At Will Employment, Quirky Question # 114

Quirky Question # 114:

We are a national company with operations in virtually every state.  We stress to our employees that they are employed “at will” giving them the right to resign at any time for any reason, and preserving our right to terminate their employment at any time, for any reason not prohibited by law.

Recently, an employee in one of our Montana facilities who had been working with us for about three years engaged in conduct that violated our company’s policies.  We fired him as a result.  He now contends that we did not have a “good reason” to fire him.  We told him that while we had one, we did not need a “good reason” to fire him due to our standard policy of at will employment.  He claims that at will rules don’t apply in Montana.  That can’t be, can it?

Dorsey’s Analysis:

As you described, your company terminated one of your Montana employees for violation of one of your company’s policies, believing that you had the right to terminate “at will” employees at any time for any reason not prohibited by law.  Your employee, however, has asserted that at will employment rules do not apply in Montana.  Your employee is correct.  With limited exceptions, none of which appears to apply to your factual situation, Montana rejects the concept of at will employment.

Discharges in Montana are governed by the Montana Wrongful Discharge from Employment Act (“WDEA”).  Under that statute, employee terminations are limited to terminations for “good cause.”  The WDEA defines “good cause” as “reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer’s business operation, or other legitimate business reason.”  MCA, Section 39-2-903(5).  In turn, Montana courts have explained that a “legitimate business reason” means a “reason that is neither false, whimsical, arbitrary or capricious, and it must have some logical relationship to the whims of the business.”  In short, as the WDEA and the decisions interpreting the statute make clear, Montana employers do not have the flexibility afforded employers in most, though not all other states, to terminate an employee at any time for any legal reason.  (I include the word “legal” in the last sentence because even in at will states, an employer may not fire an employee for a reason prohibited by law; for example, an employer cannot fire someone because of his or her race, sex, age, disability, etc.)

Notwithstanding the Montana statute, you should not despair.  The mere fact that Montana is not an at will state does not suggest to me that you have violated the WDEA, or that your company has acted wrongfully.  The WDEA makes clear that “a discharge is wrongful only if . . . the discharge was not for good cause . . . or the employer violated the express provisions of its own written policy.”  MCA, Section 39-2-904(b)-(c).

As stated in your question, you believe that your employee “engaged in conduct that violated [your] company’s policies.”  You did not specify which policies were violated, but it strikes me that violation of a number of different types of policies would justify discharging an employee.  For example, if the employee brought a weapon to work in violation of company policy, that action would warrant discharge.  Similarly, if an employee stole funds from the company, stole company product, damaged company product or equipment, or engaged in any other conduct that was criminal in nature, it would be relatively easy for a company to establish that it had “good cause” for the discharge. Other hypothetical examples that readily come to mind include violation of a company’s sexual harassment policy, violation of an insider trading policy, violation of a policy prohibiting disclosure of confidential trade secret information, and violation of a policy proscribing fighting in the workplace.  There are undoubtedly numerous other types of policies, the disregard of which would warrant discharging an employee.

Moreover, Montana courts have found that an employer’s “reasonable belief” that an employee has engaged in inappropriate conduct may justify the employer’s actions.  For example, in Koepplin v. Zortman Mining, Inc., 267 Mont. 53 (1994), the court concluded that an employer’s reasonable belief that an employee had engaged in threatening or harassing conduct constituted good cause for discharge under the WDEA.  Finding that an employee’s threats and harassment of other workers was “disruptive of the employer’s business operation,” the employer had “the right to serve its own legitimate business interest by discharging the [plaintiff].”

In addition, Montana courts have held that actions that expose the employer to litigation or liability constitute “legitimate business reasons for discharge and for discharge and good cause under Montana’s Wrongful Discharge Act.”  Montana courts have emphasized, for example, that an employer “need not wait until it has been successfully sued for harassment to determine that it has a problem employee and that termination is warranted.”  See Bourdelais v. Semitool, Inc., 2002 ML 3961, at *62-72 (Mont. Dist. Ct.).

Although a well-grounded discharge decision (including one based on the fact that the employee was not meeting the employer’s performance expectations) will not run afoul of the WDEA, four general admonitions are important to consider.

First, as described above, one of the specific statutory violations described in the WDEA is that the employer has not violated the “provisions of its own written policies.”  This statutory definition ups the ante with respect to the written policies utilized by employers in Montana.  Regardless of the underlying content, the policies should be clear and well written.  Ambiguities should be eliminated.  Your company (and other Montana employers) should review carefully the policies the company has adopted and the way in which the polices are enforced to ensure that you are not creating a risk of a WDEA violation.

Second, as also noted above, Montana employers may be able to avoid any potential liability for an employee discharge if they had a “reasonable belief” that the employee has engaged in wrongful conduct.  This implies that the employer has conducted an investigation appropriate under the specific facts and circumstances to evaluate meaningfully the offending conduct and its potential consequences.  Precipitous decisions, made without any investigation, or decisions based upon superficial and careless investigations, will not meet that standard.

Third, Montana employers should be sensitive to the issues of inconsistent enforcement of company policies, and inconsistent treatment of individuals who violate company policies.  With respect to the former, it would be relatively easy for a plaintiff to construct a compelling argument that the policy violation for which he or she was terminated was not one that warranted discharge, if other employees had violated those policies in the past without significant repercussions.  Employees fired for offenses that others had engaged in without consequence could make a decent argument that this conduct could not truly have been “disruptive to the employer’s business operations” since others who had behaved in a similar (or identical) manner were still gainfully employed.

Fourth, a corollary observation to the point above is that discrimination cases often turn on the issue of differential treatment.  For example, if an individual in a protected class were discharged for the same type of conduct that those outside the protected also had engaged in without repercussions, there is a significant risk of a discrimination claim.  Thus, even if the court found that employer had “good cause” to discharge the employee, thereby eliminating potential exposure under the WDEA, an employer still could face potential litigation and/or exposure for violation of federal or state anti-discrimination statutes.

In sum, your ex-employee is correct that Montana is not an at will state.  But, the Montana WDEA does afford employers the right to terminate employees for good reason.  If the policies that you referenced in your question were important, clear, and consistently enforced, and your company had a reasonable belief that the policies were violated, your discharge decision should be affirmed.  Finally, the WDEA incorporates some protections for employers that mitigate the effects associated with the rejection of at will employment.  But that’s a topic for another day.

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