Combating Employee Theft
The U.S. Chamber of Commerce reports that in the United States alone, billions of dollars vanish every year due to employee theft. Theft is a severe threat to any salon and it only takes one or two people to cause financial chaos. Salon owners should recognize such theft, deter it from their place of business and understand the benefits of employee dishonesty insurance.
Theft can be committed by one employee or carried out by a few. Forging and hiding receipts, pocketing loose change and stealing merchandise such as lotions and jewelry are common practices. There have been reports of managers creating bogus payrolls, overbilling expenses and committing purchase fraud. Theft even can include the stealing of tanning and ancillary equipment. Some thieves actually have taken advantage of their employment by breaking into the salon after hours, helping themselves to goods and calling the police to report the crime the next morning.
Employee theft can be hard to detect, especially if thieves are good at what they do. So what can salon owners do to protect themselves from employee dishonesty? Start by watching out for unusual occurrences such as discrepancies of cash amounts or missing supplies or merchandise. Take notice of employees' behavior by watching out for activities such as unusual working hours, poor work performance, constant complaining and defensive behavior when discussing work issues.
Implementing an anti-theft regime in the salon also can reduce the risk to theft exposure. Employees will be less likely to steal if they think there is a good chance of being caught.
Perform regular and surprise visits and audits to keep track of merchandise or receipt problems. It's recommended to have managers and accounting personnel take vacations so the fill-ins can double-check for payroll and accounting discrepancies.
Set up surveillance in key areas such as the managing office, cash register and other key areas where customers' privacy won't be violated. Surveillance will keep a record of events and help deter theft from outside burglars.
Know who is hired. Some people have theft in mind from the beginning, and salon owners should be able to avoid hiring these people by conducting thorough background checks and obtaining previous job references.
Last but not least, salon owners with many employees might find it beneficial to start an awareness program. By creating such a program, they can inform workers about stealing and keep them on the lookout for theft.
In addition to deterring theft, it is recommended to secure an adequate amount of employee-dishonesty insurance. Unlike burglary and robbery, losses due to employee dishonesty are excluded under most commercial policies. This coverage could be just as important as fire or liability insurance. Crime coverages can protect against losses from robbery, burglary, theft, embezzlement and other risks, and can be tailored to fit the size and scope of any business.
It is important to know that dishonest acts by employees must be committed with manifest intent-- a loss resulting from an unethical act such as lying--and with the employee seeking personal gain. Without manifest intent, such claims would be disallowed. Also, inventory-shortage claims are excluded from employee-dishonesty policies because losses can occur from a variety of reasons besides theft, such as accounting errors.
Consider also that money, security and business-personal claims are not the only losses that can be covered under employee dishonesty. Endorsements might be available to protect salon owners against check forgery, credit-card misuse and computer fraud to supplement existing protection at extra cost.
No matter how large or small a salon may be, having adequate coverage is essential for protecting assets. Universal Insurance Facilities, Ltd. offers a complete package of coverages specifically designed to meet the unique needs of the tanning salon industry. For more information on any of Universal's coverages or to get a quick, no-obligation quote, call (800) 844-2101; e-mail uif@vpico.com; or visit www.vpico.com/universal.
