I think Michael is referring to judging the teaching not the people...am I right on that?
For the most part - yes. In context of the Christian religion, those who follow the Lord Jesus must be ones who take all we hear and
"search the Scriptures daily to see if these things are so."
In this way, we are judging the office of one who is a
"preacher", "pastor", "teacher" or
"apostle" by the words they speak, and how their lives line up with what they proclaim.
But remember again, what the Lord Jesus commends His Elect for doing: in testing even the individual by their fruit and calling them for what they are -
"false apostles."
Speaking to His Church within the churches, our Lord says -
"I know your deeds, your hard work and your perseverance. I know that you cannot tolerate wicked people, that you have tested those who claim to be apostles but are not, and have found them false." - Rev 2:2. And yes, He is speaking of "false apostles" IN the churches.
And Peter writes as well to exhort the saints to judge the words being spoken to them, and to judge the individuals who bring forth what they claim is the Word of God.
"But there were also false prophets among the people, just as there will be false teachers among you. They will secretly bring in destructive heresies, even denying the Master who bought them, and will bring swift destruction on themselves. 2 Many will follow their unrestrained ways, and the way of truth will be blasphemed because of them. 3 They will exploit you in their greed with deceptive words. Their condemnation, pronounced long ago, is not idle, and their destruction does not sleep." - 2Pet 2:1-3
See the influence these "false teachers" have - even to deceive, and blaspheme the way of Truth. Now, I'm not saying stand and rebuke these in front of all, unless there is a clear directive from the Lord; and I believe that day is coming. Most often it is best, as others have stated here, just to leave the congregation and move on.
Personally (and sadly), the bulk of churches I have visited had messages from the pulpits that do not line up with Scripture. I judged the word, and moved on. A couple assemblies that I have been involved with, the Lord has given me occasions to confront the pastor or teacher; and such times were done with love and ended in a time of prayer and seeking the mind of the Lord. Both of these churches have invited me to teach even after such incidents.
I share that to say that I do believe fully that we must judge everything by the written Word of God; and as well the spirit behind what drives some to preach a "different gospel" than what the Scripture (both Testaments) declares.
God's Wisdom and Understanding to us all.