We’ve heard a number of managers refer to probationary periods and make statements such as “we can terminate them within the first 90 days of employment because they’re in a probationary period.” Even in an at will employment relationship (for the states which recognize at will employment), termination during a probationary period could still result in potential liability for your company in the event of an unemployment claim or other lawsuit (discrimination, harassment, etc).
Whether an employee has worked for your company for 1 day or 10 years, there is still potential liability. For example, in Michigan, the wages for the last five quarters at all jobs the employee has worked are used when determining benefit eligibility. So even if the person was only employed by your company for two weeks or two days, they could still be eligible for benefits if their wages from all employers in the last five quarters meet the minimum threshold.
Once an employee has been determined eligible for benefits, it’s the employer’s burden of proof to show that the employee was terminated for a disqualifying reason. Some examples of disqualifying reasons include theft, gross misconduct, etc. Being in a probationary period is NOT a disqualifying reason for termination under unemployment law. It’s still important to have a documented reason for termination in order to win an unemployment claim.
Your potential unemployment liability is even greater if the employee left another job to come work for your company. In this scenario, the previous employer can protest the unemployment claim and request that all of their liability/charges be transferred to the new employer – which is you. This means that you are responsible not only for the charges assessed against your unemployment account, but also any charges for the last employer.
Instead of using a probationary period, it’s often times more beneficial to improve your hiring practices. Before hiring an employee, perform skills assessments and/or aptitude tests, background checks, and any other type of screening you see fit to find out if the candidate is a good match for the position and your organization.