Evaluating Employee Performance While Mitigating Liability

Employee performance reviews can be uncomfortable, often even more so than issuing discipline to an employee. With disciplinary actions, employers are often dealing with employees who intentionally break the rules. With negative performance reviews, however, employers are often dealing with employees who simply are not competent to satisfactorily perform their jobs, despite their dedication and hard work. Telling a well-meaning employee that they are doing a bad job is simply a hard thing to do.

The first step an employer can take to protect itself is to hire employees for a probationary period with a performance review to take place at the end of the probationary period. Assuming the employee is at-will, the employer must make it clear that the probationary period does not guarantee any length of employment – the employee may still be terminated for any reason either before or after the probationary period ends. The purpose of the probationary period is to give the employee time to learn the job and to make sure that the employee is capable of performing the job duties. The length of the probationary period should be determined in accordance with the difficulty of the job duties to be learned. If a probationary period is done correctly, and an honest assessment is taken at the end of the period, the employer can avoid future complications by either cutting an employee loose at the end of the period or continuing the individual’s employment with the expectation that the employee can and will satisfactorily perform all job duties in the future.

If an employer continues to conduct performance reviews for all employees, the performance reviews must be done honestly, consistently, and thoroughly to be effective. In fact, if performance reviews do not meet these criteria, the employer is much worse off from a legal liability standpoint. For example, a common problem with performance reviews is that supervisors are hesitant to offer honest, negative feedback to their employees. They understandably want to avoid confrontation and awkward conversations. So, supervisors tend to complete performance reviews in a much more positive light than an employee’s performance truly merits. Eventually, the employee’s performance might decline to such a point that the employer wants to terminate the employee, and it does so. If that employee brings a claim for unlawful discharge, the employee’s positive performance reviews will tend to support the employee’s claims against the employer. So, if an employer cannot ensure that performance reviews are honest, consistent, and comprehensive, it would be better off by not having performance reviews at all.

A good performance review is one that lists each of the job expectations for the employee and offers constructive feedback for each of those expectations. Employees should be given clear directions on what they need to do to improve on any points of poor or weakening performance, and they should be given a timeline for expected improvement with a description of potential consequences if they do not meet expectations within that timeframe. Employers should have the employee sign the performance review, and the employer should document its conversation with the employee about the performance review. Finally, employers should be wary of guaranteeing or implying that employees will receive any benefits, raises, or continuing employment associated with positive performance reviews unless the employer fully intends to honor such commitments.

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