Compliance Partner General The Truth About N...
The Truth About New-Hire Probationary Periods
By Ann Potratz
What's not to love about new-hire probationary periods? Employers get to see what kind of worker they've really hired before making any commitments. Employees might even appreciate that they've been given a cushion of time to learn a new job.
Unfortunately, no matter what you call them (orientation periods, introductory periods, training periods, trial periods, etc.), probationary periods amount to nothing more than regular employment. Even the most detailed policies don't completely remove an employer's legal risks when terminating an employee, and poorly written policies can actually make termination harder.
While these periods of introduction can still be useful tools for both employers and employees, it's important to understand their true benefits and limitations before instituting them.
Where did probationary periods originate?
Originally used in union contracts, probationary periods were spelled out as a defined amount of time in which the regular employee agreement was altered to ease restrictive union policies. Employers were able to evaluate and more easily terminate otherwise contract-bound employees, and employees were able to get the lay of the land without the same expectations as long-time employees. Over time, nonunion environments began to adopt similar policies, often under the incorrect assumption that they would provide the same employer protections as those used in union shops.
What to watch out for
Most American workers (except those in Montana) reside in at-will employment states and work without contracts. Essentially, "at-will" means employees can be terminated at any time for any reason that is not illegal, including during any kind of probationary period. However, a poorly worded probationary policy might actually create the impression of a contract and challenge that at-will relationship. This could cause an employee to believe that employment was somehow guaranteed (that he had a contract), negating the intended effect of the policy altogether.
To avoid this unintended outcome, employers should include clear, unambiguous statements within any policies that could potentially change the nature of the employment agreement and in their employee handbooks. These statements should clarify, in no uncertain terms, that the company's policies and guidelines do not create contractual rights, reaffirming that employment is "at will" and may be terminated at any time.
Are there any benefits?
As long as the policy is clear and informs the employee that the at-will nature of their position is still intact, employers can still see many benefits from probationary periods:
  • Wages: Employers may pay employees they designate as "probationary" a lower rate than a regular employee in the same position, as long as it's at least minimum wage (or at least the minimum requirements for exempt positions).
  • Benefits: Companies may hold off on providing voluntary benefits such as paid time off, sick leave and more to new employees until after a probationary period, but there are limits. For example, the Affordable Care Act (ACA) requires that covered employers offer health insurance to full-time employees after 90 days. Other entitlements, like FMLA leave, will also kick in after the defined amount of time, no matter how long your probationary period.
  • Expectations: A clearly outlined and consistently applied probationary-period policy can help an employer outline benchmarks and expectations for new employees. Managers and employees should know what to expect during onboarding and beyond, including regularly scheduled reviews, training plans and more.
While probationary periods do not necessarily protect employers from legal claims, a well-defined policy can still be a beneficial part of a company's hiring and onboarding processes.
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