Briefly explain the legal issues in performance appraisal.

Answers will vary. When performance appraisals are used as the basis for HR decisions (as in the case of merit pay or promotion decisions), they are considered the same as any other test under the law. This designation includes decisions about layoffs based on performance. Therefore, appraisals that show evidence of disparate impact must be validated the same as any selection technique. Performance-appraisal decisions are known to suffer from various types of biases and problems. Ratings based on traits tend to have ambiguous standards, so they are probably more prone to these biases. Therefore, it is critical that organizations can demonstrate that the ratings provided are in areas that are job related, that raters can observe the behaviors they are rating, and that raters received some training to help them do a better job with rating performance. If an appraisal system is used for providing feedback only, however, it is not subject to these same legal requirements.