Ninth Circuit Court of Appeals Is Asking Montana’s Supreme Court Whether Employers Are Limited to the Reasons Listed in a Discharge Letter When Defending Against a Lawsuit

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Featured Ninth Circuit Court of Appeals Is Asking Montana’s Supreme Court Whether Employers Are Limited to the Reasons Listed in a Discharge Letter When Defending Against a Lawsuit (1)

Montana’s Wrongful Discharge from Employment Act which requires employers to hold “good cause” for terminating an employee after a probationary period has been completed, has frequently been held by employees as protection from capricious dismissal. Montana also holds a distinct statute that gives discharged employees the right to demand a “discharge” letter providing the reasons for their dismissal.

The Court of Appeals for the Ninth Circuit has now asked the Montana Supreme Court to clarify whether the reasons given in this discharge letter are the only reasons for dismissal that an employer may provide in a future lawsuit.

In the case necessitating this request for clarification, the former vice president of a telecommunications company has filed suit against his former employer, claiming that the company lacked good cause to do so. The employer claimed that the reasons for dismissal were a failure to meet minimum travel requirements to visit each worksite for which he was responsible and allowing an employee to work as an electrician in violation of company policy.

The court found that issues of fact precluded granting the employer summary judgment on the matter of the electrician. For the minimum travel requirement, the plaintiff and employer disputed whether the 50% travel requirement listed in the discharge letter was applicable during the period when the termination took place. Regardless, the trial court found that the plaintiff had acknowledged failing to meet the applicable minimum travel requirement and thus granted the employer summary judgment despite the fact that this reason was not stated in the discharge report.

The plaintiff appealed this decision, and the Ninth Circuit found that the law was unclear as to whether or not an employer is solely limited to the reasons provided in a discharge report when arguing that good cause for termination was present or whether statutory changes have since removed this requirement. A 1995 decision by the Montana Supreme Court held that the reasons included in the discharge letter are the sole reasons which may be presented in a lawsuit to defend the termination.

However, since this decision, the Montana Supreme Court has allowed employers to expand upon the reasons stated in this letter, and the trial court in more recent years has ruled that statutory changes made in 1999 have completely removed this requirement. However, as of yet, no ruling by the Montana Supreme Court has completely overruled this former decision, so the Ninth Circuit is asking the court to decide if this requirement still applies.

Employer Takeaways

Employers will likely be left waiting for several months for the Montana Supreme Court to provide an answer to the issue. However, in the meantime, employers should take this as a reminder of the importance of clearly articulating any reasons for termination and clearly documenting the justification for the cause.

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