Legal Question in Criminal Law in California

Re: Embezzelment or grand theft and what to do

What you have described is both embezzlement and grand theft, though the defendant can only be sentenced on one of these charges even if he is convicted of both.

Whether your company fires this man now, later, or never is a business decision and not a legal one. All three of these options are permitted by law, so there isn't much point seeking guidance from lawyers about how to handle the situation. I know what I would do if I were you, but I would have had exactly the same answer before I entered law school.

Just be sure not to tell this employee you will report him to the police unless he repays the money, since such a threat can qualify as extortion and lead to criminal charges against both the company and the officers / directors who made or approved of the threat. This would not make the employee's actions any less criminal, but it could give the two of you a chance to get much better acquainted in the local jail while awaiting trial.