Probationary periods present potential legal pitfalls, so be prepared
Using a probationary period for employees is a common practice in many businesses. Employers establish a time frame to give newly hired employees a chance to prove their skill, value, and reliability. For employers, it’s an opportunity to evaluate new hires before “committing” to their long-term employment. However, probationary periods come with their own set of pitfalls that can lead to legal disputes, confusion, and unintended consequences, especially when they aren’t properly defined or managed. Before implementing probationary periods, ask yourself: What is the difference between terminating an employee during versus after a probationary period?
Understanding probationary periods
A probationary period is typically a set amount of time—generally 90 days—during which an employer evaluates a new employee’s performance, behavior, and overall fit for the position. The idea is that the employer can terminate the employee more easily during the probationary period if things don’t work out.
While this seems straightforward, there are several common misconceptions and legal risks that can arise from the use of probationary periods if you aren’t careful implementing them.
Common pitfalls of using a probationary period
False sense of protection for employers. One of the biggest misconceptions is that the probationary period gives employers more leeway to terminate employees without cause or consequence. However, Arizona is an “at-will” employment state, meaning employers can terminate employees at any time, for any reason, as long as it’s not an illegal reason. This at-will nature applies regardless of whether the employee is within the probationary period or a long-term employee. Therefore, employees can file a wrongful termination lawsuit if they believe they were fired for an unlawful reason, even if they were fired during the probationary period.
Miscommunication of expectations. Another common issue with probationary periods is the lack of clear communication about what success looks like during this time. If you don’t provide a clear set of performance expectations and regular feedback, an employee may not fully understand why they are being let go at the end of the probationary period.
Employers implementing probationary periods should take care to establish clear performance metrics for new hires during this period. Without objective criteria, terminations can appear arbitrary or without merit, leaving you open to wrongful discharge claims. Furthermore, an employee might perceive their performance as satisfactory if there’s no ongoing feedback. If termination is based on conduct (attendance, etc.) rather than performance, maintaining an open line of communication that their attendance isn’t meeting expectations is also incredibly important so the termination doesn’t come as a surprise.
Implied contractual obligations. Employers that use probationary periods run the risk of inadvertently creating an implied contract. If you explicitly state or imply that an employee will be guaranteed employment after successfully completing the probationary period, it may unintentionally limit your ability to terminate them later. This can lead to disputes if they complete the probationary period, only to be terminated soon after. In such cases, they may argue the probationary period created an expectation of continued employment, giving rise to an implied contract. If you use a probationary period, you should expressly state that the end of the probationary period doesn’t change the employee’s at-will status.
Inconsistent application. Another issue arises when probationary periods are applied inconsistently across the workforce. If some employees are subjected to a probationary period while others in similar roles are not, this inconsistency can be perceived as discriminatory or unfair, potentially resulting in disparate treatment claims.
Best practices
You should first consider discarding your use of probationary periods altogether. If there’s no difference between how you terminate an employee on a probationary period and how you terminate a long-term employee, there really is no reason to create this expectation by establishing a probationary period.
After this consideration, employers that decide to use probationary periods should define clear performance metrics and behavior expectations for newly hired employees. Clearly communicate the metrics and expectations, providing probationary employees with regular feedback about whether the metrics and expectations are being met. Document the feedback to support any later termination decisions at the end of the probationary period. When the probationary period ends, you should take care not to use language that implies guaranteed employment, removing the at-will employment status.
