Legal Question in Employment Law in California

Obviously, disciplinary action up to and including termination is appropriate, assuming the employee is at-will.

There is nothing in the law that prohibits you from suing your employee for damages in tort.

Direct withholding without a judgment of liability is extremely risky and will be closely scrutinized by the courts. Any error in judgment against the employer here will subject the employer to penalties, assuming the withholding is from the employee's final paycheck.

You should review the situation with an employee-side labor lawyer before taking any action -- and particularly before withholding monies from the employee's pay.

If the employee left after doing this, then you can file criminal charges and a lawsuit for damages.

If still working, immediately terminate the employee.

Consult with a local attorney and with the police.