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Montana Supreme Court: Wrongful Discharge from Employment Act suit considered timely under a 1-year statute even though it took more than 1 year to exhaust grievance procedures.

April 05, 2021

Quick Takeaway: This unusual ruling had a strong dissent and any Montana employer facing a suit under the Wrongful Discharge from Employment Act (WDEA), needs to consult with legal counsel about the timing issues implicated by this case.

Legal Framework: Actions for wrongful discharge under the WDEA must be filed within one year after the date of discharge. M.C.A. 39-2-911. There is a “tolling” procedure under the Act, and time requirements for employers to inform terminated employees of written internal procedures under which an employee may appeal a discharge within the organizational structure of the employer. M.C.A. 39-2-911(3).

The first court said the claim was too late: The Department of Corrections in Montana (DOC) informed HR Director Kila Shepherd on July 23, 2018 that she was “being considered for termination.” On August 10, 2018 Shepherd was notified that she was being discharged “effective today” and she could challenge her discharge by filing a grievance pursuant to ARM 2.21.8010. She filed a grievance the same day, which was considered a request for a “Step III” grievance hearing. The lower court found that since Shepherd’s grievance procedures took longer than 1 year and 120 days from the date of her termination, her WDEA claim was untimely. On appeal, the Montana Supreme Court reversed. (Shepherd v. DOC, DA 20-376, 3/23/21.)

The Montana Supreme Court said it was right on time. The issue on appeal was whether, and for how long, the limitation period was tolled. Section 39-2-911(2), MCA, requires an employee to exhaust an employer’s “written internal procedures” prior to filing an action. The statute also expressly provides that “[t]he limitation period … is tolled until the procedures are exhausted.”  Section 39-2-911(2), MCA. Shepherd commenced her grievance procedure on the same day that she was discharged; therefore, the tolling of the limitation period began on the same day that the limitation period would have otherwise commenced.

  • But did the clock restart? Since the statute expressly tolls the limitation period “until the procedures are exhausted,” the issue then becomes when the procedures were exhausted, thus restarting the statute of limitations. The lower court held that the procedures were “considered exhausted after ninety days.” They based this conclusion on the provision of § 39-2-911(2), MCA, which provides “[i]f 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 plain meaning of the statute evinces that only if, and when, the employee exercises that option are the grievance procedures considered exhausted. Shepherd elected not to exercise that option, opting instead to fully avail herself of the administrative due process to which she was entitled, as was her right under the statute. Therefore, by the express terms of §39-2-911(2), MCA, the limitation period was tolled from the date Shepherd initiated the grievance procedures until the Final Administrative Decision was issued on February 14, 2020. Since Shepherd initiated the grievance procedures on the date of her discharge, the limitation period on her WDEA claim effectively commenced on February 14, 2020.

The Dissent said the heck are you talking about? Rice, Baker, and Sandefur dissented– In their words “the Majority’s holding fails common sense and disconnects from reality.” So it wasn’t just me…

When analyzing how long an employee has to file for wrongful discharge under the Wrongful Discharge from Employment Act (WDEA), employers can rely on their own procedures to overrule the tolling procedures of the act itself. This is a big deal.

  1. The WDEA requires an employee to exhaust an employer’s “written internal procedures” prior to suing. It provides for tolling while the internal process is ongoing but caps the tolling at no more than 120 days and authorizes the employee to file an action after just 90 days if the internal procedures have not been completed, deeming them to be exhausted.
  2. Provisions versus procedures: The Majority sees fit for the first time in 30-odd years of litigation that the Legislature inserted a discrete concept within the last sentence of 39-2-911(2). It reasons that “provisions” are the employer’s written policies, distinguished from the “procedures” in the policies to be followed when an employee appeals a discharge.
    1. Consequently, the last sentence of 39-2-911(2) means the 120-day extension of the limitation period applies only if provided by the employer’s written policies, not independently effectuated by statute.
    2. In other words, the Legislature delegated to the employer the exclusive authority to toll the statute for a period of up to 120 days by including such tolling in its policies and that otherwise the 120-day provision has no effect.
    3. Consequently, because DOC’s policies contain no such tolling requirement, the Majority reasons that the last sentence of 39-2-911(2) containing a 120-day provision is meaningless.
    4. Upon removal of a maximum tolling time and its reading of the 90-day exhaustion provision in 39-2-911(2) to be effective only upon the employee’s election to sue, it concludes that an employee’s challenge to her discharge under the internal procedures tolls the 1-year limitation period indefinitely.
    5. Thus, Shepherd’s action was timely filed within the 1-year limitation period that commenced 18 months after her discharge…We would venture to say that not a single employer has attempted to toll the statute by way of its internal procedures nor thought it possible.
    6. The new WDEA changes signed into law last week did not change the tolling language of the statute, so this decision stands for now.

Don’t be the test case here. Tolling a Montana statute by way of internal procedures is not something that employers generally do and if you are in this situation, we recommend you speak with your school lawyer or contact Bea, Kevin, Megan, Beth, and Lily by email or at 406-542-1300 to discuss these issues.


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