What does the term "employee theft" encompass?

The term "employee theft" specifically refers to the act of theft or embezzlement of funds or property by an employee. This involves situations where a worker takes company assets with the intention of permanently depriving the employer of those assets. This could include pilfering cash, inventory, or any other company resources.

In contrast, theft by a third party falls outside this definition, as it pertains to actions taken by individuals who are not employees. Damages caused by employees to the company might be classified more as misconduct or negligence rather than theft. Similarly, losses attributed to employee negligence are not considered theft since they involve carelessness rather than malicious intent to deprive the company of its assets. Thus, the correct choice captures the essence of employee theft as actions committed by an employee for personal gain.