United States: Probationary Periods: A Window Worth Closing

Probationary periods are a tool long used to test the viability of job candidates. They can provide a window into an employee's suitability and qualifications for a position. In an economy that continues to have high unemployment, recent graduates, those looking to change careers and those interested in a specific company may be particularly open to a probationary period that lets them get their foot in the door. However, without adequate protections, when completed, a probationary period may create an expectation on behalf of the new employee – and, more importantly, in the eyes of a court – that the employee cannot be fired at will. This is just one of several reasons you might consider eliminating probationary periods as a hiring tool, unless your company has a unionized workforce.

This is not to say that probationary periods cannot serve a useful purpose, particularly when an employer has a unionized workforce. Under most collective bargaining agreements, employers can terminate employees only if they can demonstrate "just cause" and exhaust the grievance or arbitration procedures. But when an employer has negotiated for a probationary period for new hires as part of its collective bargaining agreement with a union, a new hire can be terminated during that period consistent with the employment-at-will standard, meaning that the employer can terminate the employee for any legal reason or no reason at all. Given how difficult it can be to terminate a union employee, negotiating a probationary period clause into a collective bargaining agreement can be an extremely valuable tool to ensure that you are hiring the right employees for the job – especially if you may have to live with them for a long time.

In other, non-union contexts, however, this does not make as much sense – first and foremost because it is largely unnecessary in those states in which the default rule is that all employees, however long employed, remain "at will" in the absence of some other agreement, express or implied, to the contrary. An employer should, therefore, take steps to affirmatively ensure that nothing "to the contrary" occurs to abrogate the at-will status of its workforce. For this reason, outside of the specialized contexts noted above, employers might consider eliminating probationary periods.

For example, a creative plaintiff's attorney might argue that probationary periods create such a contract – albeit an implied contract – between the company and an employee who successfully completes his or her probationary period. This is most often a problem when the employer has hired a mediocre employee who is susceptible to termination in the subsequent months or years for one reason or another. When that termination occurs, the successfully completed probationary period could come to mean several things, all of which could be damaging to the employer in the context of litigation or administrative proceedings initiated by the employee:

  • As noted above, the completion of the probationary period could be seen as having created an implied promise that the employer will not fire the employee absent good cause.
  • The employee could argue that completing a probationary period is evidence proving that the employer itself found that the employee had the requisite qualifications to perform the job functions of his or her position – an essential element of a discrimination claim.
  • Probationary periods, when inconsistently applied to employees, will invariably raise questions about whether supervisors are permitted to make ad hoc decisions about assignments, expectations and hiring, especially if probationary periods have been extended for certain employees but not others, or if regular employees are evaluated differently than they were while on probation.

For all these reasons, it may be worth eliminating the probationary period from your hiring toolbox, especially if it is more likely to work against you than for you. No one needs a tool like that, and indeed it is one that, outside the union context and any other legal or contractual considerations, has little salutary use: An at-will employee is already effectively always in a probationary period. Why create an additional layer of complexity?

If, however, probationary periods are regarded as essential to your company, be sure to make them meaningful and consistent. When a probationary employee is hired, include in the offer letter that employment remains at will regardless of the completion of a probationary period, and put this rule in your employment handbook too. Further, in case a court is later called upon to review a termination, it is good practice for all employers to document incidents of poor performance as they happen, whether they occur during the probationary period or afterward. As with all questions involving labor and employment law, an ounce of prevention is worth a pound of cure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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