Montana Termination of Employment

Back to Montana

The Montana Wrongful Discharge From Employment Act governs termination of employment. (Mont Code Ann. 39-2-901-915.)

After the probationary period, an employer may not terminate an employee except for “good cause.” A discharge is considered “wrongful” only if:

  • it was in retaliation for the employee’s refusal to violate public policy or for reporting such a violation.
  • 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.

If an employer wrongfully discharges an employee under the statute, the employee may be awarded lost wages and fringe benefits. See the statute for more details.

All wages earned and unpaid at the time of discharge are due and payable upon the termination of employment unless by written policy they are paid at the next regular pay date. See Mont. Code Ann. 39-3-205.

Severance Agreements / Releases
Generally, employers are not required to provide severance pay, unless they have agreed to do so. If the employer wants to offer severance to an employee, the employer may ask the employee to sign a release in exchange for the severance, in which the employee waives all legal claims the employee may have against the employer. If an employer seeks a release, the employee must be provided severance or other consideration in addition to any payments the employee was already entitled to receive.

Federal law contains specific statutory requirements for waivers of age discrimination claims and prohibits the waiver of certain wage claims. 
Because of the numerous issues that may arise in connection with termination of an employee, it is advisable to consult a qualified attorney as soon as it may appear that discipline and/or termination may be an issue.

Unemployment Insurance / Compensation
The purpose of unemployment compensation is to provide benefits to those who are unemployed through no fault of their own. Therefore, to be eligible for payments, an applicant generally must either (1) have quit for good cause attributable to his or her employer or (2) have been terminated for reasons other than serious misconduct connected with his or her work. In addition, an applicant must be available and actively looking for work during the entire period of benefits, and (1) must have been paid total wages for employment in the base period in an amount not less than 1 ½ times the wages earned in the calendar quarter in which wages were highest during the base period; or equal to or greater than 50% of the average annual wage described in Mont. Code Ann. 39-51-2201. (See Mont. Code Ann. 39-51-2105), (2) be unemployed for a waiting period of one week; (3) make a claim for benefits for each week of unemployment; (4) have registered to work and continue to report to the employment office; (5) be available and able to work; and (6) actively seek, but be unable to obtain work in four of the last five quarters.

Unemployment benefits come from taxes paid by employers on wages of their workers. These taxes are put in a special trust fund that is used solely to pay unemployment benefits to workers who lose their jobs through no fault of their own. The benefits are intended to be temporary to help people with basic needs while seeking new employment.

Most employers pay contributions under the experience rating provisions of the law at a rate of 2.7 to 5.4% of their total payroll. The employer’s contribution rate depends on its individual benefit ratio (benefits charged to its account for a certain period divided by its total payroll for the same period) as well as the level of funding of the Unemployment Compensation Fund.

To be “unemployed,” individuals must perform no services in a given week and receive no remuneration. In situations where individuals receive payments from their employers for periods in which they render no personal services, e.g., back pay awards, holiday and vacation pay, certain severance payments or employer funded disability pay, they are not “unemployed” and are not entitled to unemployment benefits.

Public, charitable, or educational organizations should look to Montana Code Annotated 39-51-2108 for more details about payments of benefits specific to such organizations.

Health Care (COBRA) Requirements
The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) requires employers who provide employee health and medical benefits to provide notification to employees of their COBRA rights at the time of a “qualifying event” such as a resignation or an involuntary termination of employment. COBRA applies to employers with more than 20 employees. See “Federal Law” section.

*This article is provided for informational purposes only, and should not be construed as legal advice or opinion.  This overview does not provide a complete and up-to-date analysis of all potentially applicable employment law in Montana and the U.S.  You should not act upon this information without specific legal advice from an attorney based on your particular situation.

Back to Montana