Everything You Need to Know About Employee Theft Laws in California

Employee theft occurs when an employee engages in acts of embezzlement against their employer. Here’s everything you need to know about employee theft laws in California.

California Penal Code 503 defines embezzlement as the fraudulent appropriation of property by a person to whom it has been entrusted. In this case, the two parties involved are the employer and the employee.

Examples of Employee Theft

There are five examples of employee theft, or embezzlement, all of which are illegal and punishable:

Inventory Theft

The employee steals inventory or product from their employer, either for personal use or with the intent to sell it independently.

Data Theft

A dangerous form of theft because the company’s private information and sensitive data become very vulnerable. An employee who commits this kind of theft might steal trade secrets, clients’ or other employees’ personal information, client lists upon leaving the company.

Services Theft

Some employees may abuse discounts for services as a means for keeping the money for themself. For example, an employee at the front desk of a nail salon may ask a nail tech to perform their service for free, when in reality, the first employee pocketed the money the customer paid for the service.

Payroll Theft

If an employee’s type of work involves financial tasks, they could steal money from their co-workers’ paychecks by cashing them and issuing fake checks instead. This problem can occur if the same employee is tasked with writing paychecks and running the payroll account.

Monetary Theft

This can occur frequently in businesses with cash-heavy revenue, such as retail. An employee could steal, cash funds from registers, overcharge a customer and keep the difference for themself, or skim a sales book and keep money from the sales not recorded.

Related: California Theft Laws: Petty Theft, Grand Theft, & Shoplifting

Punishment for Employee Theft

Per California Penal Code 503, every individual who is guilty of embezzlement will receive punishment that is equivalent to the value of the property embezzled. The stolen property will be evidence in itself of the debt or right of action. In short, the employee would have to pay back the same amount of money they stole from their employer. If the employer is the federal government, or a local or state municipality, the funds embezzled are essentially public funds of the United States. Thus, the offense is considered a felony. The employee would then be subject to imprisonment, and further, the person convicted would be deemed ineligible to any honor, trust, or profit of the state.

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