An employee hired for a specified term under an employment contract that also had an at-will provision may bring a claim for wrongful discharge because the contract’s at-will provision “trumped” the definite employment term, the Montana Supreme Court has ruled. The court interpreted Montana’s Wrongful Discharge from Employment Act, which provides that an employee who has completed a probationary period can be discharged only for good cause, but which expressly does not apply to an employee covered by a written contract of employment for a specified term.

“Construing the employment agreement in this case as one for a specific term would remove the discharge from the Act, could effectively reinstate at-will employment in Montana, and would leave the discharged employee arguably without remedy,” the court concluded. “He would not be able to bring an action under the Act, and at the same time would be subject to the employer’s contractual right to discharge at will. Such a result would be contrary to the weight of authority and would undermine the purposes of the Act.”

The employee, Leonard Brown, was hired by the Yellowstone Club as director of retail sales and rentals of ski-related goods on October 28, 2009. He and the employer entered into an employment contract that employed Brown for a term of three years. The contract also stated that either party could terminate the employment at any time, without cause. After about six months, the club terminated Brown’s employment, with no stated cause.

Brown brought an action for damages under the wrongful discharge act. The district court dismissed his claim based on Mont. Code Ann. § 39-2-912(2), which exempts from the wrongful discharge act an employee covered by a written contract of employment for a specified term.

In reversing the decision, the court addressed the issue of whether an employment contract for a specified term that also allowed the employer to terminate the employee at will, for no cause, was a contract for a specific term under the exception provided in § 39-2-912. It noted that in other jurisdictions, such as New York, an at-will provision in a contract trumped the definite employment term, so that such a contract was construed to not be one for a definite or specific term. The court then determined that the specific term language of § 39-2-912 should be interpreted the same way.

“If an employment contract for a specific term also allows the employer to terminate at will (after completion of the probationary period), it is not a ‘written contract for a specific term’ under that statute. A discharged employee covered by such a contract is not excluded by Mont. Code Ann. § 39-2-912 from bringing a claim under the Wrongful Discharge from Employment Act,” the court held.

The court remanded the case for further proceedings.

Brown v. Yellowstone Club Operations, Mont., No. DA 10-0533 (June 28, 2011).

Susan R. Heylman, Esq., is a freelance legal writer and editor based in the Washington, D.C., area.