Ep. 34: The Employee on the Other Side · Internal Theft

Depending on whose research you read, around a third of retail loss traces back inside the building and yet the internal case is the one most operations handle with the least discipline. Don Carr and Jim Cords get into why an employee investigation carries legal ground a shoplifting case never touches: wrongful termination, defamation, the back-office interview that drifts into pressure and becomes its own claim. The overwhelming majority of employees are honest; this is about doing the rare real case right. Documents before interviews, a small circle, counsel earlier than feels necessary, and no pressure in the room because if the evidence only holds with pressure, there was no case. The evidence convicts; the shortcut gets you sued. 

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SPEAKER_01 0:02

This is the City Safe Podcast, a conversation at the intersection of community safety, technology, and leadership. Co-hosted by Don Carr and Jim Kortz. Together, we examine the critical issues facing cities today and the smarter tools that can help reduce crime and protect our communities. From instant communication systems to emerging technology, we break down what works, what doesn't, and what's next for urban safety. Because in today's world, keeping people safe requires more than good intentions. It requires innovation, data, and decisive action. Listen to the City Safe Podcast, available now on Spotify, Apple Podcasts, and YouTube Music. Subscribe today and join the mission to make cities safer for everyone.

SPEAKER_02 0:49

Last week we ended at the refund desk. The fake return. No customer standing there. So let's walk through that door because the numbers on this are significant. Depending on whose research you read, somewhere around a third of retail loss, sometimes more, traces back inside. Not the crew driving between states, but the person with a name tag and a schedule.

SPEAKER_00 1:16

Right. So before anyone bristles at that, let's say the other half of it here because there's two sides to this coin. The overwhelming majority of employees are honest. This is not an episode about suspecting your people.

SPEAKER_02 1:32

Correct. It's an episode about what happens when you do have a real problem. Because that's the moment most operations get wrong. It's not the theft, it's the response to it.

SPEAKER_00 1:44

I'm Don Carr.

SPEAKER_02 1:46

I'm Jim Cortes. Welcome to the City Safe Podcast. Today we're talking about internal theft and why the investigation itself can be where the danger lives.

SPEAKER_00 1:59

So start there because it's counterintuitive, Jim. You think catching an employee stealing is the clean scenario. You've got them on camera, it's your own systems, it's your own building.

SPEAKER_02 2:13

Yeah, you would think, right? But an internal case has something the external one doesn't. An employment relationship. And that relationship comes with a whole layer of legal ground, the shoplifting case never touches. So depending on the state, of course, you're dealing with wrongful termination exposure, defamation if you say the wrong thing to the wrong people, sometimes wage and hour issues if you go docking pay to recover losses. A stranger who steals from you walks out of your life. An employee you accuse, not somebody with standing with a paper trail, and in many cases, a lawyer's phone number.

SPEAKER_00 2:54

So there are a lot more layers to this aspect, and the bar for the internal case is much higher, not lower, right?

SPEAKER_02 3:03

Right, higher. And most operations run it lower because it feels informal. It's let's pull them into the office and sort this out. And that informality is exactly where things can go sideways.

SPEAKER_00 3:17

Right. So let's give some examples, Jim, of maybe a classic version of what sideways looks like.

SPEAKER_02 3:23

Okay, let's talk about the interview that turns into something else. So let's say a manager is sure they have that they got their guy. So they sit him in the back room, door closed, two supervisors, and it goes on for an hour, maybe two hours. Just tell us what happened, and this stays simple. Or maybe there's a suggestion that the employee can't leave until it's resolved. Maybe the employee is told, sign the statement, or we'll call the police. And look, you know, I spent a career doing interviews and a lot of internal investigations. And the moment that room stops being a conversation and starts being pressure, you're creating problems. You're not solving them. In a lot of jurisdictions, a coerced statement is worth very little. And the way you got it can become its own claim. False imprisonment, duress. We did a whole episode on where detention goes wrong with customers, but the same lines exist in that back office, and people forget it because it's an employee.

SPEAKER_00 4:28

Very well articulated, Jim. Because the badge on the lanyard makes it feel like more of an HR matter instead of a legal one, right?

SPEAKER_02 4:37

Yeah, and it's always kind of both. So here's here's the other classic: the accusation that travels. Somebody decides Dave's the problem. And before anything's established, it's been said the three other managers mentioned to the team hinted to the next employer who calls for a reference. If it turns out you're wrong, and sometimes you are wrong, every one of those conversations is a problem. Depending on the circumstances, that's defamation territory. What you say about an unproven suspicion and who you say it to matters enormously.

SPEAKER_00 5:18

I think that last part you said is worth repeating, Jim. What you say about an unproven suspicion and who you say it to matters significantly.

SPEAKER_02 5:42

Yeah, that's that's most of it. Build the case, you'd build any case. Transaction records, video, inventory data, the documents first, before anyone's interviewed, involve the people who should be involved, HR and honestly uh legal counsel earlier than it feels necessary. Keep the circle small. And when you do interview, it's an interview. Voluntary, reasonable length, no threats, don't block the door. If the evidence is real, it will hold without that pressure. If it only holds with the pressure, then you don't have a case.

SPEAKER_00 6:24

Indeed, Jim. And there's a version of this where the evidence is solid, and you still just let them resign quietly and move on in some cases, which I can understand the appeal of.

SPEAKER_02 6:39

Oh, sure. It's very common. And in some situations, it's a defensible business call. The case is small, the proof is thin, and the fight really just isn't worth it. Where I'd push is when it becomes the default. Because the quiet resignation every time teaches the building that nothing happens, and the person moves on to do it somewhere else. There's no one right answer there. Just make it a decision, not a reflex.

SPEAKER_00 7:10

So that's the same thing we keep landing on. Choose it on purpose. Every time. So the short version internal theft is real. Most of your people are not part of it. And when you do find a problem, the case against an employee needs much more care than the case against a stranger. Documents before interviews, small circle, and no pressure in the room.

SPEAKER_02 7:42

Right. The evidence convicts, the shortcut can get you suit.

SPEAKER_00 7:47

Well said. Next week, the person you've told never to come back. And what happens when they do? Trespass, banning, and where enforcing it can get complicated. I'm Don Carr.

SPEAKER_02 8:04

I'm Jim Kortz. Stay well, stay aware.

SPEAKER_00 8:08

And stay city safe.

SPEAKER_01 8:11

This is the City Safe Podcast, a conversation at the intersection of community safety, technology, and leadership. Co-hosted by Don Carr and Jim Kortz. Together, we examine the critical issues facing cities today and the smarter tools that can help reduce crime and protect our communities. From instant communication systems to emerging technology, we break down what works, what doesn't, and what's next for urban safety. Because in today's world, keeping people safe requires more than good intentions. It requires innovation, data, and decisive action. Listen to the City Safe Podcast. Available now on Spotify, Apple Podcasts, and YouTube Music. Subscribe today and join the mission to make cities safer for everyone.