Legal Implications of Probationary Periods



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This article is excerpted from Chapter 1 of 101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline & Termination, Third Edition (Amacom/SHRM, 2017), written by Paul Falcone. This is the third in a three-part series on progressive discipline and its legal considerations.

Some labor experts discourage the use of probationary periods for employees who are either newly hired by a company or newly transferred into another position. Their logic stems from the fact that some courts have ruled that the mere completion of such an initial evaluation period suggests express or implied contract obligations that make it more difficult for com­panies to discharge at will.

Specifically, the completion of a probationary period could be construed to mean that the company can no longer discharge the employee without good cause. Proponents of doing away with probationary periods argue that employees are subject to the same standards of performance and conduct throughout their employment; consequently, no probationary period is necessary, and no implications of job security will arise for employees once their probationary periods are over.

Other labor experts favor retaining traditional probationary periods but abolishing that outdated term, which has been unfavorably interpreted by the courts. They recommend using terms like introductory, evaluation, training, initiation, eligibility, or orientation periods. True, these designations may help avoid the undesired implications and assurances that the term probation has historically carried with it. However, an employee might still infer from these alternative names that the employer has a policy of not discharging without good cause once the period is completed. You, the employer, could consequently find yourself fighting a legal battle over an allegation that you had an obligation to accord due process once a worker passed probation.

Of course, the mere use of the word probation rather than introduction isn't the whole issue. In interpreting probationary periods, courts look for some reason that they exist—specifically, the employee must receive some form of benefit upon completion of the period. Therefore, to establish a formal probationary period, you need to ensure that there is some difference between your workers' status during the probationary period and after it. Typically, this is done by allowing employees to enjoy some benefit (like accrued vacation or sick leave or 401(k) enrollment) that they did not have before completing the probationary period.¹

The pros and cons of probationary or introductory periods are well beyond the scope of this book and are prime fodder for legal debate. Still, the ultimate significance of employing such an initiation period will be determined by the laws of your state. Of course, if you're governed by a union contract (AKA collective bargaining agreement) that stipulates that "employees in their probationary period may be discharged without cause and without notice," you'll gain a significant advantage in the whole matter. In essence, such language provides you, the employer, with a contractual right to terminate union workers at whim while in their probationary period. Don't be surprised to learn, however, that the union will argue strongly that once that probation period is over, its members (i.e., your employers) cannot be terminated without showing cause.

Generally speaking, it makes total sense to arm yourself with as much flexibility as pos­sible when elevating new employees, without the obligations of due process. And in states that recognize an employment-at-will relationship, probationary periods may be of less sig­nificance anyway, since they may not provide your company with any additional flexibility or discretion.

Since most organizations employ some kind of formal initiation period in which to judge employee performance before elevating new hires to "regular" employee status, we'll address disciplining the probationary employee in our samples. Remember that although most employers use probationary time frames of sixty or ninety days, you generally have substantial discretion in setting a period from thirty days to one year. Shorter time frames (thirty to ninety days) are normally used for more junior types of positions; longer windows, like six months or one year, are usually reserved for director and vice presidential–level roles. Practicality will dictate what the reasonable duration should be for the various positions in your organization.

In an effort to diminish the implied interpretation that completing the probationary period guarantees greater job that security, your handbook language should expressly state 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."

In addition, you should expressly state that the probationary period can be extended more than once at the company's sole discretion and that it also becomes effective at the time of transfer, reassignment, or promotion. Finally, remember to calculate this period in calendar days rather than weeks or months. Any ambiguity in your policy language will most likely be interpreted against you in a court of law. To learn more about the suitability of a probationary period in your company, consult your labor attorney.

NOTE:

1 To establish that the probationary period is a point when performance is evaluated before full benefits begin, create a written policy in your handbook that states: "Completion of the trial period does not entitle you to remain employed by the company for any definite period of time. Both you and the company are free, at any time, with or without notice and with or without cause, to end the employment relationship. After completion of the trial period, eligible employees will receive the benefits described in this handbook."

This is the third in a three-part series on progressive discipline and its legal considerations. The first installment was Part 1: The Elements of Due Process. The second installment was Part 2: The Traditional Progressive Discipline Paradigm.

Please visit the SHRMStore to order a copy of 101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline & Termination, Third Edition, by Paul Falcone.

Paul Falcone (www.PaulFalconeHR.com) is an HR trainer, speaker and executive coach and has held senior HR roles with Paramount Pictures, Nickelodeon and Time Warner. His 2016 book, 75 Ways for Managers to Hire, Develop, and Keep Great Employees (Amacom), focuses on aligning front-line leadership teams and on key employee retention. A longtime contributor to our HR magazine, HR Quarterly, he's also the author of a number of SHRM best-sellers, including 96 Great Interview Questions to Ask Before You Hire, 101 Tough Conversations to Have with Employees and 2600 Phrases for Effective Performance Reviews.

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