Q: I own a mid-sized company and have reason to believe that one of my employees is stealing from me by manipulating payroll. I’d like to quietly fire him before things get out of hand but I’m concerned about how his scheme may have placed my company in jeopardy and that what he did will expose the company to criminal charges. I’m not sure what to do at this point.
A: While any decision regarding firing your employees is yours to make, and certainly a decision to cut your losses and simply let him go is one option, because his scheme may have involved payroll should cause you to pause and consider the following before proceeding. While clearly you and your company would be the victims of the thefts, how the money was stolen would play a role in determining possible criminal liability and also how a prosecutor would view your company’s role in the scheme.
In New York State, a corporation (and I’m assuming you are incorporated) may be found criminally liable when conduct which constitutes an offense is “engaged in, authorized, solicited, requested, commanded or recklessly tolerated by the board of directors of a high managerial agent acting within the scope of his employment and in behalf of the corporation.” There are other theories of corporate liability but this would seem to be the only one to fit your situation.
If for instance, your employee generated the cash by creating phantom employees, or worse paying workers but getting them to kick back a portion of their pay to him, this would be sufficient conduct to attract a law enforcement agency’s attention. Theoretically speaking, if a prosecutor believed that the conduct was committed by your employee, depending on his role in the company, he could potentially expose the company to prosecution—although the New York Penal Law requires a “high managerial agent” act, one appellate court has held that even a lowly foreman can qualify for that lofty title.