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Why Massachusetts Companies Should Avoid Probationary Periods For Newly Hired Employees

Hiring qualified employees that are the right fit for a company is one of the hardest and most important jobs for employers.  A bad hire is not only a waste of time and money, but also causes morale problems and the risk of a wrongful termination claim if the employee is terminated.  Because it is impossible to have a perfect hiring record--particularly when a company is growing quickly and is hiring many new employees--employers often ask whether it makes sense to have a probationary period for new hires.

The concept of a probationary period was originally used in the context of collective bargaining agreements so that new hires were not immediately governed by the same protections as regular employees that were part of a union.  This made it easier to weed out poor hires during the probationary period before they became subject to a collective bargaining agreement, which often limit an employer's discretion to terminate underperforming employees. 

While employers are wise to pay particular attention to an employee's performance during their first few months on the job, Massachusetts employers that are not subject to a collective bargaining agreement should avoid referring to this period as a "probationary period."  Massachusetts is an "at-will" state and employers here can generally terminate an employee's employment at any time, for any reason or for no reason unless a law or contract provides otherwise.  Employers considering instituting a probationary period should therefore be aware that they provide almost no benefit and may actually increase the risk of a wrongful termination claim under a theory of an implied employment contract.  For example, an employee may believe that the existence of a probationary period creates an implied contract that the employment is guaranteed for at least as long as the probationary period.  Or the employee may argue that there was an implied contract that once the probationary period ended, the employee's job could only be terminated for cause.  For these reasons, Massachusetts employers have little to gain and potentially much to lose from probationary periods for new hires.

So, how then can employers terminate a bad hire efficiently and with the lowest risk of a wrongful termination claim?  One solution is simply to implement a review process in which employees are reviewed more frequently during the first few months of employment.  For example, after the first 45 days and again at 90 days, and then according to less frequent, but regular intervals (usually every six months or annually).  This review process will facilitate an understanding of the expectations of the job and help train new employees, while also helping the employer more quickly identify any issues with a new hire.  Throughout the review process, and in every other communication with the employee (including the offer letter, employee handbook, etc.), employers should be careful to emphasize that they employment is "at-will."  This way, any issues can be identified early and dealt with effectively while minimizing the risk of a wrongful termination claim.

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