Expense fraud and double-dipping are among the most popular workplace misbehaviours — and they can both get you fired

Early in my practice, I would tell employers that if they wished to terminate an employee and avoid severance, they only had to do two things: check their resumé and other application documents and review their expenses. More likely than not, I preached, they would find fraud in one or the other, perhaps in both.

Funnily enough, two surveys in the last month found that many employees are still cheating in both areas. One, conducted by Maru Blue, found that in the last year, 31 per cent of Canadian workers filling out expense reports claimed personal expenses, such as supplies or lunches, as business expenses and that 24 per cent of employees admitted to inflating their personal expenses for reimbursement by their employers. Understand that these results are self-reported and since most Canadians do not want to report themselves as fraudulent, even anonymously, the actual numbers are almost certainly much higher.

In the other recent Harris Poll study, 29 per cent of Canadian employees admitted to working at another job during regular work hours and, in more than a third of the cases, the second job was a full-time one. Eighty-seven per cent of responding employees had worked such a side gig at one point in their careers. Almost 40 per cent said that they would work a “side hustle” on company time if they thought they could get away with it.

Not surprisingly, there is a generational divide on this issue, with 40 per cent of millennials versus 28 per cent of baby boomers saying that they would take advantage of such an opportunity. Among those who had never worked a side hustle during company time, 23 per cent declared themselves likely to do so in the future.

Interestingly, according to the Harris Poll, 49 per cent of Canadian companies have no policies prohibiting this behaviour and only 11 per cent of those companies that caught employees double-dipping fired them. Five per cent reduced the employee’s salary and four per cent demoted them.

What does the law say about all of this?

As you have learned from these columns, it has become increasingly difficult in recent years to fire employees for cause without severance. But courts are most likely to find cause to exist if it involves dishonesty.

Expense account fraud is, of course, theft and although police characteristically will refuse to lay charges taking the position that it’s a “civil matter” to be sued for instead, it is criminal conduct and employers could attempt to lay charges as well as demand the monies be returned and sue if they are not. And the amount stolen through fraudulent expenses is not significant legally because, once an employee deliberately cheats, employers should and do wonder what other areas they are cheating in. The only conceivable legal defence would be that the employee was unaware that it was a personal expense or made some sort of an administrative error in filling out the expense forms. Employers can eliminate the prospect of that by a thorough review of all past expenses to show that the theft was a pattern. Few employees who steal only do it once.

Working a “side hustle” on company time is inherently no different legally as it is a theft of time during which the employee is being paid to perform work. Employers have an equal right to sue for the overpayment of wages and, recently, a B.C. employer whose case was discussed in a previous column successfully did just that. But actually proving cause for working for another company on company time is more nebulous because, unless the employer has a policy of which the employee is made aware, the employee can argue that they thought it was permissible or that they were making up the time after hours. If that is argued, the employer should demand evidence (i.e.: phone records, emails, etc.) to prove the time was actually being made up. But even if not, particularly if the time is relatively minimal, the employee could argue that the misconduct was permissible in the way that making some personal phone calls, or checking the internet for sport scores or stock prices, would be, that the impact on the employer is de minimis and therefore it is not a firing offence. Such an argument can be made even if the employer does have a policy prohibiting it, particularly if the policy does not say clearly that it is cause for discharge.

What is interesting is how few employers (just 11 per cent) actually fire employees when they are caught. That suggests either uncertainty on the employer’s part as to whether the law will support firing for cause or the employer’s view that that employee is too valuable to lose and a warning will suffice.

Why is this? Is the job market so tight that employers fear they cannot find a replacement or do not want to spend the time replacing, recruiting, training and familiarizing a new employee? Such costs are high so the concern is not illegitimate. Or do the employers have a misapprehension of the law and believe, as many employers do, that termination for cause is a nearly impossible task whatever their policies and whatever the misconduct?

Over the last few years, the paradigm has shifted. It used to be that employers believed they could fire for cause more easily than was the case. Now, they believe that firing is more difficult than it actually is.

It is also true that most employers play favourites. There are employees who they simply do not like and are happy to find excuses to rid themselves of. Other employees, they like quite a lot and if they catch them in this sort of misconduct, are more likely to be forgiving. That is not merely a bad human resources practice: it has legal implications. Such differential treatment permits a wrongdoer to point to that other employee who committed the same misconduct and was not dismissed and say they therefore assumed reasonably the company condoned or permitted the misconduct. That is actually a legal defence.

What does all this mean? Explore expenses more rigorously and have clear policies making “side hustles,” at least without written consent, cause for discharge and then terminate for cause when either occur.