By Brandon Hess, CVPM, CCFP
I cannot count the number of times that I’ve heard a management team member, or owner say “It’s a good thing they are within their 90-day probationary period because we can let them go if it’s not working out and they won’t get unemployment.” There are multiple things within that statement that need to be addressed. I’d like to take some time to talk about common misconceptions with the 90-day period at the beginning of employment.
Introductory vs. Probationary
To begin with, it is very common, as in my example above, to call the first 90 days of employment a “probationary” period. It’s important to take a look at what the term “probationary” means, if it is right to use in this context and the potential repercussions of using it. In an October 2014 post on the Society for Human Resource Management (SHRM) website, they make the following statement regarding at will employers:
“Courts have determined that the use of probationary periods may provide employees who have successfully completed this period with additional employment rights.”
There are a few reasons that employers are encouraged to refer to this period as an “introductory” vs. “probationary”. 1. Probationary tends to suggest that there is a disciplinary reason for an employee being in this period. 2. Due to the punitive association of this term, completion of this period could have a negative impact on future disciplinary actions or terminations (see statement cited above). 3. Introductory is a “softer” term, that is more appropriate for the processes that typically take place during this period.
At Will Employment
I would like to define what at will employment is, and which states currently fall under this. Currently, every state within the United States, with the exception of Montana, is an at will state. According to Nolo.com, this means that you can be terminated, or terminate your own employment at any time for any reason.
Thus, the employer nor the employee need a justifiable reason to terminate employment, with or without notice. The 90-day period at the beginning of employment does not have any bearing on at will employment either. Additionally, this period does not have any impact on unemployment eligibility. Therefore, these two things are independent of each other.
No Unemployment if Terminated Within 90-Day Period
It’s important to stress my point above, again: at will employment and the 90-day introductory period do not have any influence on qualifying for unemployment. Every state has slightly different requirements to qualify for unemployment. Typically, it is based on number of hours worked in a certain period, and being terminated for “just cause”. For example, in Kentucky you must meet the following three criteria: 1. Able to work and actively seeking employment. 2. Unemployed through no fault of your own. 3. Earnings of at least $750 in one quarter of a base period. So, with Kentucky’s requirements, once an employee earns $750 they would meet that eligibility requirement. This criteria will be met well before the 90th day for a full-time employee. It’s important to be familiar with your specific state’s unemployment qualifications. You can typically find these through your state labor board.
No Benefits Within 90-Day Period
When employers talk about benefits they typically do so with the mindset that most benefits are not required. If the benefits are not required, then they feel they have control over the benefit and when an employee is eligible for it. This is both true and false. Below I’ve listed some important considerations.
- There are benefits that are required of employers to have.
- Most non-required benefits do allow employers flexibility in structure and eligibility. Therefore, ensure there is no room for interpretation of discrimination. Be consistent.
- Be aware of changes in regulations regarding benefits.
- For example, the health insurance waiting period through the Affordable Care Act. Below is a link to a SHRM article addressing this. Within this article is a link to the actual Federal Register document.
As you can see, benefit regulation can be a constantly evolving monster to keep up with. I would strongly encourage you to check with your insurance broker or representative if there are any concerns with your compliance. Lastly, make sure that you are clear as to the purpose of the 90-day period and name it accordingly. You will be setting the employee up for success and protecting your practice.