The general theme Plaintiff’s lawyers use in these cases is that the Defendant, in an effort to maximize profits, skimped on security measures that would have made the premises safe –i.e. crime free, risk free, covered in bubble wrap with no sharp edges or tripping hazards. To drive up the value of these cases and advance the argument the Defendant was ‘on notice’, Plaintiff’s lawyers rely on the crime statistics for the premises being sued as well as the surrounding community. Police call logs, news articles, social media postings, and the like are used to paint a picture that management was aware of the problem but disregarded the risk to its customers.
Once the groundwork has been laid for the ‘profits over people’ theme, the focus of the case shifts to deterrent measures –security guards, security lights, fences, other barriers, cameras, etc. From a defense perspective, the key is to focus on the word ‘deterrent’. More often than not, the criminal perpetrator, if identified and caught, will have an extensive criminal history. For such a person, the fear of going to prison is no deterrent. By focusing on the history of the criminal, you may be able to demonstrate that he/she has committed crimes despite the presence of ‘appropriate’ deterrent measures. Another factor to focus on is the deterrent measures used by other similarly situated businesses in the community. Again, experience tends to show that most businesses follow the same or similar security protocols.
Another effective tool in rebutting the deterrent argument is to place the local criminal justice system on trial in the civil case. What happens to the criminal Defendants charged with these crimes?Are the local judges tough or too lenient on crime? How effective/proactive is the DA in prosecuting these cases? In other words, do criminal Defendants have anything to fear? Unfortunately the answer is oftentimes ‘No’. Instead of relying on or fixing the system, Plaintiff’s lawyers would have the businesses in the community become fortresses impervious to the realties facing the average taxpayer in the community.
Defending businesses in high crime areas is a challenge. Very rarely does the opportunity to blame the victim arise. In addition to presenting positive evidence of the security measures implemented and associated costs, educating the jury as to the realties present in the community, including uncontrollable obstacles that exist when trying to provide a safe premises, can have a positive effect. At a minimum, it should result in a settlement well below policy limits, which is so often not the outcome in these cases.
Authors
David Eaton
David Eaton is a founding shareholder of the firm and practices in the Nashville, Tennessee office. He practices in Kentucky, Mississippi, North Carolina, and Tennessee and focuses in the areas of long-term care defense and general liability claims. As an advisor to health care providers, David has worked closely with nursing home staffs and personnel in the strategy and development of the defenses of cases prior to and through trials. David received a Bachelor of Arts degree in English from Nicholls State University in 1995 and a Doctor of Jurisprudence from Mississippi College School of Law in 2000.
Michael Phillips
Michael Phillips is a founding shareholder with Hagwood and Tipton and president of the firm’s Executive Committee. Michael oversees staff in both the Jackson, Mississippi, and Hillsborough, North Carolina, offices.A significant portion of Michael’s cases involves the defense of physicians, nurses, hospitals, nursing homes, assisted living facilities and other health care providers. He handles all phases of the litigation process – with a particular emphasis on trial – and has defended claims against nursing homes and assisted living facilities in Mississippi, Tennessee, Alabama and North Carolina. Michael also has extensive experience in the areas of complex defense litigation involving premises security/liability, insurance coverage and general insurance defense.
Property Crimes Still Dominate the Hospitality Sector
The majority of hotel crimes are property related. Burglary and theft are the two most common crimes in hotels and most hospitality-based businesses. Hospitality businesses are expected to provide a safe environment to their clients. Many clients have begun seeking legal action not only against the thieves, but the service providers as well. Evidence suggests that this number is tied to poor security practices and that many property crimes could be avoided.
Security for Your Staff
Harassment and discrimination crimes continue to soar in the hospitality sector. One poll of 300 workers in the hospitality sector showed that 89% had been sexually harassed by guests or fellow employees at some point. Of those, around 56% said that the harassment came from a member of the public or a client. Staff safety and avoidance of bullying for physical and mental health reasons however, is a priority.
Furthermore, legal issues regarding tip pools and Fair Labor Management are expected to become an important topic soon. In countries like America and the UK, prices in the hospitality sector are expected to fluctuate due to recent changes in policy. This means businesses trying to maintain their same wages and practices may soon fail to meet minimum wage laws, overtime laws, and more.
Negligence Maintaining Buildings and Permits Persists
For management, the most common legal issues still involve business maintenance. Laws regarding expiring building permits and health codes are expected to become stricter soon. The rate of legal cases involving tax obligations and trademark issues has remained steady for the time being.
The hospitality sector currently faces several legal issues. Discrimination and harassment are unfortunately considered common in the hospitality sector. Property theft and burglary are the most common legal issues facing guests and clients in the hospitality sector. The most common legal issues for management in the hospitality sector continue to be issues regarding health codes, expiring building permits, and tax or trademark issues that businesses have chosen to ignore.
]]>The charges allege that the company would regularly offer heavy discounts or comped rooms for the city’s building department in Santo Domingo and other properties in exchange for assistance with permitting, licensing and, in some cases, to avoid paying fines.
The hospitality industry is constantly subject to inspection, permitting and licensing from local, state and federal governments. Whether it is a concession to operate on public federal beach property in Mexico, permits to build in protected or historic areas in Cusco, or a license to operate a new multiuse development in Manhattan, the hospitality industry is, somewhat inconspicuously, significantly regulated. Although some hotels operators act as if they do not, most have contact with government officials of every level almost daily.
Every hotel – and every hotel developer or management company – must obtain licenses and permits, must pass inspections and must manage government relations, from local officials to international dignitaries; it must deal with a local fire department inspection, as well as host national leaders. Throughout these interactions, the hotel staff must provide the best and most professional service while staying on the right side of the law.
Transnational Anticorruption Laws
Many of you may be familiar with the Foreign Corrupt Practices Act (FCPA), but some of you may not. The FCPA is a statute of the US that prohibits bribery in the operations and business practices of US individuals and entities in the international arena. The FCPA has two components: one prohibits international corruption and bribery directly, and the other indirectly, through accounting requirements. In general, the anti-bribery component prohibits giving anything of value to foreign government officials in exchange for an improper advantage. The accounting and record-keeping component applies only to “issuers,” or what are generally referred to as publicly held entities.
To US companies, the FCPA is the most relevant transnational anticorruption law. However, many countries have enacted similar legislation with an increasing number of enforcement actions. Under the umbrella of the OECD anticorruption convention, the UK, France, the Netherlands, Mexico, Chile and other OECD members all have laws that prohibit their national companies from bribing foreign government officials. Other non-OECD member countries, like Peru, Argentina and Brazil, have also enacted similar laws. These laws and other international treaties establish principles of cooperation between nations, which means that a violation in one country could lead to potential prosecution in many others. If you are familiar with recent scandals in Latin America, you may have noticed that cooperation between Brazil, Switzerland and the US led to significant penalties for companies and individuals.
Additionally, most countries in the world have domestic anticorruption laws that prohibit not only bribery, but also influence peddling, false government claims and improper inducement. Thus, companies may be subject to prosecution for improperly seeking government action (through bribes, influence or inducement) in both the place where property is located and the company’s headquarters.
This means that companies should ensure that their teams are trained and understand the risks associated with improper payments at any time, for any reason and at any level, and that the company has an adequate reporting mechanism and response protocol to address any allegations of misconduct. The alternative can subject individuals to criminal and civil liability and cost the company millions in penalties, fines and investigation costs.
Bribes and Other Improper Inducements
A bribe can be anything of value as long as it is given to a government official with an improper purpose (i.e., to get a benefit or advantage, or avoid a penalty). Value can be anything and in the hospitality industry, it includes comps, upgrades, loyalty points, discounts and many other benefits hotels regularly give to their guests. Government official is also defined broadly and includes building and health inspectors, police and military, but also ambassadors and, in some cases, even doctors and teachers.
When a guest who happens to be a government official complains, can they receive an upgrade? When the chief of police visits the restaurant, can they get a drink “on the house”? When an ambassador and their entourage arrive, can they get a room upgrade? Who should be making these decisions?
Compliance is simple in theory, but hard in practice. Stating in the code of conduct that employees should not bribe government officials to obtain a benefit or advantage is only the starting point. Requiring the finance director to have adequate controls in place to ensure that the hotel’s books and records are accurate is necessary, but does your company have the adequate policies and procedures in place to properly register a free meal or an upgrade?
Defining when a comp is a bribe, and when an upgrade is improper, is never easy. The decision – many argue – should not be made by the front desk or even at the property level. This is certainly true if property level employees do not receive adequate training nor have specific compliance policies and procedures that address these issues. The prohibition against bribery is the main thrust behind a company’s anticorruption compliance program, and adequate internal controls its primary objective.
Compliance Programs
There is no one-size-fits-all compliance program. Each company must conduct an independent risk assessment and determine what type of program is right to address its particular risks. That said, various government authorities, including the US Department of Justice (DOJ), have provided some guidance as to the minimum expected requirements to establish adequate internal controls. In addition, many recently enacted laws have leniency provisions for companies with robust compliance programs. Based on these guidelines, there are several basic elements of a compliance program:
Every company’s compliance program must have each of these elements to have an effective compliance program. These elements, however, must be fashioned in proportion to the company’s risk profile, size and revenues, government interactions, etc.
Consequences of Noncompliance
Let me share some useful statistics, courtesy of Stanford’s FCPA Clearinghouse on FCPA enforcement and how disruptive it can be
for companies:
Internal Investigations
Based on a sample, the cost of a company’s internal investigation can be more than 10 times the amount of profit obtained from bribes paid. If a company pays US$10,000 in bribes, it may pay hundreds of thousands of dollars in penalties/disgorgement and more than US$1 million to conduct its global internal investigation. Internal investigations into bribery are, generally, global in nature and expansive in scope. The mandate is twofold: on one hand, it must determine if the specific bribery allegations are true and, on the other, it must establish if this same fact pattern that caused a failure of internal controls is occurring in other locations or properties.
Conclusion
Many companies in the hospitality industry do not have a working compliance program either because they have not assessed the significance of the risk or because they believe such an undertaking would be costly in efficiency and resources. As we have discussed above, the risk is present from development to management, and the risk compounds without adequate training and controls. As for budgeting, an efficient and cost-effective compliance program is achievable provided the company’s tone at the top – and at the property level – puts compliance front and center.
]]>1. Lighting Lighting is an important security measure in a parking facility. Adequate lighting is a deterrence to criminal activity. It can contribute to the other CPTED concepts and active security measures.
2. Natural Surveillance
Natural surveillance is a concept that applies to everyone that is in or near a parking facility. Not only does it apply to people in the parking lot or parking garage,it applies to people outside of the parking facility or inside the business associated with the parking facility. The ability of people walking by a parking lotor looking out the window of a business to view the activities going on inside the parking facility enhances the security of the facility. In some parking facilities, adequate natural surveillance may be all that is needed to provide reasonable security.
3. Access Control
Access control is an important means of reducing criminal opportunity. Access control is gained through controlling the entering and exiting of pedestrians and vehicles. Proper security of the perimeter of the parking facility enhances access control of the facility.
4. Signs and Graphics
Signs and graphics that are properly located in a parking facility can help pedestrians find where they want to go and minimize their chances of becoming a victim of crime. Additionally, a sign indicating the area is under surveillance or there are security patrols of the area may be a deterrence to a criminal. A graphic is described as a symbol that sends a message in a picturesque manner. An example is a CCTV camera indicating the area is under surveillance.
5. Natural Territorial Reinforcement
Natural territorial reinforcement provides a distinct boundary between public and private areas. The purpose of these boundaries is to send a message to a potential intruder to avoid this area. Natural territorial reinforcement is achieved by landscaping, signs,and ences. It is important to remember to allow or the natural surveillance of the area from the outside; keep landscaping at the proper height and have fencing that is open in its design.
In addition to the preceding five concepts of CPTED, the following two concepts have evolved and are also considered part of CPTED: 1. Maintenance of the Area The maintenance of the area is important to suggest to any potential intruder that the area is well cared for and crime-free. Garbage or debris, let in the area,suggests that the area is not cared for and there is no one responsible for the area. Abandoned vehicles should be removed from the area. It is important to portray the image that someone cares or the area and is responsible for it. 2. Support by Legitimate Activity
There may be areas that are difficult to protect because of their location. These areas can benefit from the placement of a legitimate activity. These legitimate activities can include having a Police substation or a maintenance shop or offices located in the immediate area. Active security measures can complement the overall CPTED features in a parking facility. Active security measures can help compensate or a deficiency of CPTED features. An example of this is a parking lot that is a dead end and there is no natural surveillance of the parking lot from the building. Natural surveillance of the parking lot area becomes less and less as a person walks farther away from the building towards the end of the parking lot,where fewer people have parked their vehicles. The lack of natural surveillance can be addressed by CCTV and/or the presence of security personnel patrolling the parking lot.
Some active security measures are:
1. Security Personnel
One of the best crime prevention methods is the presence of security personnel. It is important that the security personnel be recognizable and visible. They should be properly equipped to perform their duties. Security guards should conduct proper random patrols of an area. This would prevent the predictability of the whereabouts of a security patrol by a criminal.
2. CCTV
CCTV provides surveillance that can detect criminal activities and record the camera footage. Conspicuous CCTV can be a deterrent to a criminal. There are some difficulties in monitoring parking facilities because of shadows, spaces between parked vehicles; and columns, ramps, and walls in parking garages.
The effectiveness of security measures decreases without a meaningful response to a situation. Proper policies have to be in place, so appropriate personnel respond to the situation. The hospitality industry has a responsibility to provide or the reasonable safety and security to its employees and patrons. Parking facilities have become one of the most likely locations for criminal activity on a commercial property. Proper CPTED concepts can provide a deterrence to procedures criminal activity. Active security measures can help compensate or the lack of natural surveillance and access control. Policies and procedures should be established or a proper response to any safety and security incident.
]]>Kidnapping for ransom has historically been a profitable enterprise. As American companies expand their bases of operations and global reach, the number of targets and the number of countries with perceived threats has increased exponentially. According to the United States Department of State, for example, Mexico reported a 300 percent increase in such crimes between 2005 and 2011. Latin America has long been the region with the most reports of kidnapping for ransom, followed by the Asia Pacific region, Africa, and the Middle East—all popular or budding locations for business and recreational travel by American executives.
In addition to identifying the geographical threats, there are many lessons to be learned from prior incidents of kidnapping for ransom. First, by all accounts, the vast majority of kidnaping for ransom incidents (more than 60 percent of reported incidents) end with the captive’s release in exchange for the payment of ransom—approximately $2 million on average. Close to 20 percent are released without payment, with the remainder of victims dying or being killed, being rescued, or, albeit infrequently, escaping. Given the reality that the police in many high-risk countries may also be the kidnappers, many kidnappings go unreported and even fewer have official police involvement.
In response to this unique risk, individuals and entities with a global presence are looking into a specialty line of insurance coverage known as “kidnap and ransom” insurance.
Understanding Kidnap and Ransom Insurance
Kidnap and ransom insurance policies provide coverage for high-profile and high-net worth individuals, executives travelling abroad, and individuals who appear to fit one of those categories. These types of policies then obligate the insurer to pay those costs necessary to secure the safe return of an “insured person” kidnapped in a “covered territory.” These costs include, most notably, the ransom amount paid (up to policy limits) on behalf of the insured person in
exchange for his or her release.
Additionally, depending on the terms of a particular policy, kidnap and ransom coverage can provide indemnity for a variety of other expenses related to the negotiation and delivery of a ransom payment. For instance, at the policyholder’s request, many kidnap and ransom insurers will hire and dispatch experienced security consultants to coordinate the negotiation and payment of the ransom. A number of policies likewise cover the cost of hiring an interpreter, if necessary,
to facilitate negotiations with the kidnapper. Some kidnap and ransom policies also cover payments to “informants” who possess and provide information concerning the whereabouts of the kidnapped individual or the kidnapper’s identity.
Many policies also cover the costs of medical and psychiatric care for the kidnapped individual following his or her release. Kidnap and ransom policies also commonly cover travel expenses incurred by the policyholder to fly the released individual (or his or her relatives) home.
Although kidnap and ransom policies can provide broad coverage for the various
expenses associated with negotiating and delivering a ransom, these policies generally contain
various exclusions as well. Some policies bar coverage for kidnappings that take place in certain
excluded geographical regions. Others purport to exclude coverage for kidnappings planned or
facilitated by a relative or employee of the policyholder.
Common Policy Conditions
Kidnap and ransom policies also typically include a number of policy conditions, some of which can impact coverage in significant ways. Because policyholders with kidnap and ransom coverage could be attractive targets for kidnap plots if the existence of the insurance was known, many policies contain confidentiality clauses prohibiting the insured from discussing the coverage with third parties. Breach of these confidentiality provisions can result in a forfeiture of Policyholders should also expect to see certain notice-related provisions in their kidnap and ransom policies. In particular, kidnap and ransom policies commonly require the policyholder to immediately notify the insurer and local law enforcement agencies of a
kidnapping. Failure to provide prompt notice of a kidnapping can, depending on the particular policy language at issue, jeopardize coverage.
Purchasing the Right Policy
Because the scope of coverage can vary widely from policy to policy, it is important that policyholders carefully evaluate their coverage needs prior to purchasing kidnap and ransom insurance. Indeed, by keeping a few tips in mind, policyholders can avoid many typical coverage disputes and ensure that they purchase policies that suit their particular needs.
For one, when purchasing a kidnap and ransom policy, the policyholder should pay close attention to who is insured under the policy. Insured executives may also want to purchase coverage for their relatives, friends, or employees. A good rule of thumb is to purchase a policy that covers each individual for whom the policyholder would pay a ransom in the event of his or her kidnapping.
Furthermore, policyholders should make sure that their policies provide coverage in the desired geographical regions. Some policies provide worldwide coverage, whereas others exclude coverage for kidnappings taking place in certain specified geographic regions. Therefore, when purchasing a kidnap and ransom policy, policyholders should take stock of their coverage needs and select a policy that provides the desired scope of coverage.
Policyholders should also carefully consider the practical consequences of policies with stringent notice requirements. Many kidnap and ransom policies purport to void coverage if the policyholder fails to immediately provide notice of a kidnapping to both the insurer and local law enforcement agencies. Such provisions may seem relatively uncontroversial, but they can
prove problematic in instances where the kidnapper forbids the policyholder from notifying local police or other authorities. To avoid coverage disputes over the enforceability of such notice-related terms, policyholders should attempt to negotiate more favorable provisions. For instance, policies that only require immediate notice “where practicable” can give policyholders much-needed flexibility when responding to a kidnapping.
Finally, prior to purchasing kidnap and ransom coverage, policyholders should closely review all policy exclusions and other limiting terms. In some instances, policyholders may be able to negotiate more favorable terms, often without any significant increase in premium. For example, the policyholder should take into account the quality and experience of the response team or security consultants hired by and paid for by the insurer.
Conclusion
With the continued globalization of business and business-related travel, more executives are contemplating the purchase of kidnap and ransom coverage. Although this coverage can be a valuable asset to those living and traveling in foreign countries, policyholders must make sure that they purchase policies that meet their precise coverage needs. Then, once a policyholder settles on a particular policy, the policyholder should carefully review all terms and conditions of the policy.
While one can never be completely prepared for a kidnapping, having the right policy in place—and understanding how it works—can provide peace of mind for those individuals living and traveling abroad in high-risk regions.
]]>Prevention in All Forms
Take a thorough look at your hotel’s security measures and processes. Ensure that your guest room locking systems and room safes meet general industry standards. Review, implement or update employee policies related to 1) package passes to control removal of property from the hotel, 2) lost and found procedures, which should be strictly enforced and 3) guest room access by employees. Consider an audit by a security expert to review your security procedures and protocols – in action.
Another criminal trend that can have a major impact on the hotel industry is identity theft. Many hotel employees have access to guest identity and credit card information. Make certain that your hotel is in compliance with the payment card industry security standards. Implement best practices related to credit card and identity documents: purge unneeded credit card data, do not imprint credit cards, ensure that only partial credit card numbers are displayed, carefully monitor charge-backs and carefully limit the employees who have access to guest identity and credit card information.
Prevention also includes proper employee screening. One of the best ways to prevent theft by your employees is to not hire a thief. Consider conducting criminal background checks on applicants and employees with access to guests, their property and hotel property. Consider credit checks on applicants and employees who have access to financial assets. And employee screening should not be finished once the employee has been hired. Require employees to report any criminal convictions during the course of their employment and conduct periodic criminal background and credit checks during employment.
Criminal background checks pose some legal risks at any stage in the employment process. In 2012, the U.S. Equal Employment Opportunity Commission (EEOC) issued updated guidance on the use of criminal background checks in employment titled, Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. Although Title VII does not prohibit the use of criminal background checks, the EEOC cited concerns that employers could use arrest and conviction records to unlawfully discriminate against job applicants based on their race or national origin. A hotel’s criminal background and credit check policy should be tailored to comply with the EEOC guidance and state and local laws that restrict or prohibit criminal background and credit inquires.
The hotel also should be certain it is in full compliance with the federal Fair Credit Reporting Act (FCRA) which sets forth the requirements for authorization by the applicant or employee to conduct the background check and which has strict notification requirements for a hotel if it decides not to hire an applicant based on the information obtained in the background check. Be certain that your background screening vendor is accredited and using updated authorization and notification forms.
Responding to Suspected Theft
A common reaction to suspected theft is to discharge and make an example of the employee and hope to prevent similar actions by other employees. While an employer has the right to discharge an employee who steals, doing so can involve hidden traps. Case law is rife with examples of employers being sued by discharged employees for wrongful termination, malicious prosecution, defamation, false imprisonment, false arrest and invasion of privacy. These legal challenges are usually centered on the methods used to try to catch or prove employee theft – which can result in liability. Surveillance or recording of employees may be illegal under federal anti-wiretapping laws and some state laws. Forcing a suspected employee to sit in a room where the employee cannot leave an investigation meeting can lead to a false imprisonment claim. Searching an employee’s personal items without consent or proper notice can lead to an invasion of privacy claim. Federal laws also regulate the use of lie detectors in investigations of monetary loss.
Before conducting any kind of surveillance through video or voice monitoring, hoteliers should check state and federal law to determine whether an employee’s consent is necessary for such surveillance. Even if consent is not necessary, it is wise to inform employees at the time of their hire and throughout their employment that such monitoring may occur. Never conduct surveillance in private areas such as restrooms or locker rooms.
Policies regarding searches of employees’ lockers or personal belongings brought onto hotel property are generally acceptable and common in the hotel industry. Be certain that the policy is well publicized and acknowledged by every employee. These searches should be conducted in a manner that minimizes confrontation – such as first requesting an employee remove a lock from a locker before removing it forcibly. Loss prevention personnel and managers should be instructed that any search of an employee’s purse or briefcase should be minimally invasive and conducted with the dignity of the employee in mind. Give all employees specific instructions on how to properly remove authorized items from hotel property, through the use of a property pass or otherwise.
Investigations into theft should be carefully conducted and invasive techniques, such as polygraphs, should be avoided. Involve at least two individuals in the investigation and, optimally, one person should not personally know the accused employee. This will help avoid claims that “charges” were trumped up against an employee because of hostility by the investigator. If the company has a written protocol or established past practice for conducting investigations, the protocol or past practice should be followed. Witnesses should write their own statements in their own handwriting and all statements should be legible, dated and signed. An employee who is being investigated should be allowed to tell his or her side of the story and have it included as part of the investigation file. Otherwise, a judge or jury may feel that the employee was railroaded and falsely accused. The investigation must be thorough and an investigator should not limit the investigation to the witnesses identified by the accused if other individuals might have relevant knowledge.
While many law enforcement agencies still include a polygraph examination in investigations, employers are severely limited in the use of polygraphs. The Employee Polygraph Protection Act of 1988 (EPPA) prohibits most private employers from using lie detector tests either for pre-employment screening or during the course of employment. Polygraph tests are permitted in only limited circumstances. One of those circumstances is in connection with an ongoing investigation of theft, embezzlement, misappropriation or an act of unlawful industrial espionage or sabotage. But there are strict limits to this exception, which makes the use of the polygraph exam a legally risky proposition. In order to conduct the polygraph, an employer must demonstrate that the employee had access to the property that is the subject of the investigation, that the employer has a reasonable suspicion that the employee was involved and the employer must execute a specific statement about the loss.
Employers conducting polygraph tests under circumstances permitted by law are subject to strict standards for the conduct of the test, covering pretest, testing and post-testing procedures. And most significantly, the employer cannot terminate an employee based solely on the results of the polygraph test. The employer must have additional, independent evidence of the theft before it can discharge the employee. Many employers decide not to risk running afoul of the strict requirements under the EPPA if the employer has other evidence linking the employee to the theft.
The Final Days
Risks arise again when the hotel makes a decision about what to do with the employee after an investigation into theft. Carefully consider whether police involvement makes sense. While it might act as a deterrent for other employees, it may also lead to a lawsuit by the departing employee for malicious prosecution. It is critical to have some idea as to how seriously the police will respond to allegations of employee theft. Some police departments are too overwhelmed with violent crimes to do more than write a report of the complaint. Ultimately, no police involvement is better than limited or poorly handled police involvement. If a police department is ready, willing and able to respond to reports of theft, call them when the missing item or money is discovered.
Attempting to recoup monetary losses from employee theft can be tricky business. Before engaging in efforts to recoup losses, strongly consider whether it is worth the effort. A common method of recoupment is to deduct from the discharged employee’s last paycheck or withhold the pay out for earned benefits, such as vacation or PTO. Making deductions from a last paycheck may implicate the federal Fair Labor Standards Act, and there are numerous state laws around the country that make the paycheck deduction either unlawful or extremely risky. Before embarking on efforts to recoup losses, it is strongly advised that you consult with trusted labor and employment law counsel in your particular state.
Treat the inevitable unemployment compensation claim with great care. If the employee has counsel, that attorney will likely attend the hearing and question witnesses. Take the time to prepare witnesses fully and make sure they understand the importance of the proceeding. If an employer loses an unemployment compensation claim related to employee theft, the employee may become emboldened to assert other claims. If you cannot spend the time, energy and effort needed to fully prepare for the unemployment hearing, it may well be better to not contest the claim at all.
While hoteliers can take strong steps to reduce employee theft, eliminating it entirely is likely an impossibility. The best loss prevention involves good procedures for hiring, training and supervision of employees. And by following a few best practices, employers can limit the potential liability for claims related to employee theft situations and diminish the potential for the insult of an expensive lawsuit on top of the injury of employee theft.
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