Probationary Periods?

Question

We would like to establish a 90-day “probationary period” for our new hires. Is there anything we should be aware of?

Answer

Employers generally have discretion to manage employee performance as they see fit, including by establishing a probationary period at the beginning of employment. That said, one of the biggest potential pitfalls with establishing a probationary period for a particular length of time is that an employer may unwittingly create an employment contract.

Unless an employer wants to create an employment contract for the time period stated in its probationary period policy (or otherwise guarantee employment after that period ends), the employer should carefully ensure that any such probationary period of employment (and any period thereafter) remains “at will” at all times. In other words, an employer should clarify that either the employer or employee can terminate employment both during and after the stated probationary period at any time, for any lawful reason, and with or without notice. Otherwise, an employee may argue that he or she is guaranteed employment for the probationary period (or after that period concludes) and may file a breach of contract action if the employer terminates employment during either period.

As a best practice, employers should clearly advise employees that they are expected to meet performance expectations at all times during their employment and not just during the probationary period. An employer can certainly endeavor to more closely monitor and train employees during their initial months on the job to ensure that they are a good match and are able to meet the employer's expectations. However, if employment is “at will” at all times, then the employer's ability to end employment is not different or greater during an initial probationary period. An employer should not give its employees the impression that the employer’s expectations differ based on tenure.

Ultimately, employers should emphasize that employment is not guaranteed in any situation and that they will not tolerate unsatisfactory conduct or performance after the probationary period concludes. If an employer wishes to establish a probationary period, we recommend the employer consult legal counsel for guidance in drafting a policy to ensure the employer retains maximum flexibility and does not unintentionally create an employment contract.

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