retail, and manufacturing industries with tens of thousands of employees and management averages. Contact SESCO to learn more about our satisfaction survey process, tools and consulting services.

Who's The Boss? ? How Discrimination Law Treats Leased Employees and Independent Contractors

In today's competitive economy, employers are experimenting with new ways of organizing work in an attempt to avoid traditional responsibilities or in an attempt to reduce costs. Common methods include utilizing independent contractors or even leasing their employees through a PEO. With these methods, the employer has changed the basic employment relationship with their employees by ceding control over individual employees to another entity or creating an employment relationship "at arm's length."

Many employers utilize these "employment concepts" to rid themselves of "headaches" and liability. However, when one explores the legal employer-employee status, are employers who engage in such relationships relieving themselves of liability?

Most employers will find it surprising that the use of PEO's, employing independent contractors and other techniques do not actually reduce their liability.

Who is the employer? and who is the employee? for the purposes of federal and state employment regulations. The law is clear in stating that an employer is defined as anyone having any type of control over employees. Therefore, even if you contract or lease employees, if you are supervising or directing the work of those individuals, you would be considered an employer and subject to federal employment regulations. And the reality is, most organizations exert some form of control over the individual's within their workplace. Consider each case:

? Employee Leasing Arrangements ? Employee Leasing Arrangements easily become joint employer situations. Where employees are selected by a leasing agent and then turned over to the supervision of the leasee, the leasee's control over the employees will result in the leasee being treated as an employer.

This outcome may surprise many employers who use leased employees. For many employers, the attraction of leased employees lies in the fact that the leasing company handles virtually all of the personnel functions. Employers should be aware that the one function the leasing company cannot assume for the employer is the function of assuring non-discriminatory treatment. Thus, an employer who uses leased employees cannot discriminate against those employees on any federal or state protected category. Nor may an employer allow leased employees to suffer from unlawful harassment. In summary, an employer's reliance on leased employees does not diminish any of an employer's responsibility under federal employment law.

? Independent Contractors ? Since individuals who work as independent contractors are not subject to control by the employer, they cannot be counted as employees for Title VII purposes and thus, cannot be sued under the provisions of Title VII. This does not mean that a company can ignore discrimination laws simply because it earns its income as an independent contractor. Such a company will be considered an employer if it employs 15 or more employees. The fact that the company's relationship with its clients is that of an independent contract is irrelevant to the to the nature of its relationship with those who work for it.

Also as a footnote, most independent contractor relationships do not meet IRS regulations which are very specific. If your organization uses independent contractors instead of regular employment, you should contact SESCO to determine if the relationship is legal according to Department of Labor and IRS rules.


Before entering into a relationship with a leasing company, an independent contractor or an insurance company, an employer should evaluate how federal and state employment laws will apply to the relationship. If possible, any issues regarding control over employees or indemnification against lawsuits should be settled at the beginning of the relationship. The employer should also remain vigilant enough to recognize and cretail misconduct by individuals for whom it may be held responsible.

SESCO Client Inquiry ? Staff Response

Question: Are we required to offer benefits to part-time employees?

Answer: Certain benefits such as unemployment and workers compensation are mandated by state law and apply to all employees.

Eligibility for voluntary benefits such as vacation, sick leave, medical insurance, life insurance, etc. is at the discretion of the employer. Eligibility for benefits is often tied to employees' normal work schedule. For example, persons working less than 32 hours in the workweek would not be eligible for benefits, or they might be eligible for certain prorated benefits. Employers should be certain that their policy is clear on what benefits are offered to full-time and part-time employees and the eligibility requirements for these benefits.

One exception is under the Employee Retirement Income Security Act (ERISA) with the "1,000 hour rule". Employees who have completed 1,000 hours service in a period of 12 consecutive months are eligible to participate in any company pension or profit-sharing plan that is offered to other employees. This requirement applies to both full-time and part-time employees.