Montana Employer’s Short Guide to Wrongful Discharge

Navigating the complex waters of Montana employment law can be one that is both treacherous and filled with fear. 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. For the purposes of this article, the goal is to provide you with a brief overview I like to call the “Montana Employer’s Short Guide to Wrongful Discharge”.

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. First, lets examine the Wrongful Discharge Statute, which is found under MCA § 39-2-904:

• it was in retaliation for the employee’s refusal to violate public policy or for reporting a violation of public policy;
• the discharge was not for good cause and the employee had completed the employer’s probationary period of employment; or
• the employer violated the express provisions of its own written personnel policy.

MCA § 39-2-904(1)(a)-(c). Most Montana Wrongful Discharge claims assert that the termination was not for “Good Cause”. This begs the question: what is “Good Cause”? Well, I am glad you asked. 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.” MCA § 39-2-903(5).

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? The first step is based on the concept of good hiring and firing practices.

Maybe you have heard the phrase, “be slow to hire, fast to fire.” While that sounds like good advice, actually following it can be tricky. Having the ability to hire well is nuanced and requires business savvy unique to your line of business. Only you will know exactly the type of person you need for a particular position. However, what you can do to protect yourself is establish clearly defined positional roles and requirements. This can be done through your employment manual, as well as the written employment agreement. Every employee should sign the employment manual and a written employment agreement. Also, in the manual, and the employment agreement, a clear “probationary period” should be established. MCA § 39-2-904(2)(a). This protects your business, and notifies the employee that during the “probationary period”, the employee may be terminated for any reason, or no reason at all.

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, and the like. You must also notify the employee the “good cause” reason for termination, such as poor workplace performance. Failing to do so will violate MCA § 39-2-904(1)(b).

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. MCA § 39-2-905(1). This could amount to hundreds of thousands of dollars in damages that could have been avoided by simple documentation and following the Statute as required.

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 EPL coverage. Purchasing this employment insurance will require your insurance company to defend, and indemnify, you in the event that a wrongful discharge claim or suit is brought against your business.

HagEstad Law Group Defends Employers

HagEstad Law Group 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, Constructive 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.