Area of Law: Private Investigation
Answer # 1010
Employee FraudRegion: Ontario Answer # 1010
What is employee fraud?
Employee fraud occurs when an employee commits a fraud against their employer. The employer may be any form of business including a sole proprietorship, partnership, corporation, organization and so on.
While there are many types of employee fraud, the severity of the fraud, and the legal remedies available to the employer are based on many factors, including:
- the amount of damages,
- whether the fraud was an isolated incident, or a complex scheme over a prolonged period of time,
- if the employee was in a position of trust, and
- whether an employee in a position of trust is found to have had a fiduciary obligation to the employer.
A licensed private investigator can help with investigations of employee fraud.
Common types of employee fraud
1. Theft of cash
Stealing cash from an employer can take many forms, depending on the type of business. For example:
- in a bar or restaurant, the cashier may simply keep the register open and not even enter the purchase, or the bar tender and the server may be working together, collecting money from the customer and simply pocketing it,
- in a retail store, the manager may steal from the register, or the deposit bag, and provide a false receipts account by overriding legitimate purchases on the computerized register, or falsely report a return of funds to a customer, and so on.
2. Unauthorized billing, money transfers and overpayments
This type of employment fraud occurs when an employee:
- transfers money into personal accounts,
- inflates invoice amounts and keeps the overpayment for themselves, or
- generates false payments to themselves using the company’s vendor payment system, either by setting up a fake supplier and billing the company for goods or services not provided, or by manipulating the account of an existing vendor.
3. Kickbacks, bribery and overbilling
Fraud also occurs when an employee takes payments or benefits for, or overbills, in exchange for providing business advantages to a company, such as clients or suppliers.
4. Benefits fraud
Benefits fraud can be committed by an individual or by a large group of employees. It may be as simple as an employee submitting a claim for a massage or other treatment covered by the company insurance plan that they did not receive, or increasing the cost of the treatment.
An example of benefit fraud being committed by a group of employees involves the employees all going to the same service provider who issues receipts for non-existent claims. The employees submit their fraudulent receipts to the insurance company and then share the proceeds of the benefits payout with the service provider.
5. Workers’ Compensation fraud
Workers’ Compensation fraud involves an employee exaggerating injuries or a disability, inventing injuries that did not occur, or claiming injuries that occurred outside of work happened at work, in order to receive compensation pay. For more information, refer to topic #984 Workers’ Insurance Board Investigations.
6. Asset misappropriation
Asset misappropriation is the theft of company assets by an employee, and can include many types of fraud, such as:
- using a company credit card used for personal use
- using other company property or equipment for personal use
- forging a company cheque
- altering a company cheque, such as the amount or other details
- theft of cash or inventory
- submitting false or inflated expense claims
- using a company expense account for personal expenses and submitting them as business expenses
- personal use of company vehicle
7. Payroll fraud
Payroll fraud involves an employee committing theft using the company’s payroll system, and can include an employee:
- keeping a non-existent employee or ex-employee on the payroll and diverting that pay to themselves
- requesting a payroll advance and not paying it back
- falsifying time sheets to inflate hours, clocking in and out for another employee in their absence, or manually inflating hours on an employee’s timesheet
- stealing another employee’s paycheque and cashing it
8. Data or Intellectual Property theft
It is also considered fraud when an employee steals data or trade secrets (called intellectual property) from their employer. This can include an employee:
- stealing proprietary information to sell to a competitor
- copying or downloading lists of the company’s contacts to use or sell
- stealing or sharing credit card numbers, client lists or other valuable personally identifiable information to sell to others
If you a have a criminal record due to fraud-related charges (or for any other criminal offence), and wish to erase your record, call toll-free 1-888-808-3628 or learn more at Pardon Partners. It’s easier than you think.
If you believe you are a victim of fraud, contact our preferred Investigators:MADPI GLOBAL
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