Employee Must Pay for Investigation into Her Own Theft

McCarthy Tetrault

If you have ever thought it wouldn’t be worth the cost to investigate an employee’s criminal misconduct, the recent decision in Canada Safeway Limited v. Brown, [2007] B.C.J. No. 2400 (S.C.) might make you reconsider. Not only was the employee ordered to pay back the money she stole, the judge tacked on six times that amount to cover the costs incurred by the employer in investigating and prosecuting the employee.

Facts
As a cashier and customer service representative for Canada Safeway, a major grocery store chain in Western Canada, Sharon Brown had unsupervised access to the company’s cash and accounting records. When Safeway began experiencing cash and inventory shortages, it installed surveillance equipment and assigned its security officer to investigate. Lo and behold, Safeway discovered that Ms. Brown was processing fraudulent refunds and pocketing the cash.

Ms. Brown was criminally charged with theft over $5,000 and, in the end, pleaded guilty to theft under $5,000. Safeway participated in the police investigation and Crown prosecution.

Safeway incurred huge costs, both in terms of cash expenditures for installing the surveillance cameras and human resources dedicated to conducting the investigation and assisting the police and prosecution in the criminal case. Safeway subsequently launched a civil lawsuit against Ms. Brown to recover the cash she had stolen, as well as the related costs.

Damages award
Based on Safeway’s investigation and accounting records, the judge accepted its claim that Ms. Brown had stolen approximately $6,000 and ordered her to repay Safeway that amount in damages. Safeway also claimed its expenses for the security officer’s travel to the grocery store from his headquarters and hours lost due to the internal and police investigation. Safeway calculated these losses taking into consideration the full salary and benefit costs of the employees involved in the investigation.

For her part, Ms. Brown argued that compensatory damages should not include costs incurred in assisting the police and Crown with the prosecution, especially since she confessed to Safeway after the internal investigation.

The judge agreed with Safeway and held that compensating an employer for the use of its corporate resources to investigate a theft and to assist the police and prosecution is “fair, appropriate and not too remote.” In the end, in addition to an order to repay the stolen funds, the judge awarded Safeway an additional $24,512.26 in consequential damages for expenses it incurred in the criminal investigation and prosecution of Ms. Brown.

Lessons for employers
Employers often choose not to act on their suspicions about employee misconduct because of the costs of investigation and the burden it places on other employees.  However, there is now one more good reason to go ahead with an investigation. Not only will it allow you to identify weaknesses in your internal anti-crime processes and procedures and put better safeguards in place and allow you to gather evidence to use against the employee in either a criminal or civil proceeding, you also may in the end be able to recover the costs of the investigation from the thieves themselves.