Wrongful Termination of Employment Cases

Under the Montana Wrongful Discharge Act (MWDA), an employer cannot terminate an employee except for good cause. Otherwise, the employment termination is wrongful with remedies available to the employee.

Section 39-2-904, MCA defines wrongful termination this way:

(1) A discharge is wrongful only 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.

Below is discussed a few of the issues that commonly arise in wrongful termination cases. (For a detailed discussion of issues, see William Corbett, Resolving Employee Discharge Disputes Under The Montana Wrongful Discharge Act (MWDA), Discharge Claims Arising Apart From The MWDA, And Practice And Procedure Issues In The Context Of A Discharge Case, 66 Mont. L. Rev. 329).

Good Cause

“‘Good cause’ means 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.” Whidden v. John S. Nerison, Inc., 1999 MT 110, P12, 294 Mont. 346, 349, 981 P.2d 271, 273 (Mont. 1999). “The most common legitimate reasons for a discharge are based on: (1) employee conduct-employment ‘rule’ violations and/or failure to perform in conformity with the employer’s legitimate expectations ; and (2) business needs unrelated with employee conduct (e.g., economic slowdown resulting in layoffs, business reorganization resulting in loss of positions, contracting out the work resulting in loss of positions, etc).” Corbett, Resolving Employee Discharge Disputes, 66 Mont. L. Rev. at 337.

Discharge

The MWDA defines “discharge” as constructive discharge or any other termination of employment, including resignation, elimination of the job, layoff for lack of work, failure to recall or rehire, and other cutbacks in the number of employees for legitimate business reasons. Section 39-2-903(2), MCA. This definition includes two kinds of discharge: (1) where the employer severs the employment relationship, and (2) in the case of constructive discharge, where the employee severs the relationship.

Actual discharge is apparent because it happens when the employer terminates the employment. On the other hand, constructive discharge “means the voluntary termination of employment by an employee because of a situation created by an act or omission of the employer which an objective, reasonable person would find so intolerable that voluntary termination is the only reasonable alternative.” Section 39-2-903, MCA. But “[c]onstructive discharge does not mean voluntary termination because of an employer’s refusal to promote the employee or improve wages, responsibilities, or other terms and conditions of employment.” Id.

“In determining whether an employee has been constructively discharged, the fact finder must decide whether the employer has rendered working conditions so intolerable that resignation is the only reasonable alternative. This determination must be based on the totality of the circumstances, not on the employee’s subjective judgment that working conditions are intolerable.” Jarvenpaa v. Glacier Elec. Coop., 898 P.2d 690, 691, 1995 Mont. LEXIS 135, *1, 271 Mont. 477 (Mont. 1995). “A determination of constructive discharge ‘depends on the totality of circumstances, and must be supported by more than the employee’s subjective judgment that working conditions are intolerable.’” Kestell v. Heritage Health Care Corp., 259 Mont. 518, 524, 858 P.2d 3, 7 (Mont. 1993). A demotion is not considered a “discharge” but potentially could qualify for hostile work environment depending on the circumstances.

Probationary Period

Employees on probation may be terminated at will by the employer or employee for any or no reason at all. “[The] employer must define the probationary period at the outset of an employment relationship, and the employer has the burden of showing that a probationary period was in effect at the time of a discharge.” Hunter v. City of Great Falls, 2002 MT 331, P16, 313 Mont. 231, 235, 61 P.3d 764, 767 (Mont. 2002) (citations omitted).

Probationary periods are presumed to be six months but can be longer if it is specifically stated upon hire. See Mitchell v. V-1 Propane, 19 Mont. Fed. Rep. 409 (1995). Also, an employer may extend the employee’s probation period to determine the employee’s competence if the employee’s performance during his probation is unsatisfactory. See Hunter, PP 13, 18.

In general, a probationary employee may still bring a claim for a “public policy” violation or a violation of the employer’s own written “personnel policies.” The Montana Supreme Court has stated,

The statutory prohibition on termination in retaliation for the employee’s refusal to violate public policy does not distinguish between probationary and non-probationary employees. Section 39-2-904(1), MCA. In fact, as long as an employer’s conduct is consistent with the employer’s personnel policies, the only basis for challenging the discharge of a probationary employee is that the employer discharged the employee in retaliation for refusing to violate public policy or for reporting a violation of public policy.

Motarie v. Northern Mont. Joint Refuse Disposal Dist., 907 P.2d 154, 156, 1995 Mont. LEXIS 270, *6, 274 Mont. 239 (Mont. 1995). One distinction to be made here, however, is that public employees may be precluded from bringing any of the three claims for relief. See Ritchie v. Town of Ennis, 2004 MT 43, 320 Mont. 94, 86 P.3d 11.

Remedies

If an employee is wrongfully terminated, his damages are limited to 4 years lost wages and benefits and reasonable costs for finding new employment, minus the wages he earned or could have earned with reasonable diligence during that time. Section 39-2-905 provides for the employee’s remedies in a wrongful termination as follows.

(1) If an employer has committed a wrongful discharge, 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. Interim earnings, including amounts the employee could have earned with reasonable diligence, must be deducted from the amount awarded for lost wages. Before interim earnings are deducted from lost wages, there must be deducted from the interim earnings any reasonable amounts expended by the employee in searching for, obtaining, or relocating to new employment.

(2) The employee may recover punitive damages otherwise allowed by law if it is established by clear and convincing evidence that the employer engaged in actual fraud or actual malice in the discharge of the employee in violation of 39-2-904(1)(a).

(3) There is no right under any legal theory to damages for wrongful discharge under this part for pain and suffering, emotional distress, compensatory damages, punitive damages, or any other form of damages, except as provided for in subsections (1) and (2).

An employee has one year from the date of discharge to file a lawsuit for wrongful termination. Some employers have employees agree to follow an employee handbook as a condition of hiring or during employment. Employee handbooks sometimes requires a discharged employee who seeks remedy to follow internal procedures with the employer before being able to file a civil lawsuit against the employer for wrongful termination. Generally speaking, the one year statute of limitations is tolled during the internal procedures. Section 39-2-911, MCA prescribes the procedures in this regard, stating,

(1) An action under this part must be filed within 1 year after the date of discharge.

(2) If an employer maintains written internal procedures, other than those specified in 39-2-912, under which an employee may appeal a discharge within the organizational structure of the employer, the employee shall first exhaust those procedures prior to filing an action under this part. The employee’s failure to initiate or exhaust available internal procedures is a defense to an action brought under this part. If the employer’s internal procedures are not completed within 90 days from the date the employee initiates the internal procedures, the employee may file an action under this part and for purposes of this subsection the employer’s internal procedures are considered exhausted. The limitation period in subsection (1) is tolled until the procedures are exhausted. In no case may the provisions of the employer’s internal procedures extend the limitation period in subsection (1) more than 120 days.

(3) If the employer maintains written internal procedures under which an employee may appeal a discharge within the organizational structure of the employer, the employer shall within 7 days of the date of the discharge notify the discharged employee of the existence of such procedures and shall supply the discharged employee with a copy of them. If the employer fails to comply with this subsection, the discharged employee need not comply with subsection (2).

At the time of discharge, the employee has the statutory right to demand the employer to provide a written statement for his discharge. Section 39-2-801(1), MCA says,

It is the duty of any person after having discharged any employee from service, upon demand by the discharged employee, to furnish the discharged employee in writing a statement of reasons for the discharge.

This demand must also advise the employer that the statements can be used against the employer in a lawsuit. Section 39-2-801(2), MCA says, “A written demand under this part must advise the person who discharged the employee of the possibility that the statements may be used in litigation.” This same statute also prohibits an employer from blacklisting the employee if the employer “refuses to [provide a written statement of the reasons for termination] within a reasonable time after the demand.” Id.

The employer’s response “may be modified at any time and may not limit a person’s ability to present a full defense in any action brought by the discharged employee. Failure to provide a response as required under subsection (1) may not limit a person’s ability to present a full defense in any action brought by the discharged employee.” Section 39-2-801(3), MCA.

Another aspect of the employee’s remedies includes arbitration. Sections 39-2-914 and -915, MCA provide a way for the parties to arbitrate instead of litigate the dispute. If one party offers to arbitrate but the other party rejects the offer and later loses in a civil action, the prevailing party is entitled to reasonable attorney’s fees and costs incurred subsequent to the date of the offer.

Conclusion

Many employees are terminated without good cause. Under Montana law, these employees have a remedy for damages. Employees who have been wrongfully discharged should consult with an attorney experienced in this area of law because there are many issues to be addressed that have an impact on how the case should be handled to maximum the amount of damages the employee can recover for the wrongful termination.

If you need a consultation regarding your wrongful termination case, call Billings Legal at (406) 248-7000 or email Jeff Simkovic at jeff@billingslegal.net.