Two wrongs don't make a right. I'd suggest this person consult with a local criminal defense attorney to discuss their options.
To directly answer your question - grand theft (theft over $950) is a potential felony, so the statute of limitations is 3 years. That's how long the prosecution has to file charges. It can be reported at any point before the statute of limitations has run. [The statute may be longer in certain instances of fraud, but the 3 year rule is for most felonies].
But the other side of this - the employer has far more potential issues to worry about if the conduct is as you describe.
The employer is himself guilty of criminal compounding, Penal Code 153, which prohibits taking money or other benefits in exchange for not reporting a crime. (http://law.onecle.com/california/penal/153.html). At this point, the "victim" cannot make a good witness at trial for the prosecution and may get himself/herself in trouble for reporting the incident. You might call the employer's bluff.
The employer could be guilty of extortion as well. This is not a good situation. If you are the person being extorted, go see a lawyer immediately and discuss your options. Good luck!
This is not legal advice. In order to get legal advice, you need to retain a lawyer and establish an attorney client relationship. So, talk to your lawyer! [I am licensed to practice law in the state of California and am admitted to the federal courts in California, Washington D.C., the Ninth Circuit, the U.S. Supreme Court and a number of other federal Circuit and District courts. For legal advice, you need to retain a lawyer in the jurisdiction in which the matter is pending.]