Employee performance reviews are one of the most effective ways of improving and augmenting your employees’ workplace performance. In addition to providing a structured forum for feedback, it also allows for a measurable process of employee engagement. Each company has their own approach to performance evaluations. These reviews can range from being highly formalized and data-based, to more narrative-driven and informal. Your ideal approach will depend on your company culture as well as the type of work your employees do.
Regardless of the format and scope of your employee performance reviews, however, it is important to remember that performance evaluations can create legal risk. An example of such risks materialising is the recent lawsuit filed against Yahoo in which it is alleged that their employee performance review system perpetuated gender discrimination.
What Are the Legal Risks Associated With Employee Performance Evaluations?
Employee performance evaluations do not only provide records of a particular employee’s performance over time. In addition to this, it creates an evidentiary record of the employer’s engagement with, expectations of, and promises toward an employee. As such, it can leave an employer vulnerable to discrimination and wrongful termination lawsuits.
If your employee performance review records show that you don’t treat all employees similarly, you might be facing possible discrimination charges. Such employer discrimination can be intentional or unintentional. Whether or not you are liable for discrimination will depend on whether your varying conduct towards different employees was based upon a protected ground (for example: race, gender, sexual orientation), and whether your conduct caused prejudice.
It is best to completely avoid a situation where you need to prove that your conduct did not amount to discrimination: ensure, across the board, uniform treatment of all employees.
Wrongful Termination Lawsuits
By their nature, employee performance evaluations will require you to express an opinion about a particular employee’s performance. This is a good thing. However, it also means that your later conduct toward that employee must be in accordance with the impressions you create in review sessions.
If you act in a way that creates an employee’s reasonable reliance on a statement that you are happy with their performance, or that you do not intend to terminate them, you can be liable for wrongful termination if you do so.
This can play out in two ways: firstly, if your employee is not employed at-will, you can only terminate employment with just cause. Your actions and feedback during employee performance reviews can serve as proof of that just cause, or it can undermine your reliance upon just cause. In the latter case, you might not be able to fire the employee if he/she can prove that your employee performance review feedback proves their satisfactory performance.
Secondly, if an employee is employed at-will, you might be undermining your ability to legally terminate employment at any time if you make promises about continued employment during performance reviews.
How to Manage the Legal Risks?
There are a few easy steps that can limit the legal issues surrounding your performance reviews. Standardize your employee performance evaluations to ensure that it is substantively similar for all employees. Reduce the results and conclusions of each review to writing and have employees sign them. Be careful about making any promises about job security that you can’t honor. And, perhaps most importantly: consult an employment law attorney.
All of Your Employment Law Questions, Resolved
In the United States alone, the federal government administers and enforces more than 180 employment laws. Employment laws affect millions of employers and workers across the country, and anyone facing a potential workplace issue wants to make sure to have the best employment lawyer they can get to advocate for their rights.
Whether you have questions about wages and pay, hours of work, or what type of agreements you need in place to protect your legal rights, if you’re considering hiring someone you probably need employment law services. LawTrades has top employment lawyers online now who can help you draft or review employment agreements which create a safe and effective legal framework for your working relationships. Our employment law services can help guide you through the entire hiring and firing process, from the first offer letter to termination.