When your organization separates from employees, it’s important to know what the Montana employee separation process requires. Employee termination laws and employer obligations can vary considerably, depending on the state.
This handy employee separation checklist offers a quick overview of Montana’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
Montana Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Montana
Montana state law mandates that when an employee is terminated for cause, they must be paid immediately—within four hours of the end of the business day—unless the employer has a written policy extending the payment deadline to either the next payday, or within 15 days.
Employees who resign must be paid by the earlier of the next scheduled payday or within 15 days of their resignation. Regardless of the reason for separation, all unpaid wages and accrued, unused vacation time must be paid out. However, employers may cap vacation accrual, as long as it is accomplished through lawful policies.
Final paychecks can be issued through regular payment channels, or by mail, upon request. Failure to comply with these payment obligations can result in a misdemeanor charge and a penalty of up to 110 percent of the unpaid wages.
2. Firing Employees in Montana
Firing employees in Montana is slightly more complicated than in other states: it is the only state in the nation that does not have at-will employment. With certain exceptions, such as probationary periods, Montana requires employers to have a “valid reason” for terminating employment.
However, unlike some other states, employers are not obligated to provide any written notice or other documentation upon separation.
3. Severance Agreements in Montana
If your separation involves a severance agreement, be sure that it is compliant with Montana employee rights. First, employers may only include non-compete provisions in severance agreements if the employee is terminated for cause.
Second, the agreement needs to explicitly list any state or federal claims the employee is releasing. Montana allows employees to release claims arising under the Montana Human Rights Act, Montana Equal Pay Law, Montana Wrongful Discharge from Employment Act, Montana’s minimum wage and overtime laws, and Montana’s leave laws. However, the agreement should only release claims that arose prior to its effective date.
Employers must also remember to review applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision suggests a restriction in the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in Montana
When separating from employees with an Income Withholding for Support Order (“IWO”), you must promptly report the employee’s termination to the child support agency, court, or attorney that issued the IWO. Employers may register for online reporting with the Federal Office of Child Support Enforcement here.
Alternatively, report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. Have the following information ready:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Montana
If separating from your last Montana employee ends your business dealings in the state, you may wish to formally withdraw your business registration. For-Profit Corporations, Non-Profit Corporations, and Limited Liability Companies (LLCs) should file an Application for Withdrawal using Montana’s online portal; instructions can be found here.
Stay Compliant with Montana Employee Separation Requirements
Staying current with Montana Employee Separation Agreement requirements helps employers ensure they’re compliant with local, state, and federal laws, and mitigates legal risk to the organization.
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Looking for employee separation laws for a different state? Our interactive map makes it easy to find all employee termination requirements by state.
