Montana Wrongful Discharge from Employment Act: Employer’s Guide

Montana employment law includes nuances that are important to understand. As an employer, you want to make sure that you are complying with Montana's complex rules related to employment discrimination, wage claims, and wrongful discharge.

Why? Because these statutes have some of the strongest statutory remedies available to employees. Also, doing so is good business practice and will help you maintain your reputation in the community. Our Montana business litigation lawyers have prepared a short guide on the matter.

Wrongful Discharge Is a Common Claim with Harsh Penalties

Wrongful discharge is not an uncommon claim. However, there are simple ways that can put your business in a position to avoid or defeat any attempted wrongful discharge claims. The Wrongful Discharge Statute outlines the following prohibited actions:

Retaliation for Refusal to Violate Public Policy

Employers cannot terminate an employee for refusing to engage in illegal or unethical activities or for reporting such activities. This provision protects employees who act in accordance with ethical principles and report wrongdoing, even if it goes against the employer's wishes.

Termination Without Good Cause

Employees who have completed their probationary period cannot be terminated without "good cause," which is defined as job-related reasons for dismissal. This means that employers cannot terminate employees for arbitrary or personal reasons once the probationary period has ended.

Violation of Written Personnel Policies

Employers must adhere to their own written personnel policies, including procedures for termination. This means that if an employer has a policy outlining specific steps for termination, they must follow those procedures. Failure to do so can be grounds for a wrongful discharge claim.

Defining "Good Cause" in Montana Employment Law

Most Montana wrongful discharge claims assert that the termination was not for “good cause.” Under Montana law, “good cause” is defined as “reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer's operation, or other legitimate business reason.”

Why Is Wrongful Discharge a Concern for Montana Employers?

Montana's employment laws offer significant remedies for employees, including potential damages for lost wages and benefits. These remedies can be costly for employers, even in cases where they believe they have legitimate reasons for termination.

Additionally, the Montana Wrongful Discharge Statute provides employees with a range of protections against unfair termination. This statute is considered one of the most employee-friendly in the country, giving employees considerable leverage in wrongful discharge cases.

Complying with employment laws is essential for maintaining a positive business reputation and fostering a healthy workplace environment. A wrongful discharge claim can damage a company's image and make it difficult to attract and retain top talent.

Combating Lack of “Good Cause” Wrongful Discharge Claims

Because we know that most former employees who bring Montana Wrongful Discharge claims are for lack of good cause, how can you, as a business owner, protect yourself?

Establish Clear Job Roles and Requirements

Clearly define job responsibilities and expectations in written job descriptions and employment agreements. This helps to ensure that both the employer and the employee understand the scope of the role and the performance standards expected.

Implement a Probationary Period

Establish a probationary period during which an employee can be terminated for any reason. This should be clearly outlined in the employment manual and agreement. The probationary period provides an opportunity for both the employer and the employee to assess the fit and ensure that the relationship is working.

Document Performance and Termination Decisions

Maintain detailed records of employee performance reviews, warnings, and the rationale for termination decisions. This documentation is crucial for defending against wrongful discharge claims, as it provides evidence of the employer's legitimate reasons for termination.

Terminating an Employee After the Probationary Period

When terminating an employee after the probationary period has ended, it is vitally important that you have documented reasons for the decision to terminate the employee. This can be done through employee performance reviews. You must also notify the terminated employee of the “good cause” reason for termination, such as poor workplace performance.

An Employee's Remedies for a Wrongful Discharge Violation

Montana employers who fail to terminate a non-probationary employee for “good cause” can face stiff penalties. The employee may be awarded lost wages and fringe benefits for a period not to exceed 4 years from the date of discharge, together with interest on the lost wages and fringe benefits.

Make Sure to Purchase Employment Practices Liability Insurance

For a Montana employer, it is vitally important to purchase employment practices liability insurance, otherwise known as EPLI coverage. Purchasing this employment insurance will require your insurance company to defend you in the event that a wrongful discharge claim or suit is brought against your business.

EPLI is essential for Montana employers to protect themselves from the financial risks associated with wrongful discharge claims. This insurance comes with several benefits for your business:

Financial Protection

This insurance provides financial protection against legal costs, settlements, and judgments. It can help to mitigate the financial impact of a wrongful discharge claim, even if the claim is ultimately successful.

Legal Defense

EPLI covers the cost of legal representation to defend against wrongful discharge claims. It provides access to experienced legal counsel professionals who are familiar with Montana employment laws and can effectively defend the employer's interests.

Peace of Mind

Purchasing EPLI coverage provides the peace of mind of knowing that your business is insured against potential employment-related risks. EPLI can give employers confidence that they have a safety net in place to protect them from the financial and reputational damage that can result from wrongful discharge claims.

HagEstad Law Group, PLLC Vigorously Defends Employers

HagEstad Law Group, PLLC is trusted by numerous insurance carriers in Montana to defend against professional liability and employment practices claims. With over 20 years of experience, our attorneys are well-versed in Montana law as it relates to wrongful discharge and other Montana employment-related issues.

If you receive a wrongful discharge claim, notify your insurance carrier immediately. You or your insurance carrier are encouraged to contact our firm directly to represent your interests.