Are Probationary Periods Passé?

​Using a probation period to assess the suitability of new hires is an outdated practice that could prove legally costly for your company, according to experts, because such a period may create an expectation of a permanent job once probation is completed.

Historically, before the 1980s, when a substantial portion of the U.S. workforce was unionized, having a probationary or trial period meant something, said Paul Falcone, vice president of human resources at the Motion Picture and Television Fund in Woodland Hills, Calif. Once union workers make it through a probationary period, they are covered by contracts that generally protect them. Nonunion workers, whether or not they complete a trial period, have no such protections. Today, only 6.4 percent of private-sector workers are covered by a union's collective bargaining agreement.

Probationary periods have little use in an at-will environment, Falcone said.

Marc A. Antonetti, partner at Baker Hostetler in Washington, D.C., agreed. "If you are hiring in an at-will context, there isn't a particular advantage to probation," he said.

At-will employment means an employee can be dismissed for any reason, without warning, as long as the reason is not illegal.

Probationary periods can be disadvantageous for employers. Having completed the allotted time—usually 30 to 90 days—an employee may believe he or she has achieved a new employment status of a quasi-contractual nature, Antonetti said. "That's not true, but sometimes perceptions matter. If someone 'passed' probation, it can create an expectation, if not a contract."

Some courts have ruled that the completion of a probationary period suggests express or implied contract obligations that make it more difficult for companies to discharge at will, Antonetti and Falcone noted.

[SHRM members-only online discussion platform: SHRM Connect]

Possible Advantages

Under collective bargaining agreements, when an employer has negotiated a probationary period for a new hire, the worker can be fired during that period consistent with the employment-at-will standard. But once the union employee has passed probation, he or she can generally only be fired for "just cause" after exhausting the grievance procedures.

In union cases, Antonetti recommended negotiating for the longest trial period possible.

Small nonunion companies have little reason to put new employees through a probationary period, but large nonunion employers might see a benefit, according to Antonetti. In a large-employer setting with many new hires, he said, a probationary period could be the opportunity to avoid the cost of setting up benefits for many people who come on board but ultimately don't fit.

Perceptions Matter

If your company utilizes a probationary period, Falcone said, don't label it as such. That term "smacks of a union environment," he said. "The word 'probation' puts an undue burden on the employer. The term kind of creates an expectation of due process." He recommended using "introductory period," "training period" or "evaluation period."

Spell out in the employee handbook exactly what that period covers—describe how long it lasts and what the expectations for successful completion are. Include language in the handbook and in the offer letter expressly stating that the employment relationship is terminable at-will, either with or without cause and with or without notice, at any time during the employment relationship.

Falcone, author of 101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline & Termination (Amacom, 2017), added that HR should document incidents of poor performance as they happen, whether they occur during any type of probationary period or afterward.

Instead of relying on a probationary period—by whatever name—to protect your company from bad hires, experts advocate concentrating on good hiring practices.

Because there's often pressure to hire quickly, there's a temptation to "short circuit" the hiring process, Antonetti noted, but "act in haste, repent in leisure. If the person is not the right fit, you're back where you were. Vet before you hire."

Part of that vetting process, according to Falcone, should be thorough reference checking. "A lot of employers pooh-pooh reference checking, but it's so critical." The excuse HR managers give, he said, is that the reference check won't be effective. "A lot of times they say, 'Employers won't talk to me,' or 'I'll only get good reports.' "

In the discussion, draw out information about the candidate's working pace and areas of developmental need. "You're trying to get a feel for the [candidate's] style."

Welcome each new hire with a well-structured onboarding process that follows up at days 30, 60 and 90. "You want to ask different questions each time, hear feedback, hear about roadblocks, hear about things that are not meshing," Falcone said. "It's not hand-holding. You want to hear directly from the new hire what their experiences are."

Stephenie Overman is a freelance writer based in the Washington, D.C., area.