When a new hire joins a company, it’s natural for the employee and the employer to want to ensure a good fit. Probationary periods can sometimes help fulfill this objective, though they may not be ideal in all employment situations. In fact, unless a collective bargaining agreement exists or the employer and employee plan to enter a contractual relationship, probationary periods are generally not considered best practice.
Before rolling out a new hire probation program, employers should understand the implications of such policies and weigh other available options for hiring the best candidates.
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What is a probationary period for new hires?
New hire probation is an introductory period of 30 to 90 days, though sometimes longer, that allows employers to assess if employees have what it takes to succeed in their positions. During this time, it’s common for new employees to receive training and have additional supervision. The employer may also restrict their access to benefits plans and paid time off until the probationary period reaches completion.
This practice originated in union jobs with collective bargaining agreements. It provided a short window for employers to evaluate employees without being governed by the same termination requirements as regular employment. Probationary periods have since expanded to non-union jobs, albeit with some risks, particularly when misconceptions about at-will employment exist.
What is at-will employment?
At-will employment means that either the employer or the employee may end the employment relationship at any time, for any lawful reason. All states recognize at-will employment except for Montana. In that state, a probationary period of at least six months is required, after which Montana employers generally can only terminate employees for good cause.
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Probationary periods allow employers to evaluate how well new hires fulfill their job duties without the burden of following certain requirements that come with the employment relationship. For instance, employers might delay benefits eligibility until the probationary period ends. Such a policy could potentially save money, but there are compliance implications.
The Affordable Care Act (ACA) prohibits group health plans from applying a waiting period that exceeds 90 days for individuals otherwise eligible to enroll. In addition, some states and local jurisdictions have paid leave laws with eligibility requirements, which would supersede probation periods.
Cons of probationary periods
Employees sometimes misunderstand probationary periods. They may think they’re being disciplined at the start of their employment, which could negatively impact engagement and their opinion of the company.
Employees might also think they cannot be terminated based on performance once the probationary period ends, when in reality, their employment is at will. This confusion can increase an employer’s risk of wrongful termination lawsuits.
How can employers create a probationary period policy?
To prevent employees from misinterpreting their employment status, employers need carefully worded probationary policies. The following tips may help:
- Consult legal counsel when drafting and implementing policy
- Apply probationary procedures consistently to all new hires
- Make it clear that at-will status is affective during and after the probationary period
- Include an at-will disclaimer in the employee handbook
What are some alternatives to a probationary period at work?
Due to the risks involved, probationary periods may not be suitable for every employer. Fortunately, there are other proven methods to help ensure that new hires are a good fit for the company. Some of these tactics include:
- Asking job-related and behavioral-related questions during initial interviews
- Conducting post-offer background and reference checks where appropriate
- Providing comprehensive orientation to familiarize new hires with the company
- Giving new hires the information, tools and support they need to succeed
- Setting clear goals, providing regular feedback and evaluating performance
How can employers dismiss employees during the probationary period?
New hires generally have the same protections as regular employees, which means employers cannot dismiss a worker during the probationary period for reasons that might be considered unlawful. If they do, they could be subject to wrongful termination lawsuits.
Rules regarding unemployment eligibility are also the same for both new hires and long-term employees. Therefore, terminating workers who have not completed the probationary period does not disqualify them from unemployment benefits.
Frequently asked questions about work probation
How long should a probation period be?
Employers who have probationary policies and are covered by the ACA cannot withhold health benefits from eligible employees for more than a 90-day probation period. The length of the probationary period also must not prevent employees from taking paid leave if they are entitled to it by state law.
What is the most common probation period for new hires?
Probationary periods commonly last three to six months. In Montana, employers are required to provide employees with a probationary period of at least six months.
Can I extend a probationary period?
Employers may extend a probationary period if they’re contractually permitted to do so and if special circumstances prevent them from adequately assessing the new hire in the original time allotted. The extension generally must be documented in writing.
How do I extend a probation period?
When drafting a notice to extend a probationary period, employers may want to include the following information:
- Length of the extension
- Special circumstances justifying the extension
- Goals employees must meet before the end of the probation
- Any additional support that will be provided during the extension
How do I pass an employee's probation?
Some employers end probationary periods with a performance review. These are usually documented so there’s an official record of the employee passing the probation.
Can I terminate an employee during the probation period?
Employers may terminate workers during the probationary period, but it does not mean they are free from the risk of wrongful termination lawsuits. New hires have the same protections as other employees and cannot be dismissed for unlawful reasons.
This guide is intended to be used as a starting point in analyzing probationary periods and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax guidance or other professional services. Please consult with your legal counsel.
