Many employers start employees off with probationary periods during which the employer can let the new employees 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.
Must You Have Probationary Periods?
No particular law requires employers to have a category of probationary employees or governs termination during probationary periods, 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, probationary periods are 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.
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.
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.
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 a related Advisor, Hunter “Please Sue Me” Lott advises, “Probationary periods? Get rid of them!”