Employers sometimes use "probationary periods" when hiring new employees or promoting employees into a new position. Employers use the probationary period as a time to assess whether the new hire or newly promoted employee is a good fit for the position. Typically, probationary periods range from 3 months to 6 months.
The following are frequently asked questions, along with some common misconceptions, about probationary periods.
Q: Are probationary periods a good idea?
A: Probationary periods can lead to confusion regarding whether the employment relationship is "at-will." "At-will" means that either the employee or the employer may terminate the employment relationship at any time, for any lawful reason. When employers use probationary periods, employees sometimes think that once they successfully complete a probationary period, they are no longer at risk for termination based upon their performance. This misunderstanding can lead to increased risk of wrongful termination lawsuits if the employer terminates the employee. Accordingly, with the exception of collective bargaining agreements or circumstances where the employer wishes to enter into a contract with a particular employee, probationary periods are generally not considered a best practice.
Additionally, the term "probationary period" may have a negative connotation for new employees. New hires may misinterpret "probationary" to mean that they are immediately placed on a disciplinary action plan at the start of their employment. This could negatively impact the employee’s perception of the company.
Q: How can I help employees understand my company’s probationary period policy?
A: If your company requires that new employees enter into a probationary period, make sure that your probationary period policies and procedures are carefully worded and applied consistently to all new hires. Your policies should make clear that upon successful completion of the probationary period, the status of the new hire’s employment will remain "at-will." The policy should also make clear that "at-will" status is in effect even during the probationary period. Employers should consider consulting with legal counsel to ensure that their probationary period policies are drafted and implemented properly.
Note: Employers should also have a clear employment at-will disclaimer in their employee handbook to make the employment relationship clear.
Q: Which states recognize at-will employment?
A: In the United States, employment relationships are presumed to be at-will in all states except Montana. In Montana, employers can generally only terminate employees for good cause once they have completed the employer’s probationary period. If an employer does not establish a specific probationary period in Montana, the default probationary period is six months from the date of hire.
Q: Why would employers use probationary periods?
A: Probationary periods originated in union environments. It was a way for employers subject to a collective bargaining agreement to have a short period of time to evaluate employees where they would not be governed by the same termination requirements as during the regular employment period. Some non-union employers have since adopted the practice believing it is a way to assess a new hire’s skills and qualifications without the burden of following certain requirements that come with the employment relationship. Some employers also misconstrue the probationary period to mean that they would be free from wrongful termination lawsuits should the relationship not work out. This, however, is not true. New hires generally have the same protections as other employees and can be terminated at any time during the employment relationship. Having a special probationary period does not change that.
Q: What about an introductory period, training period, or orientation period? Are these different?
A: Some employers use an "introductory period," "training period," or "orientation period." However, they all generally refer to the same type of initial period. And, if not handled correctly, they all run the risk of confusing employees regarding their employment status. Employers should carefully assess the benefit of having introductory periods, and if they wish to continue using them, consider working with legal counsel to develop and implement such policies.
Q: Without probationary periods, how can my company help make sure new hires are (and will continue to be) a good fit?
A: Employers should develop an effective hiring process to help find the best candidates for the position and avoid bad hires. During the interview process, employers should ask job-related and behavioral-based questions, and, where appropriate, should conduct post-offer job-related background and reference checks to help determine whether candidates have the potential to succeed in the open position.
Once hired, all employers should provide new employees with a comprehensive orientation process to familiarize them with the company (and vice versa). Supervisors should work closely with new hires, giving them the information, tools, and support they need to succeed. Supervisors should also establish clear goals, provide feedback and coaching regularly, and evaluate performance proactively and consistently.
Q: Without a probationary period, can my company require new hires to wait before they enroll in our health plan or are eligible for paid time off?
A: The Affordable Care Act ("ACA") prohibits group health plans from applying a waiting period that exceeds 90 days for individuals otherwise eligible to enroll. Under the ACA, health plans are permitted to use "orientation periods" without violating the 90-day waiting period rule if the following requirements are met:
- The period is not more than one month.
- The 90-day waiting period begins on the first day after the orientation period.
Generally, employers may also establish reasonable waiting periods for employees to become eligible for voluntary company provided benefits, such as paid time off. Note: Some states and local jurisdictions have established paid leave laws that will have their own eligibility requirements with which covered employers must comply.
Q: If employees are terminated during their introductory period, are they disqualified from unemployment benefits?
A: The fact that an individual was terminated during an introductory period would not disqualify the employee from unemployment benefits. The same rules regarding eligibility for unemployment still apply. However, length of employment may be a factor in determining how much the employer will be impacted by the employee’s unemployment claim.