Montana Termination Laws

October 8th 2024

Termination laws in Montana govern the circumstances under which employees can be laid off or dismissed from their jobs. Understanding these laws is crucial for employers and employees, as they establish the legal framework for fair and just employment practices.

Montana is unique as the state does not follow the traditional at-will employment doctrine. Instead, it is governed by specific regulations that protect workers from unjust termination.

This article will explore key aspects of Montana termination laws, including employee rights, legal requirements for layoffs, and protections against discrimination and retaliation.

This Guide Covers

Legal Considerations for Termination in Montana
Employment Framework in Montana
Lawful Termination in Montana
Legal Protections During Termination in Montana
Terminated Employee Benefits in Montana
Layoffs in Montana
Resignations in Montana
Legal Cases Related to Wrongful Termination in Montana

Legal Considerations for Termination in Montana

  • Wrongful Discharge Claims: Montana employees can file a wrongful discharge claim if they demonstrate that they were discharged without good cause, terminated in retaliation for exercising their legal rights, or fired in violation of the employer’s written policies or employment contracts.
  • Severance Pay: Under Montana laws, severance pay is not a statutory requirement unless it is specifically agreed on in an employment contract, collective bargaining agreement, or company policy.
  • Anti-Discrimination Laws: Employers cannot base terminations on discrimination. Montana follows the federal anti-discrimination laws, which prohibit employee forced termination based on race, gender, disability, age, or any other protected status.
  • Retaliation: Employers cannot terminate employees in retaliation for reporting illegal activities, filing complaints about unsafe working conditions, or participating in whistleblower activities or labor-related actions,
  • Notice Requirements: No specific Montana statute requires employers to provide advance notice before terminating an employee unless it is specified in a contract or company policy. However, there is a special notice requirement for certain law enforcement positions. Under Montana Code 7-3-2108, sheriffs must provide ten days’ written notice to a deputy sheriff before terminating their employment. The notice must include the reasons for termination. In addition, if the deputy requests it within ten days, they are entitled to a hearing before the country commissioners regarding the termination.

Employment Framework in Montana

Is Montana an At-Will State?

Montana is not an at-will employment state; its employment framework is unique as it includes legal clauses that greatly restrict at-will employment following an employee’s probationary term.

Most states in the United States allow employers to fire employees at any time and for any cause unless it is illegal. However, Montana has established the Wrongful Discharge from Employment Act (WDEA) which establishes explicit standards for when and how employers may terminate employees who have completed their probationary period.

What is Wrongful Discharge from Employment Act (WDEA) in Montana?

Wrongful Discharge from Employment Act (WDEA) in Montana governs employment after an employee has finished their probationary period, requiring “good cause” for termination.

Employees can be terminated at will during their probationary period (usually 12 months unless otherwise specified by the employer). After this period, employers are required to provide a legitimate reason for dismissal.

The WDEA establishes a framework that safeguards employees from wrongful firing:

  • Termination with Good Cause: Following the probationary period, an employer may only terminate an employee for “good cause.” A good cause is a genuine business reason, such as the employee’s failure to fulfill performance goals or breach of company policies. When firing an employee, employers must have a reasonable reason based on business operations or employee behavior.
  • Probation Period: Employers may establish a probationary term during which employment is at will. The default probationary period is 12 months unless the employer indicates otherwise. During the probationary phase, the employer may fire the employee without providing a cause.

However, the WDEA may not apply in certain cases, including:

  • Temporary employment arrangements.
  • Employees were terminated during their probationary period.
  • Employees are subject to written contracts that specifically indicate termination rules outside of the WDEA.

Employees may file a claim for wrongful discharge if they believe they were unlawfully terminated. The WDEA defines wrongful discharge as:

  • Termination without good cause following the probationary term.
  • Dismissal that violates the company’s written policies or employment contracts.
  • Termination in retaliation against an employee using their legal rights, such as whistleblowing. If a worker successfully establishes wrongful termination, the WDEA offers the following remedies:
    • Reinstatement
    • Lost wages and benefits

An employee has one year from the date of termination to file a claim under the WDEA. After this statute of limitations expires, claims will not be taken into consideration.

Employment Under Contract in Montana

Employment under contract in Montana provides a structured framework that outlines the rights and responsibilities of employers and employees. Contracts can vary widely in their terms, covering aspects such as job duties, compensation, employment duration, and conditions for termination.

Unlike at-will employment, where either party can terminate the relationship without cause, employment contracts often specify the grounds for termination and may include provisions that protect employees from unjust dismissal.

In addition, Montana law mandates that certain essential elements must be present for a contract to be valid. These include identifiable parties capable of contracting, mutual consent, a lawful object, and sufficient cause or consideration.

Lawful Termination in Montana

Legal Grounds for Termination in Montana

Montana is unique compared to other states in the United States because it does not follow at-will employment once the employee’s probationary period has passed. Instead, the state operates under just cause, which means that employers must have a legitimate reason for terminating an employee after their probationary period.

Here are some legal grounds for termination in Montana:

  • Good Cause: Under the WDEA, an employee can only be terminated for good cause after the probationary period. “Good cause” refers to a reasonable and lawful reason for dismissal, usually related to the employee’s performance, behavior, or the needs of the business. A good cause for termination includes, but is not limited to, poor job performance, misconduct, excessive absenteeism, or negligence.
  • Layoffs or Reduction in Workforce: Employers can also terminate employees based on business-related reasons such as economic downturns, restructuring, mergers, or downsizing. These terminations are usually considered lawful if they are not based on discrimination or retaliation.
  • Probationary Employment: During the employee’s probationary period, employers can terminate an employee for any reason or no reason at all, as long as it is not based on disclination or retaliation.
  • Termination by Agreement: Some employment agreements in Montana include clauses that outline specific grounds for termination. For example, if an employment contract outlines that an employee can be terminated for failure to meet certain performance benchmarks, these contractual provisions are legally enforceable.
  • Termination for Breach of Contract: If an employee violates the terms of their employment contract, an employer has the legal grounds to terminate them. A breach of contract could involve violating confidentiality agreements, non-compete clauses, or other specific contractual obligations.

Read our comprehensive guide to firing employees in Montana for further information.

How Do I File a Wrongful Termination Claim in Montana?

To file a wrongful termination claim in Montana, employees must determine if their termination violates the Montana WDEA or any other federal or state laws.

Employees can file their claims with the Montana Department of Labor and Industry, discuss their cases, and determine whether mediation is required before filing a lawsuit. Under the WDEA, employees have one year from the date of termination to file a claim.

Legal Protections During Termination in Montana

Both state and federal legislation that guarantees terminations are carried out legally, without discrimination or retaliation. Below is an overview of the fundamental laws related to termination in Montana:

  • Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act is a federal law that prohibits employers from terminating employees based on race, color, religion, sex, or national origin. It ensures that all employees are treated fairly in termination decisions, protecting them from discriminatory practices.
  • Americans with Disabilities Act (ADA): The ADA protects employees with disabilities from being terminated due to their disability, provided they can perform the essential functions of the job with or without reasonable accommodations. Employers must avoid making termination decisions that unfairly target workers with disabilities.
  • Age of Discrimination in Employment Act (ADEA): The ADEA protects employees against age-based termination for workers above 40 years of age and above. Under the ADEA, age-based layoffs or terminations may give rise to federal claims.
  • Family and Medical Leave Act (FMLA): The FMLA grants eligible employees the right to take up to 12 weeks of unpaid, job-protected leave for certain family or medical reasons. Employers are prohibited from terminating employees for taking FMLA leave, ensuring job security during critical personal or family health events.
  • Occupational Safety and Health Act (OSHA): The OSH Act ensures that employees work in a safe environment. It protects workers from being terminated for raising concerns about workplace safety or reporting unsafe working conditions. Retaliatory terminations under OSHA may result in legal consequences for the employer.
  • Montana Wrongful Discharge from Employment Act (WDEA): The WDEA protects Montana employees against wrongful termination. After completing a probationary period, an employee can only be terminated for good cause, such as poor performance or misconduct. The WDEA prohibits terminations that violate company policies for illegal reasons like discrimination or retaliation. If employees feel they were fired unfairly, they have a year to bring a claim under the WDEA.
  • Montana Human Rights Act (MHRA): Discrimination in the workplace based on race, gender, religion, national origin, disability, and other protected characteristics is prohibited under the MHRA. According to state law, it is unlawful to fire an employee for any of these reasons, and affected employees may file a complaint with the Montana Human Rights Bureau.

Terminated Employee Benefits in Montana

When an employee is terminated in Montana, the benefits and obligations that apply are based on state law, federal law, and company policies.

  • Final Paycheck: When an employee is terminated, Montana law requires that the final paycheck, including any unpaid wages, must be provided within the next scheduled payday or within 15 days, whichever occurs first. If the employee is fired for misconduct, the employer has up to 15 days to pay.
  • Health Insurance Continuation: Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), terminated employees have the right to continue their group health insurance coverage for up to 18 months. This applies if you work for an employer with 20 or more employees, and while you’ll need to cover the full cost of the premium, this benefit ensures you maintain health insurance after termination.
  • Unemployment Insurance: Terminated employees may be eligible for unemployment insurance benefits as provided under Montana Code Annotated § 39-51 unless your termination was due to misconduct. These benefits offer financial support while you search for new employment, with eligibility determined by the Montana Department of Labor and Industry.
  • Severance Pay: Montana law does not require employers to provide severance pay unless it is outlined in the company’s policies or employment contract. If offered, severance agreements must comply with state and federal employment laws.
  • Workers’ Compensation: If an employee is terminated due to a workplace injury, they may be eligible for workers’ compensation benefits. This program provides medical and wage benefits to employees who are injured or become ill due to job-related activities, regardless of their termination status.

Layoffs in Montana

In Montana, labor laws governing layoffs primarily revolve around the federal Worker Adjustment and Retraining Notification (WARN) Act and state-specific employment laws.

The WARN Act requires employers with 100 or more full-time employees to provide at least 60 days advance notice of a mass layoff or plant closing. This law applies to:

  • A mass layoff refers to a significant reduction in the workforce that affects 50 or more full-time employees at a single site within 30 days. Unlike a plant closing, a mass layoff does not necessarily result in the shutdown of an entire facility but significantly reduces its workforce.
  • A plant closing involves the shutdown of one or more facilities or operating units within a single location, leading to the termination of at least 50 employees. This type of layoff is often associated with permanent closures, where operations cease entirely at a specific site.

Resignations in Montana

In Montana, employee resignations may happen in two ways:

Voluntary Resignations

A voluntary resignation occurs when an employee chooses to leave their job by their own decision. There are various reasons why employees resign voluntarily, including finding better job opportunities, relocation, dissatisfaction with their job or work environment, and other personal reasons.

Employees who resign voluntarily are not eligible for unemployment insurance benefits unless they can prove that they quit for a good cause, such as unsafe working conditions or harassment.

Involuntary Resignations

An involuntary resignation happens when an employee is forced to resign, often as an alternative to being fired. This can include circumstances where an employer creates an intolerable work environment, leading to what is known as “constructive discharge.”

If an employee resigns because of extreme or hostile working conditions, this may be classified as constructive discharge under Montana law, where the resignation is treated as wrongful termination. Employees in these situations are eligible for unemployment benefits and potentially other legal remedies.

Legal Cases Related to Wrongful Termination in Montana

1. Railroad Company Ordered to Pay $385,000 in Disability and Defamation Case

In Georgina Treperinas v. Burlington Northern Santa Fe Railroad Company, George Treperinas, an employee of BNSF Railway Co. in Havre, suffered a neck injury while on the job and reported it to his supervisor. The injury Treperinas acquired needs surgery and extensive medical care.

Instead of assisting Treperinas with his recovery, the management of BNSF accused Treperinas of dishonesty, alleging that his injury report was fabricated for his personal gain. The company subsequently fired Trepernas, leaving him unable to work or pay his bills.

Treperinas sued BNSF Railway for wrongful termination and defamation, claiming that the company’s accusations were false and had caused significant harm to his reputation and financial stability. Two years later, the jury ruled in favor of Treperinas, awarding him $385,000, of which $300,000 in punitive damages, $30,000 for the emotional stress he endured during his termination and unemployment, and an additional $55,000 for the company’s contributory negligence in causing his injury.

Key Lessons Learned from the Case:
  • Employers should investigate workplace injury reports thoroughly and in good faith. Accusing employees of dishonesty without sufficient evidence is unethical, and this may lead to costly legal consequences.
  • Employees can file defamation claims based on baseless accusations, and employers may face punitive damages for harming an employee’s reputation.
  • Companies have a duty of care when it comes to workplace injuries. Failing to assist their employees’ medical needs can result in negligence claims and financial penalties.

2. Shipping and Logistics Company Pays $395,000 in Retaliatory Termination Case

In Daniel Dean v. United Parcel Service, Daniel Dean, a 24-year UPS employee who serves as a manager at the company’s Missoula hub, was wrongfully terminated following a logistical error involving undelivered packages. In 2004, UPS initiated a new lot-checking system whereby employees had to verify that all vehicles were unloaded in order to ensure the sorting and delivery of packages. Dean trained his team with the new system, but one evening, a subordinate missed the check, resulting in 300 packages not being delivered.

Despite Dean’s efforts to manage the new system and his request for an internal investigation through the company’s employee helpline, UPS made Dean solely liable for the mistake. UPS did not conduct the investigation and later fired Dean.

Dean sued for a wrongful discharge claim. The case went to mediation, where the mediator ruled that UPS’ actions were without cause. They found that the error did not warrant termination for a 24-year employee and that the company violated its personnel policies by failing to investigate Dean’s grievance. Dean was awarded $395,311 in lost wages and benefits.

Key Lessons Learned from the Case:
  • Employees should not be terminated for minor mistakes without proper investigation, as such actions may violate internal policies and result in legal consequences.
  • Companies must follow their established personnel procedures, even in terms of conducting investigations when employees request them, to ensure fair treatment.
  • Failure to give due process can lead to costly judgments, including compensation for back wages and other benefits.

Learn more about Montana Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.

Most Read