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Probationary Periods — Dangerous Device or Necessary Tool?

Hiring & Recruiting
by Stephen Bruce, PhD, PHR

Many employers start employees off with a “probationary period” during which the employer can let the new employee go without worrying about just cause and lawsuits. Sounds good, but there’s a downside, says attorney Sandra Rappaport.

The use of “probationary hiring” has been confusing for employers and employees alike, Rappaport says. Originally, it was a way for an employer subject to a collective bargaining agreement (CBA) to carve out a short, introductory period that would not be governed by the same termination requirements as the regular employment period under the agreement

Generally, that meant that during the probationary period, a union employee could be let go without concern for just cause or other rules governing termination.

Probationary periods have since been adopted by many employers who aren’t unionized, says Rappaport, who is a partner at the San Francisco office of the law firm Hanson Bridgett LLP.


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Must You Have a Probationary Period?

No particular law requires employers to have a category of probationary employees or governs termination during a probationary period, says Rappaport. Essentially, the answer to how one should treat a probationary hire depends on the nature of the particular employment relationship.

If an employment contract sets forth the requirements for termination—e.g., employment can only be terminated for cause—the employer obviously must comply with those requirements. Similarly, if the employment relationship is governed by a CBA negotiated between the employer and a union representing its employees, the CBA likely will specify the grounds for termination and the required procedures for discharge. In both an employment agreement and a CBA, the contract’s language governs the requirements for lawful termination during a probationary period.

If there is no employment contract saying otherwise, the presumption in many states is that all employment is at will, which means that either party can terminate it with or without cause.

If an employer has an at-will employment relationship with all of its employees, a probationary period is really not needed. A new hire can be terminated at any time in his or her employment without cause; setting aside a special introductory period does not change that.

No Guarantee

However, says Rappaport, most employers understand that the at-will presumption does not necessarily mean that they will be immune from a wrongful termination suit. Even in an at-will state, an employer cannot terminate a person for any reason barred by state or federal law; employment decisions based on prohibited grounds like race, gender, disability, or for reporting illegal conduct (“whistleblowing”) can subject the employer to liability, even if the discharge is during a probationary period.

Therefore, it is helpful to document the legitimate bases for a termination decision, regardless of when it occurs.


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Don’t Create an Implied Agreement

In addition, says Rappaport, at-will employers need to avoid creating implied agreements—through actions, policies, verbal commitments, and the like—that an employee will not be terminated except for cause.

To avoid wrongful termination lawsuits based on a claim that an implied agreement exists, employers must be careful not to behave in ways inconsistent with at-will employment. Using a probationary period may imply some increased level of job security after the period ends—an implication that is completely inconsistent with at-will employment.

To combat this possibility, an employer should clearly state in the employee handbook or in an employee’s offer letter its intention to retain the at-will nature of employment even after the probationary period expires. Additionally, employers should:

  • Avoid making verbal assurances of continued employment.
  • Encourage supervisors to document any problems that arise, even during the probationary period, so that evidence exists to refute any claims of termination for an illegal reason.
  • Make sure all employees are treated consistently when applying policies and procedures.
  • Educate supervisors on improper termination grounds and the laws governing discriminatory practices.

Recommendation

Employers that wish to maintain at-will employment relationships with their employees should evaluate whether there is a real benefit in using a probationary period, says Rappaport. Those that want to continue using probationary periods should take care to clearly articulate their reasons and implement their pertinent employment policies in such a way as to avoid opening themselves up to liability.

In tomorrow’s Advisor,  Hunter “Please Sue Me” Lott advises, “Probationary periods? Get rid of them!” plus we introduce a unique checklist-based HR audit system.

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  1. Anonymous        
    April 4, 2011 9:39 am

    We use Introductory Period for new employees, rather than Probationary Period. Rationale is that probationary period could imply that once completed, that some type of relationship exist. So I advise other companies to avoid the term probationary.

    Though we are an employment at will state, the introductory period serves several purposes:

    1. establishes up front the requirement that new employees must be the right fit – both supervisors and employees are told this. This means that the employee may be good at his skill but is not the right person in the right job for this company – takes out some of the sting.

    2. forces supervisors to take a close loop at the new employee immediately rather than the less than thorough approach used during the annual performance evaluation.

    3. avoids the need to explain the termination within the 90 day period to the termed employee and avoids the issue with the progressive discipline steps requirement. Once an employee moves beyond the 90 days, the verbal, written, PIP steps apply. But not in the introductory period. No reason need be given for a term – though we generally state not the right fit. In our company, the progressive discipline steps negates, to a degree, application of the employment at will. We are obligated to follow our company policy of justifying terminations and documenting each of the steps. Similarly, with an introductory period, we follow company policy and term without a reason.

    4. the company is not on record for payment of unemployment insurance in the introductory period. The employee is eligible and will receive UI but the company is not on record as the employer.

    5. tracking of terms indicates that though the employee is unhappy about his/her term and wants to know the specifics, the specifics are not provided, and the termed employee accepts that.

  2. Anonymous        
    April 4, 2011 11:32 am

    Don’t set a probationary “period.” Period. (Unless you must by union contract.) Here’s why: In the real world, all of us are “on probation.” Even the President of the United States can be impeached and removed from office. Every business is on “probation.” Go too many years without a profit and a business goes bankrupt and the doors close. Every employee — from the CEO to the newest hire — needs to know that every day they need to move the ball forward toward the goal line…or a time out is called and they’re likely to get put on the bench.

  3. Anonymous        
    April 5, 2011 5:19 am

    Montana statute requires a probationary period unless the employer specifically states that there is none. If an employer does not say anything about a probationary period, there is automatically a 6 month probationary period of 6 months (MCA 39-2-904 (2) (b).

  4. Anonymous        
    April 6, 2011 5:55 am

    We’ve used an introductory period of 90 days.  How we clarify that there is no guarantee at the end of the period is by specific wording in the handbook/policy.  Basically we let new employees know that the 90-day period is a trial period in a sense, where the company can evaluate performance and fit and the new employee can get a sense if this position is right for them.  In addition, Pennsylvania is an “at will” state, so we re-emphasis what that means in the handbook.  The new employee is also made aware that the original 90-day introductory period could be extended if further evaluation is needed.

  5. Anonymous        
    April 15, 2011 9:53 am

    If employment is at-will, it is at-will for the first 60 days, the first 90 days, the first 365 days, or the first 25 years.

    Given that “probation” periods were created in Collective Bargaining Agreements (CBA’s), and regardless of all at-will statements in a handbook or other documents, a jury can be convinced that when employment continues beyond the “probation” period, the employee becomes a “for cause” employee — just as in CBA’s.

    Introductory periods, probationary periods, get-acquainted periods, etc. (the name is not controlling) all convey that, once the new hire has completed that time frame, he/she is a “for cause” employee.

    And, given that all employment laws apply from the of employment, will an employer be successful in defending an unemployment claim or a wrongful discharge claim or an EEOC discrimination charge by stating that the employee was in his/her “probation” period or that employment is at-will?

    Practically & Reality should trump philosophy with regard to “probation” periods.

  6. Anonymous        
    October 24, 2012 11:55 am

    can you be placed without cause after working for one year and never having a previous write-up , be placed on a 30 day probation?

  7. Anonymous        
    December 11, 2012 8:05 am

    Can an Introductory period protect the company from unemployment insurance claims – above, one response stated:

    The company is not on record for payment of unemployment insurance in the introductory period. The employee is eligible and will receive UI but the company is not on record as the employer.

    Does this cover us during the trial period in California? Thanks.

  8. Anonymous        
    December 13, 2012 2:57 pm

    Does anyone have any research on the percentage of employees fired within a (90 day, preferably) probationary/introductory period?
    Thanks.

  9. Anonymous        
    May 10, 2013 6:47 am

    If the employee handbook states that the “probationary period is 6 months” and continues to extend the probationary period where it nows is almost 2 years, what is the liability to the company?

  10. Anonymous        
    August 1, 2013 11:00 am

    I am an employee presently sueing my previous employer. They offered me employment with a one year probationary period. At no time did I see, read or was told I was an at will employee. I was never formally reviewed, written up, reprimanded. After 9 days of employment I was terminated with out warning or reason. When I asked why I was being terminated I was told, “its not up for discussion”. This took place in the state of Missouri. In Missouri if you hire someone for a definite period of time, you contracted for cause employment. Needless to say I marched my butt right into court and I am presently argueing that the 1 year probationary period is a definite term of employment and by offering probationary employment the employer implied that a fair due process would be undertaken, which never happened. Also if the employer truely intended at will employment there was no need to offer a one year probationary period contract.

    At the end of the day all employers need to institute a fair dismissal process for all employee’s. If an employer uses a fair dismissal process no employee can win a law suit against said employer. Also it is of intrest to tax payers to have a fair dismissal process as SOP for employers becuase my previous employer did not dismiss me fairly I was able to collect unemployment, the employer is arguing all types of fault with me but becuase there is no proof their efforts are futile.

    Also by my employer arguing fault with the unemployment offices this further solidifies my claim that they contracted me as a for cause employee.