Laws In The USA That Have Potential Impact on Performance Evaluations

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It's useful for companies to design and evaluate their performance management systems in light of legal concerns, and protection from law suits. Below are some of the laws that may be relevant, that exist in the USA related to the employment relationship, at will employment and similar legal areas:

Summary of Selected Laws and Legal Principles That Relate to Performance Appraisals and the Nature of the Employment Relationship

Law or

Legal Principle

Summary of Law or

Legal Principle

Relationship to Performance Appraisals and the Nature of the Employment Relationship


at Will

Status under which the employer or employee may end an employment relationship at any time

Allows the employer considerable latitude in determining whether, when, and how to appraise performance

Implied Contract

Nonexplicit agreement that impacts some aspect of the employment relationship

May restrict manner in which employer can use appraisal results (e.g., may prevent termination unless for cause)

Violation of

Public Policy

Determination that given action is adverse to the public welfare and is therefore prohibited

May restrict manner in which employer can use appraisal results (e.g., may prevent retaliation for reporting illegal conduct by employer)


Breach of duty to conduct performance appraisals with due care

Potential liability may require employer to inform employee of poor performance and provide opportunity to improve


Disclosure of untrue unfavorable performance information that damages an employee’s reputation

Potential liability may restrict manner in which negative performance information can be communicated to others


Disclosure of untrue favorable performance information that causes risk of harm to others

Potential liability may restrict willingness of employer to provide references altogether, even for good former employees

Fair Labor Standards Act (FLSA)

Imposes (among other things) obligation to pay overtime to nonexempt (supervisory or managerial) employees

Fact that employee conducts appraisals may influence determination that employee functions as supervisor or manager and is therefore exempt

Family and Medical Leave Act (FMLA)

Imposes (among other things) obligation to reinstate employee returning from leave to similar position

Subjecting employee to new or tougher appraisal procedures upon return may suggest that employee has not been given similar position of employment


(From Current Legal Issues in Performance Appraisal Stanley B. Malos, J.D., Ph.D.

These are not the only relevant laws, since they do not include anti-discrimination statutes. Click here to see relevant legislation so you can examine your performance management system in light of these laws.


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Bacal & Associates was founded in 1992 by consultant and book author, Robert Bacal. Robert's books on performance management and reviews have been published by McGraw-Hill. He is available for consultation, training and keynote speaking on performance and management at work.


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  • Performance management can be the lever for improved employee engagement.
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