National media, including the New York Times, have been reporting recently that Senator Marco Rubio used a Republican Party credit card for personal items, such as the purchase of paving stones at his home, travel for a family reunion, flights, and even groceries. According to the Times, Senator Rubio has admitted spending more than $16,000 on personal expenses using the credit card in 2007 and 2008, and further disclosures are expected soon. When asked about the card, the Times reports that Rubio described the card as “secured under my personal credit in conjunction with the party.” Rubio has maintained that he paid all of the money back.
As an employment lawyer, these reports piqued my interest in the law surrounding use of an employer’s credit card. These cards are increasingly common and issued to employees with a variety of expectations, including in the pharmaceutical industry, where my law firm does a considerable amount of work. Sometimes, these cards cause issues when an employee is fired, and sometimes they are the source of the termination. So I looked into a few cases on the topic.
In one federal case, United States v. Bradshaw, “an office manager and executive assistant for a succession of Chicago-area employers, Lori Bradshaw embezzled more than $240,000 by making personal purchases on company credit cards, falsifying reimbursement claims for business expenses, and depositing corporate checks in her personal bank account.” Bradshaw pleaded guilty to fraud charges and was sentenced to 27 months in federal prison, including a sentencing enhancement for “a position of public or private trust . . . in a manner that significantly facilitated the commission or concealment of the offense.” Clear enough: Don’t steal from your employer.
In another federal case, Kepereos v. Alcon Laboratories, Inc., an employee “engaged in repeated instances of abuse of the [the employer’s] credit card that had been given her to cover legitimate business expenses. She had repeatedly charged personal items on the card but logged them on her expense account as ‘office supplies,’ and she had purchased gift cards on several occasions, some for as much as $100. If she then used them for herself or her family, the result was clearly theft from the company. If, as she said, she had given them to prospective clients as ‘incentives’ to do business with [the employer], she had violated well-established company policy. Both possibilities were considered grounds for termination“ The court determined that the employee’s conduct in this reagard was sufficient to defeat the employee’s sex discrimination lawsuit.
On the other hand, a Virginia appeals court overturned the conviction of a man who allegedly used kept his company credit card for personal uses after his employment ended but reimbursed the employer for the charges as permitted by the company policy. The court determined that the employee lacked the requisite mental state to be guilty of credit card theft or credit card fraud under Virginia law.
All of this is to say that Senator Rubio has inadvertently shined a light on a thorny area of employment law. And the pitfalls of employer credit cards may extend beyond the potential for criminal liability. Employees should also consider the process of applying for the credit card. Applying for a credit card may include a credit check or even a background check. These checks present considerable issues for employers, as Kate Kimpel, a partner at my firm, recently pointed out in Human Resource Executive Online. Indeed, BMW has agreed to pay $1.6 million to settle a suit involving background checks on employees. Settlements or lawsuits of this type are not uncommon.
So all of this is to say that Marco Rubio isn’t the only one to discover the pitfalls of company credit cards—both for employees and for employers.