If an employee walks off the job you should always send a certified letter with their last paycheck and a letter stating that they resigned there postion on the that day.
As far as documentation you typically need a 2- 3 week daily time line of what that employee did each day. You have to build a pursasive/belivable case that your are the victim and the employee damaged your business. Stating state statutes also help.
Its alot of work but another neccesary evil. You must also keep all files on these employee's (clowns) for at least 5 years so you can referance the case decisions if the employee tries to refile. The state doesnt always have their information (I think its to skrew with the employers)
Just my experince.