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By Jill Gerdrum, Axilon Law

In 1987, Montana adopted the Wrongful Discharge from Employment Act, making Montana the only state to abolish “at-will” employment.  

The Act provides a discharge is wrongful if:

(a) it was in retaliation for the employee’s refusal to violate public policy or for reporting a violation of public policy;

(b) the discharge was not for good cause and the employee had completed the employer’s probationary period of employment; or

(c) the employer violated the express provisions of its own written personnel policy.

Montana Code Annotated § 39-2-901, et. seq.

The 2021 Legislature made significant changes to the Act that took effect March 31, 2021.  Here are the highlights:

Changes to Probationary Period

  • Extends default probationary period from 6 months to 1 year. 
  • Allows employer to set probationary period up to 18 months.
  • Allows employer to extend the probationary period for the time period an employee has taken a leave of absence.

Changes to “Good Cause”

  • “Good Cause” now includes an employee’s material or repeated violation of an express provision of the employer’s written policies.
  • Codifies managerial exception, meaning the statute now states the employer now has the “broadest discretion when making a decision to discharge any managerial or supervisory employee.”  

Termination in Violation of Employer’s Policies

Clarifies that wrongful discharge for violation of the employer’s personnel policies must be:

  • a material violation
  • prior to discharge
  • that deprived the employee of a fair opportunity to remain employed

Grievance Procedure

Prior and current law provides employee’s WDEA claim is barred if the employer provides a copy of the internal grievance procedure, and the employee fails to utilize it. 

The recent changes to the WDEA extend the deadline to provide the grievance procedure from 7 days to 14 days and allows it to be emailed.

So be sure to provide a copy of the grievance procedure when the employment ends, even if the employee voluntarily resigned. 

Exceptions

Employees under certain contracts for a specified term are not subject to the WDEA. There have been cases in which the courts held the contract language is such that it cannot be considered a “contract for a specified term” for purposes of excepting the employment from the Act. 

The recent changes provide that employment contracts for a specified term may contain a probationary period and a renewal clause without risk of losing the exception.

Service of a Lawsuit

The statute of limitations remains the same (1 year from termination), but employees must now serve their complaint within 6 months of filing it, as opposed to 3 years under the old law.

Damages

The Act allows an employee to recover up to 4 years of wages (with interest) and fringe benefits, minus the amount of interim earnings or the amount the employee could have earned in the interim with reasonable diligence. Prior to the changes, unemployment benefits were not considered by courts to be “interim earnings” and therefore could not offset an employee’s damages.  The recent changes clarify that unemployment benefits shall be considered interim earnings for purposes of an offset.