Whose Pills?
Employee Claims Handbook Constituted Contract (1/2/09)
“A Minnesota employee fired for [allegedly] stealing pills got an arbitrator to reverse her termination. Her employer sued, claiming she had no contract and thus could be fired for any reason.” The Minnesota Court of Appeals reversed the arbitrators decision.
In this situation, this woman – referred to as Jessamine – was managing public housing units for the city. Some items were left in a public housing unit after a resident had moved out and those items were brought to her office. In the box of items, Jessamine found some prescription medication. She called the healthcare provider listed on the bottle, and was told to dispose of the medication, but keep a record of it. Jessamine told her assistant she was using the same medication and it was a shame to waste the pills. [NOTE: this is starting to sound like the illicit use of drugs – the drugs aren't illegal, but they are being used by someone other than they were prescribed for. For Jessamine to even mention this is a RED FLAG.]
Apparently, someone then walked into the office and Jessamine put the pills in her pocket. Before leaving the office she allegedly left them in her desk, but her assistant sent a letter to the board of directors reporting that she had kept the pills. The board concluded Jessamine had misappropriated the pills. Jessamine resigned rather than being terminated.
The News Misses the Point:
This news is valuable for two reasons:
- It highlights the point of having a clear, concise employee handbook which is what the Court of Appeals based it’s decision upon.
- More importantly, but what is missed in the writing of the article, is the root cause of this situation. It demonstrates the need to select people for [tag]ethics[/tag], not just for [tag]job performance[/tag] – there is a high probability that this didn’t occur, and much time and money likely could have been saved if this step had been taken.
Who Suffers From Fraud?
Does your business have fewer than 100 employees? According to the Association of Certified Fraud Examiners, small businesses repeatedly show up as the most vulnerable to fraud and abuse.
The ACFE identified three major factors which contribute to [tag]small business[/tag] [tag]fraud[/tag]:
- Inadequate employee prescreening – small businesses rarely spend money to check work references or records of potential hires
- Limited controls – the entity usually has insufficient personnel to adapt adequate controls
- Too much trust – the very thing that makes a small organization a pleasant place to work also enables thieves within it to succeed
It’s really sad that the environment that small business owners work so hard to create and keep in their businesses is taken advantage of – like the situation above.
$190K Out the Door
According to the ACFE’s 2006 Report to the Nation,
“Small businesses continue to suffer disproportionate fraud losses. The median loss suffered by organizations with fewer than 100 employees was $190,000 per scheme. This was higher than the median loss in even the largest organizations.” (emphasis added)
Can your small business suffer a fraud loss of $190,000?
Don’t Just Look at the Past
One last point from the ACFE’s report, it’s not what someone has done, it’s what they might do that is the problem.
“Nearly two-thirds of the victim organizations in our study routinely conducted [tag]background checks[/tag] on new employees. However, less than 8% of the perpetrators had convictions prior to committing their frauds.”
It’s not enough to just conduct background checks on your prospective employees. You need to look at other factors that get at whether they will act wrongly given the opportunity to do so.
Workforce Expertise:
I recommend three things to limit the possibility of fraud in your workplace:
- Do Background Checks - even though the minority of perpetrators had convictions, don’t even let them in the door.
- Assess Attitudes - use scientifically designed and validated assessments (not tests that can be cheated!) that evaluate job applicants’ attitudes for integrity, substance abuse, reliability, and work ethic.
- Train Correct Behaviors - conduct anti-fraud training to educate employees on how to recognize and report illegal conduct, and to impress upon them that such conduct is counterproductive and will not be tolerated.
I am doing a paper for school I hope it is okay to use some of your website. I want to know how much money it costs the government each year because of fraud in the workplace. People might say it doesn’t cost them anything, but I doubt that. I think some insurance agency are backed by the government and if a factory is insured the governement will back up the insurence. I think there is a strain of some sort on the government. Survailence programs because of past thief problems cost money, but maybe not as much as it would not to stop the stealing from employer or company?
Hi Donna,
Excellent! Feel free to use whatever you find; I’ve made sure I attribute so you may find other information from the sources I used.
I think your point is well made that while a specific business (or people) may think there is no cost in fraud, it is because they don’t understand what’s behind the scenes. In my opinion, every instance of fraud does cost the business and ultimately the consumer/end user.
Scott