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Employee probation periods: a lawsuit waiting to happen

by on
in Employment Law,Human Resources

If your employee handbook or job-offer letters say that new hires will face a 60- or 90-day "probation period," you should consider dropping that policy or, at the very least, referring to that period in some other way.

Why? By setting up a probation period, you could imply that once the probation period is over, the employee becomes permanent or earns some new level of job security. That misunderstanding could eliminate the employee's "at-will" termination status.

Your goal: Make it clear that all employees are "at-will" employees, meaning they can be fired at any time for any reason. Include in your handbooks, applications and offer letters a disclaimer stating that employees are at-will unless they have a written agreement signed by you.

If you still feel you need a probation period, consider referring to it as an "introductory" or "training" period, words that are less likely to imply a contract.

Recent case: An employee signed a job-offer letter that said he could be fired "at any time." The letter also called for a 90-day probation period. The company fired him two years later without giving a reason.

He sued for breach of contract and won. Reason: The job-offer letter said he could be fired "at any time," but not necessarily "for any reason." Also, the court said the probation period hinted that he was entitled to be fired only for a good cause. (Dore v. Arnold Worldwide Inc., Cal. Ct. App., 2004)

Final tip: To avoid the same problem, make sure your at-will policy says employees can be terminated "at any time" and "for any reason."

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