What does the Wrongful Discharge from Employment Act (WDEA) mean for Montana Employers?



Employees are a vital and important part of any business, and employee/employer relationships are what keep businesses moving forward. But sometimes when those relationships end, employers find themselves navigating through challenging post-employment separation issues. One of the most common questions I get from clients that have let an employee go or are thinking of terminating an employee is whether they can to so “at will”. “At will” employment means an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Montana, unlike other jurisdictions, is not an “at will” employment state, meaning that after a period of time, an employer may not terminate employment without meeting certain requirements. These requirements are set out in Montana’s Wrongful Discharge from Employment Act, or WDEA.

The WDEA requires that after an employee is outside of his or her probationary period of employment, they cannot be terminated without “good cause”. The WDEA defines "good cause" to terminate employment to include failure of an employee to perform job duties, employee’s material or repeated violation of an express provision of the employer's written policies, the employee’s disruption of the employer’s operation, or other legitimate business reasons determined by the employer while exercising the employer’s reasonable business judgment


2021 Changes to the WDEA


In the spring of 2021, Montana Governor Greg Gianforte signed HB 254, which contained significant changes to the WDEA. The changes set forth in HB 254 were effective as of the end of March 2021. For the most part, the changes made by HB 254 benefit employers. Specifically, the amendments to the WDEA extended the default probationary period during which an employee may be discharged without good cause, further defined the meaning of “good cause” for termination, expanded the sources of income that are required to be subtracted from an employee's award if they prevail on a wrongful termination claim, and simplified notice that employers must provide to an employee of their internal grievance procedure. Changes in 2021 to the WDEA include:

  • Default probationary period extended. Under the amended WDEA, the default probationary period is now extended to 12 months instead of 6 months after an employee's date of hire. Employers are also allowed to extend this probationary period at any point prior to its expiration by up to an additional 6 months (for a maximum probationary period of 18 months). Employers may also set their own probationary period in their written policies.

  • Definition of "good cause" expanded. The 2021 WDEA amendments expanded the definition of "good cause" to terminate employment. Employers can take advantage of the expanded definition in drafting employment agreements to further protect themselves from possible wrongful termination litigation.

  • The WDEA now also provides employers with additional flexibility to notify employees of its internal grievance procedures. Employers now have 14 days from the date of discharge to provide notice of their internal grievance procedures and can do so in writing or electronically.

  • Sources of income that must be deducted from a wrongful termination award have been expanded. The WDEA now requires that any award for wrongful discharge must include a deduction for any post-discharge compensation earned or that could have been earned “from any new kind, nature, or type of work, hire, contractor status, or employment that did not exist at the time of discharge” including unemployment benefits received. In short, the WDEA now identifies additional income sources separate and apart from the traditional employment relationship that must be deducted from a wrongful discharge award.

  • Employees must now serve a WDEA complaint within six months of filing their complaint, whereas they previously had three years from the date of filing their complaint to effectuate service.

If you are a Montana employer and do not have policies in place to address WDEA considerations, or if you have not reviewed your policies since the 2021 changes to the WDEA, it might be a good time to take a look at your employment termination procedures. Working with an experienced employment law attorney can help you best position you to navigate the termination of employee relationships and reduce risks to your business. For professional legal advice regarding the WDEA or other employment law issues, contact Sarah L. Johnson, Measure Law, 406-752-6373, or fill out a request here.



***DISCLAIMER***


This article is intended for educational and information purposes only, it is not intended to act as legal advice.


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