Creating Effective Performance Reviews Can Reduce Legal Liability

November 2014

Conducting effective performance evaluations is particularly important to new companies with a growing workforce. Often overlooked as they can be time consuming, performance evaluations can be critical to winning employee lawsuits or avoiding such lawsuits all together. Employers traditionally have used performance appraisal systems to:

  • Train, counsel and advise employees to improve performance;
  • Discharge, layoff or retain employees; and
  • Adjust compensation, both upward and downward.

Creating an effective performance evaluation system need not be expensive or time consuming. Growing companies should consider the following tips and considerations when conducting performance evaluations.

Best Practices

  • Use a set procedure that clearly establishes goals, plans of action and suggestions for improvement.
  • Articulate obvious conclusions for the employee.
    Include specific facts along with recommendations.
  • Link goals, remediation, conclusions and recommendations.
  • Provide a positive along with a negative.
  • Be specific.

Common Mistakes

  • Failure to follow established evaluation procedures and timelines.
  • Lack of supporting documentation.
  • Inconsistency between numerical ratings and narrative.
  • Failure to adequately train management in performance evaluations.
  • Inflated ratings and praise.
  • Lack of specific facts.

Growing companies should ensure that their performance evaluation systems are up to par to ensure employee satisfaction and to avoid unnecessary litigation expenses. Managers/supervisors should be trained to utilize the evaluations to accurately reflect upon the employee’s performance. Although performance reviews can be time consuming for managers and supervisors, documentation establishing performance issues with an employee can be key to prevailing at the early stages of a lawsuit as it is evidence of the company’s reason for adverse action taken against an employee.

If you have any questions about performance reviews, please contact a member of our Labor & Employment Practice.