May 11, 2020
Employers are particularly cautious about fraud in the workplace, and it’s not hard to see why. The Association of Certified Fraud Examiners reports that organizations lose about 5 percent of their revenue to fraud each year, to the tune of hundreds of thousands of dollars on average (https://acfepublic.s3-us-west-2.amazonaws.com/2020-Report-to-the-Nations.pdf).
To cut down on these losses, companies across many states are stepping up their fraud prevention programs. Many are using one or more of the following six common employer fraud-prevention strategies.
Background Checks
Any time you apply for a job, it’s likely the employer will conduct a background check on you to look for any criminal history. While Colorado does have a “ban the box” law that prevents employers from asking about someone’s criminal history on a job application, employers are still allowed to ask for a background check and use the results in their decision on whether to offer someone a position.
Reference Verification
Many employers will check references to help weed out the high-risk applicants. Keep in mind that past employers may be hesitant to give out information about negative employee behavior if they fear it will open them up to legal action by that former employee.
Role Separation
These days, many organizations have approval and reconciliation duties assigned to different employees to help prevent fraud. For example, the person who reconciles the accounting records may not be the person allowed to sign the checks. One employee may be responsible for asking for company purchases while another employee has to approve those purchases.
Regular Auditing
To catch theft, fraud and other undesirable behaviors, an employer may do regular audits. Your employer may go through sick and vacation day records, sales reports, expense reports and other documentation regularly to try to pick up on any issues. Some employers even monitor company email and social media to determine whether people are breaching company policy.
Sign Vigilance
Company fraud-prevention employees and supervisors are often told to be on the lookout for fraud red flags, such as those listed below.
- Sudden attitude or behavior changes
- Frequent overtime
- Protective behavior over workspace
- Preference for working after hours or alone
- Unexplained gains or losses in records
Anonymous Reporting Encouragement
Your work may have a dedicated phone line or email that enables workers to make reports anonymous if they suspect any fraud. To encourage them to do so, your employer may have a firm no-retaliation policy in place for whistleblowers.
Workplace Fraud Penalties
When your employer believes you have committed fraud, they can terminate your employment and file criminal charges against you. Law enforcement takes the investigation from there. If you are found guilty, you can be facing jail time, fines, restitution to your employer and a criminal record that will follow you for life.
If you believe you are the target of a workplace fraud investigation or have been charged, consult with a criminal lawyer in Denver, CO as soon as you can so they can begin working on your defense and protect your rights.
Thanks to Richard J. Banta, P.C. for their insight into criminal law and workplace fraud.