We think retention is the most challenging aspect of HR—until one day, we are hit with an employee misconduct complaint. Suddenly, legal battles, team conflicts, and a tarnished company reputation become our worst fears. Misconduct cases are no joke. Neglect them, and you risk toxic behaviors. Go in too hard, and you might face wrongful termination claims.
That is exactly why you need this guide. It offers a roadmap to spot, investigate, and handle employee misconduct the right way—legally and fairly. Plus, it is packed with real-world examples, step-by-step processes, essential HR policies, and even a misconduct investigation checklist.
What Is Considered Misconduct At Work?
Behaviors that breach company policies or ethical standards and harm the organization or its members are employee misconduct. You must recognize and address these actions promptly to maintain a productive and respectful workplace.
Common examples include:
- Frequent absences or tardiness
- Dishonesty
- Conflict of interest
- Abuse of power
- Health & safety violations
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4 Common Types Of Employee Misconduct In The Workplace + Examples
Review these 4 most common types of employee misconduct at work to quickly spot and address them.
1. Minor Behavioral Misconduct
These issues may not warrant immediate attention, but if you ignore them, they can escalate into major problems. For example, you may notice that an employee consistently takes long lunch breaks without approval. At first, this may seem like a minor issue, but other employees will soon follow suit. This will create major scheduling conflicts if you don’t address it in time.
- Tardiness & Absenteeism: Employees show up late or miss work without approval, which disrupts schedules and affects team productivity.
- Misuse Of Company Resources: They use work computers for personal tasks, excessive social media browsing, or take office supplies home.
- Dress Code Violations: They ignore workplace attire guidelines, wear inappropriate outfits, or refuse to wear safety gear.
- Unprofessional Behavior: They spread gossip, make sarcastic remarks, or fail to collaborate with team members.
2. General Workplace Misconduct
This misconduct type affects workplace efficiency, culture, and compliance policies. It can also cause reputational damage and legal risk. For example, when a customer service representative ignores company policy, shares confidential client details with someone, and your client finds out.
- Insubordination: They refuse to complete assigned tasks, speak disrespectfully to their supervisor, or ignore direct instructions.
- Negligence: They fail to follow procedures, which increases error rates, accidents, or wasted resources.
- Breach Of Confidentiality: They discuss sensitive company information with unauthorized individuals or share data outside work.
- Conflict Of Interest: They engage in activities that compete with the company, like working for a rival business.
3. Serious Misconduct
This is behavior that calls for disciplinary action, suspension, or termination. For example, if a manager repeatedly makes inappropriate comments about an employee’s performance, it could trigger an internal investigation and serious consequences.
- Harassment & Discrimination: Someone makes offensive remarks, engages in workplace bullying, or creates a hostile environment.
- Substance Abuse: They are often under the influence of drugs or alcohol during work hours, which affects the employee’s duties and safety.
- Theft & Fraud: They falsify expense reports, claim unworked hours, or steal.
- Workplace Violence: The employee threatens or physically harms co-workers, which creates a toxic or dangerous work environment.
4. Gross Misconduct
This category includes the most severe violations that often end in immediate dismissal. For example, if your IT employee leaks confidential data to a competitor in exchange for a job offer, it could cause major financial damage to your company. In such cases, you must take legal action.
- Criminal Activity: The employee engages in fraud, embezzlement, or illegal business practices.
- Severe Safety Violations: They ignore critical safety rules, which puts employees, customers, or the public at risk.
- Intentional Property Damage: Someone deliberately destroys work equipment, vehicles, or office property.
- Cybersecurity Breach: They hack into company systems, steal intellectual property, or leak sensitive information.
???? Did You Know?
79% of remote employees engage in risky cybersecurity behavior.
(Source)
How To Easily Spot Employee Misconduct
Read these 8 telltale signs of employee misconduct and set up proactive measures to detect issues before they escalate.
a. Sudden Drop In Performance
Employees who engage in misconduct often show a decline in work quality, missed deadlines, or frequent mistakes. Dig deeper for reasons if an otherwise reliable employee starts to submit incomplete work or ignore responsibilities.
b. Frequent Absenteeism Or Tardiness
Unexplained absences, excessive sick days, or late attendance without valid reasons can indicate misconduct. Watch for patterns. Does the employee often miss work after weekends or paydays? Consistency in these behaviors could point to substance abuse or other serious issues.
c. Unusual Financial Discrepancies
Irregularities in expense reports, missing inventory, or unapproved transactions may signal fraud or theft. Conduct regular audits, check financial records, and monitor high-risk roles that deal with money or sensitive data.
d. Complaints From Colleagues Or Clients
Pay attention when multiple employees say they feel uncomfortable, harassed, or unfairly treated by the same person. Workplace misconduct often comes to light through indirect complaints, so track reports and investigate patterns.
e. Increased Conflicts & Unprofessional Behavior
Increased workplace arguments, disrespectful behavior, or frequent clashes with co-workers are signs of misconduct. Employees involved in unethical activities may lash out and shift blame, creating a toxic environment.
f. Misuse Of Company Resources
Excessive personal calls, social media use during work hours, or unauthorized access to sensitive data suggest misconduct. IT logs and security cameras help track these inappropriate activities.
g. Secretive Or Defensive Behavior
It could be a red flag if an employee suddenly becomes overly secretive, deletes emails, avoids direct communication, or reacts aggressively when questioned. Employees engaged in fraud or other misconduct often try to cover their tracks.
h. Reports Of Intimidation Or Retaliation
Misconduct escalates when employees are afraid to speak up. Investigate immediately if staff hesitate to report issues or express concerns about retaliation. A culture of silence increases serious violations.
ℹ️ Interesting Fact
90% of companies provide security training for remote workers.
(Source)
How To Address & Handle Employee Misconduct
You may face bigger issues like legal risks and reputational damage if you ignore misconduct. The key is to act fast but remain fair. Follow these structured steps to handle employee misconduct properly and prevent recurring problems.
Non-Negotiable HR Policies Every HR Team Needs + Free PDF Template
Review your current procedures against these must-have HR policies to close gaps and strengthen compliance.
1. Code Of Conduct
Sets workplace behavior standards, ethics, and professional expectations.
- Treat employees fairly with zero tolerance for discrimination, bias, or harassment.
- Disclose any personal or business conflicts of interest.
- Use company funds, equipment, and assets for business purposes only.
- Maintain professional conduct in person, online, and during remote work.
- Follow federal and state employment laws, like the Equal Employment Opportunity Commission, on ethical business practices.
2. Disciplinary Policy
Offers a clear progressive discipline process to handle misconduct.
- Issue verbal warnings for first-time minor offenses.
- Escalate to written warnings for repeated issues.
- Impose suspensions, demotions, or terminations for serious violations.
- Make sure your investigations follow due process before disciplinary action.
3. Harassment & Discrimination Policy
Prevents workplace discrimination, bullying, and harassment.
- Define sexual harassment, workplace bullying, and microaggressions.
- Provide employees with anonymous reporting channels.
- Conduct mandatory anti-harassment training for all employees.
- Take immediate corrective action for substantiated claims.
4. Attendance & Leave Policy
Establishes clear guidelines for punctuality, absences, and paid time off (PTO).
- Mandate advance notice for leave requests except in emergencies. Follow The Family and Medical Leave Act (FMLA) for this.
- Track excessive tardiness or absenteeism rates and address patterns.
- Outline sick leave, vacation, and parental leave benefits.
- Specify consequences for repeated no-shows.
5. Confidentiality & Data Protection
Protects sensitive company, employee, and customer data.
- Require NDAs (Non-Disclosure Agreements) for confidential data access.
- Restrict unauthorized data sharing with third parties.
- Enforce secure password policies and limited access control measures.
- Specify penalties for leaking trade secrets or private information.
6. Workplace Safety Policy
Ensures compliance with OSHA (Occupational Safety and Health Administration) regulations.
- Maintain hazard-free work environments to prevent injuries.
- Require PPE (Personal Protective Equipment) in high-risk roles.
- Implement regular safety drills and emergency response training.
- Provide mental health resources for workplace stress management.
7. Termination & Offboarding Policy
Defines proper procedures for employee separation.
- Conduct exit interviews to document reasons for departure.
- Outline severance pay eligibility based on employment terms.
- Specify final paycheck distribution timelines per state laws.
- Retrieve company assets (laptops, ID badges, software access).
>>> Download The HR Policy PDF Template Here
???? Food For Thought
30% of new hires leave within 3 months.
(Source)
3 Example Cases Of Serious Misconduct & What You Should Do
Here’s how to handle 3 real-world misconduct cases effectively.
I. Workplace Harassment & Retaliation
- Separate the accused & claimant immediately to prevent further harm. Consider paid administrative leave for the accused during the investigation.
- Launch a confidential investigation and interview witnesses, review emails or messages, and gather supporting evidence.
- Follow anti-retaliation policies to protect the complainant and make sure no adverse employment actions occur.
- Take disciplinary action based on findings. If harassment is confirmed, consider demotion, suspension, or termination.
- Implement sensitivity training for all employees and make sure stronger harassment prevention policies are in place.
II. Data Theft & Confidentiality Breach
- Restrict access to sensitive data immediately. Revoke system logins, email access, and VPN credentials.
- Conduct a forensic IT audit to track unauthorized file transfers and recover stolen data if possible.
- Issue a cease-and-desist letter through an attorney and demand the return of proprietary information.
- Pursue legal action if needed. Enforce legal consequences if the employee had signed the non-disclosure or non-compete agreement.
- Strengthen cybersecurity policies with role-based access controls, stricter monitoring, and exit protocols for departing employees.
III. Physical Altercation Between Employees
- Separate both employees immediately to de-escalate the situation and prevent further violence.
- Conduct an impartial investigation. Review security footage, interview witnesses, and gather reports.
- Take swift disciplinary action. If both employees engaged in physical violence, consider suspension, final warnings, or termination.
- Involve law enforcement if necessary. Cooperate with authorities if injuries occur or you need to take legal action.
- Reinforce workplace violence policies and conduct conflict resolution training to prevent future incidents.
Employee Misconduct Investigation Checklist & Report Template
Use this step-by-step misconduct investigation checklist or download this Employee Misconduct Investigation Report Template to conduct a thorough, legally sound inquiry.
Step 1: Receive & Assess The Complaint
- Record the initial report (who, what, when, where, how).
- Determine the severity level (minor issue, serious misconduct, gross misconduct).
- Decide on immediate actions (suspension, reassignment, or business as usual).
Step 2: Appoint An Investigator
- Assign an impartial HR representative or external investigator to look into other factors you might have missed.
- Make sure they have no conflicts of interest.
- Define investigation objectives (identify facts, determine policy breaches).
Step 3: Gather Evidence & Interview Witnesses
- Collect relevant documentation (emails, CCTV footage, chat logs, access records).
- Interview the complainant and document their statement.
- Interview the accused employee and allow them to present their case.
- Speak with any witnesses and cross-check their statements.
- Maintain confidentiality to protect all parties involved.
Step 4: Analyze The Findings
- Compare evidence with company policies & employment contracts.
- Assess inconsistencies in witness statements or documents.
- Determine the level of the policy violation (minor, serious, or gross misconduct).
Step 5: Decide On The Outcome
- Review findings with senior HR and legal counsel.
- Decide on disciplinary actions (verbal warning, written notice, suspension, termination).
- Draft the investigation report (use the downloadable template below).
Step 6: Communicate the Decision
- Hold a formal meeting with the accused employee and inform them of the outcome.
- Document the disciplinary action in HR records.
- Offer an appeal process if required by company policy or law.
Step 7: Implement Preventive Measures
- Review company policies to close any gaps.
- Train employees & managers on misconduct prevention.
- Set up an anonymous reporting system to encourage transparency.
How To Deal With Employees Who Are Wrongfully Accused Of Misconduct In The Workplace
Follow these 5 steps to handle false claims fairly and protect your employees.
- Conduct A Neutral Investigation: Assign an impartial investigator, gather information and evidence, and verify claims before you make any decisions.
- Maintain Confidentiality: Prevent rumors, protect the accused’s reputation, and avoid workplace bias until the case is resolved.
- Give The Accused A Fair Hearing: Allow them to present their side, provide evidence, and challenge any misleading claims.
- Clear Their Record If Proven Innocent: Remove disciplinary actions, issue a formal clearance letter, and communicate the outcome if needed.
- Address False Accusations: If malicious intent is found, take appropriate disciplinary action against the accuser and strengthen reporting policies.
Conclusion
Employee misconduct is a direct threat to your company’s productivity and reputation. A single mishandled case can mean legal trouble or a toxic work culture that drives away your best employees. That’s why you need to know how to spot, investigate, and address misconduct swiftly and fairly.
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FAQs
Can an employee be dismissed immediately for misconduct?
Yes, but only in cases of gross misconduct—serious offenses like fraud, workplace violence, or data breaches. For general misconduct, companies should follow a progressive disciplinary process before termination.
How do you differentiate poor performance from misconduct?
Poor performance is the inability or failure to meet job expectations. Such failure is often due to skill gaps or lack of ability or training. Misconduct is intentional disregard for company rules—wilful misconduct like dishonesty, insubordination, or unethical behavior.
Can off-duty behavior be considered employee misconduct?
Yes, if the behavior affects your company’s reputation and workplace relationships or violates contractual obligations. Examples include criminal activity, social media misconduct, or breaching confidentiality.
What rights do employees have during a misconduct investigation?
Employees have the right to a fair and impartial investigation, confidentiality, access to evidence against them, and an opportunity to defend themselves before any disciplinary action is taken.
