Using a probationary period for employees is a common practice in many businesses. Employers see it as an opportunity to evaluate new hires before “committing” to their long-term employment. Employers establish a period of time to give a newly hired employee a chance to prove his skill, value, and reliability. However, probationary periods come with their own set of pitfalls that can lead to legal disputes, confusion, and unintended consequences, especially when they are not properly defined or managed. Prior to implementing probationary periods, ask yourself, what is the difference between terminating an employee during versus after a probationary period? Understanding Probationary Periods A probationary period is typically a set amount of time—generally 90 days—during which an employer evaluates a new employee's performance, behavior, and overall fit for the position. The idea is that the employer can terminate the employee more easily during this period if things don’t work out. While this seems straightforward, there are several common misconceptions and legal risks that can arise from the use of probationary periods, if not properly utilized. Common Pitfalls of Using a Probationary Period. False Sense of Protection for Employers. One of the biggest misconceptions is that the probationary period gives employers more leeway to terminate employees without cause or consequence. However, Arizona is an “at-will” employment state, meaning that employers can terminate employees at any time, for any reason, as long as it’s not an illegal reason. This at-will nature applies regardless of whether the employee is within his probationary period or a long-term employee. Therefore, an employee can file a wrongful termination lawsuit if he believes the termination was due to an unlawful reason, even if the employee was terminated during the probationary period. Miscommunication of Expectations. Another common issue with probationary periods is the lack of clear communication about what success looks like during this time. If an employer doesn’t provide a clear set of performance expectations and regular feedback, an employee may not fully understand why he is being let go at the end of the probationary period. Employers implementing probationary periods should take care to establish clear performance metrics for new hires during this period. Without objective criteria, terminations can appear arbitrary or without merit, leaving the employer open to claims of wrongful discharge. Furthermore, an employee might perceive his performance as satisfactory if there is no ongoing feedback. If termination is based on conduct (attendance, etc.), rather than performance during this period, maintaining an open line of communication that his attendance is not as expected is also incredibly important, so the termination does not come as a surprise. Implied Contractual Obligations. Employers who use probationary periods run the risk of inadvertently creating an implied contract. If the employer explicitly states or implies that an employee will be guaranteed employment after successfully completing the probationary period, it may unintentionally limit the ability to terminate the employee later. This can lead to disputes if an employee completes the probationary period, only to be terminated soon after. In such cases, the employee may argue that the probationary period created an expectation of continued employment, giving rise to an implied contract. If a probationary period is used, employers should expressly state that the end of the probationary period does not change the employee’s at-will status. Inconsistent Application. Another issue arises when probationary periods are applied inconsistently across the workforce. If some employees are subjected to a probationary period while others in similar roles are not, this inconsistency can be perceived as discriminatory or unfair, potentially resulting in disparate treatment claims. Best Practices. Employers should first consider discarding their use of probationary periods altogether. If there is no difference between how an employer terminates an employee on a probationary period to a long-term employee, there really is no reason to create this expectation by establishing a probationary period. After this consideration, employers who decide to use probationary periods should define clear performance metrics and behavior expectations for newly hired employees. Clearly communicate those metrics and expectations, providing probationary employees with regular feedback as to whether those metrics and expectations are being met. Document the feedback to support any later termination decisions at the end of the probationary period. When the probationary period ends, employers should take care not to use language that implies guaranteed employment, removing the at-will employment status.  Jodi R. Bohr is a shareholder with Tiffany & Bosco, P.A., and a contributor to Arizona Employment Law Letter. She practices employment and labor law, with an emphasis on counseling employers on HR matters, litigation, and workplace investigations. She may be reached at jrb@tblaw.com or 602-255-6082.

I grew up in a household where my father made all decisions about money (also a career banker) because he earned it. My mom never worked; I observed the dynamics of their relationship and learned a lot from it. My mom was never educated about the family finances and had a tendency to overspend. This created a lot of stress in their relationship and in our house. I watched her ask permission to buy things which bothered me, as an independent person. What I took away from this (right or wrong) is that I always wanted to have my own income source and actively participate in financial decisions that affected me, so that I didn’t have to ask permission for things I wanted or needed in my life. I also had empathy for my mom, who didn’t know anything about finances, and was never taught about it in her childhood. Having spent over 30 years of my career in Private Banking and working with wealthy individuals and their families, I have seen many women in these households be extremely out of the loop of their family’s finances as a family. This resonates with me as a result of my adolescent experiences. It has led to my belief that women should take an active role in finances that impact their lives and should take control of their own situations. This empowers women to make better choices, have independence, and be meaningful role models for the younger generation - which impacts the broader community. Financial literacy, especially for women, has become my passion as a result of my experiences. To feed my passion, a few years ago I began to seek out a local nonprofit that worked with underprivileged women. I found Live and Learn, a 501c3 nonprofit in Phoenix, AZ and liked their program because it required accountability. Their clients have to take several financial education classes throughout the year and keep budgets. We agreed that I could offer a series of financial webinars including “Creating a Healthy Relationship with Money”, “Budgeting 101”, and a “Car Buying Workshop”. For the last 2 years, I’ve had the monthly privilege of working with and educating hundreds of women on these subjects. I have found it so rewarding! Financial stress, as a result of not understanding, is one of the leading causes of anxiety. Helping women gain confidence and peace of mind in their financial knowledge is my goal. I hope to normalize wealth-building for women through basic financial skills that can be applied to real-life choices and situations. I also want to make financial education accessible, relatable, and non-intimidating by creating an open environment for discussion and questions. Some key takeaways I typically share with these clients: No matter how much money people have, they can still have financial stress (it’s all about knowing your income/expenses and staying within those boundaries). Work to reduce debt as much as possible, even if it means living frugally. Plan for the future – save, invest as much as you can. Try to cut overspending on things like subscriptions, coffee, online shopping, etc. 33% of Americans spend more on coffee than they do on savings! Background: Kathy Wills brings over three decades of sales, marketing, management, and financial advisory experience to the banking industry. Kathy is a producing manager with her own portfolio of Private Banking clients serving in business development and also as an advisor to high net worth clients structuring complex credits and asset management strategies, and is a member of the bank’s Wealth Management Board. Kathy has been with MidFirst Bank for over 17 years and was previously with Compass Bank and Bank One (now JP Morgan) for the 15 years prior in Commercial Real Estate and Private Banking. She holds a Bachelor of Arts degree from the University of Arizona and an MBA from the University of Phoenix. She is actively involved - serving on various non-profit boards and volunteering in her community. She has been a member of AZ Business Leadership for over 20 years and is a past President. Written By: Kathy Wills, AZ Managing Director – Private Banking, MidFirst Bank