So you’ve caught one of your workers stealing from the company. In fact, studies show that employee theft far outpaces shoplifting by customers—employees reportedly steal eight times as much. Here are some recommendations on how to proceed.

(1) Review your evidence and make absolutely sure there’s no mistake. It’s best if you caught the theft on video, but catching the thief red-handed also works. If you’re mistaken, though, you could be sued for wrongful termination.

(2) Speaking of termination, do so with this employee. But think through how that fits with your disciplinary policies and whether there are any other barriers, such as a contract or collective bargaining agreement, standing in your way.

(3) Call the police. That is, don’t try to handle the whole thing yourself; hand it over to law enforcement. Two additional things to think about: If you have hopes of being covered for employee theft under your insurance contract, your insurer is likely to require you to report the employee to the police. Criminal prosecution of the thief is preferable to a civil suit because restitution of at least a portion of your losses is easier to obtain with criminal than with civil charges, and shareholders and managers will expect you to use the "power of the state" to obtain restitution.

(4) Avoid deducting anything from the former employee’s final paycheck: Most states strictly limit your ability to make such deductions. Remember that you may also be able to get some of your losses back by going to small claims court.

(5) Be very careful about telling other employees or outsiders (such as other employers) why you terminated the employee. Unless there is a criminal or civil judgment, the ex-employee could charge you with defamation. It may be best to keep what happened to yourself.

We expect you may find the process of charging an employee with a crime very difficult—especially if the person is a trusted, long-time worker whose motive is desperation or compulsion. Even without long service or trust, the possibility of sending someone to jail is unpleasant at best. That’s why it’s wise to have these five steps firmly in place among your policies and procedures. And ensure they’re fully thought through before the need ever arises, so you can carry them out with a measure of calm.

Tip: Lest your former employee simply walk out of your facility and drive away as soon as you’ve fired him or her, have someone else call the police while you handle the termination. Then have your co-worker come and help you ensure the thief stays put until police arrive.