Do I have to conduct annual performance reviews?
No, there is no federal or Minnesota state law that requires employers to review an employee's performance. Most companies do so because it is a good idea, but there is no legal requirement. Similarly, there is no legal requirement that companies tell their employees anything about their performance before firing them. If you are an at-will employer you have the ability to fire as you deem necessary, for any lawful reason that you have. However, under Minnesota law you do have to provide employees with a truthful reason for their termination if they ask within a reasonable timeframe.
Is it a good idea to do performance reviews? Absolutely. Employers should provide ongoing assessments of their employees' performance. Not only is this good for morale, but it offers an increased opportunity for employees to become more valuable to the business. Moreover, it is generally less complicated when you terminate someone after they have been given a legitimate chance to improve upon their performance, but still fail to do so.
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