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Do annual performance reviews need to be in writing for legal reasons? We have 20 employees and every year we have year end reviews. I am the HR person here and I do the reviews for the support staff and the owners of the firm do the executive staff reviews. However, other than a sheet which shows all of the annual increases on them, we don't have anything in writing which would suggest reasons to give employees increases and bonuses or areas for improvement for the employee? Are we doing something illegal?
You are not required by law to provide your employees with annual performance reviews in writing. From a defensive standpoint, however, it makes sense to document as much as possible. Although you are likely in an employment-at-will situation, your are much more "lawsuit-proof" if you can back up your actions with documentation of specific behavior.
For example, let's say you have a project manager who keeps missing deadlines and budgets caps on her products. You give her a performance review and tell her that her work is of substandard quality, but don't document it. Three months later, you decide you've had enough and fire her. Well, firing her is completely legitimate in this situation. However, let's now say that she sues you saying that you fired her because she was a woman. If you had documented her poor performance, her case would likely never see the light of day. But in the absence of that documentation, it is your word against her word - and that's a headache you don't need.
Don't risk it. Document!
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