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If a presumption falls in the woods and there’s no one there to hear it…

June 8th, 2009  |  Matt Pavich

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This has flown somewhat under the radar, but Montana has statutorily reversed the underlying presumption of the employment at-will doctrine. Under Montana’s Wrongful Discharge from Employment Act, MONT. CODE ANN. § 39-2-901 et seq., subject to statutory exceptions, employers must have just cause before discharging at-will employees. In a recent, unpublished, 9th Circuit case, Johannsen v. Nike Inc., No. 08-35040 (9th Cir. June 2, 2009), a sales representative claimed that her company expanded her territory to such an extent that she could not reasonably cover it, resulting in a constructive discharge lacking just cause. The plaintiff won at trial and Nike appealed the denial of judgment as a matter of law.

In affirming the lower court’s verdict, the Ninth Circuit looked to the Act, which defines constructive discharge as an employee’s voluntary termination of employment stemming from a situation created by an act or omission of the employer, one so intolerable that a reasonable person would find voluntary termination to be their only reasonable alternative. Under the Montana Act, however, an employer’s refusal to promote the employee or improve terms and conditions of employment does not constitute such an action. The district court found that Nike admitted that the job as expanded was not workable and that the plaintiff’s territory had to be adjusted, but Nike failed to work with the plaintiff to design a more reasonable territory within a reasonable time frame.

The court also ruled that the employee had no reasonable alternative to resigning, as Nike failed to either negotiate with her, or respond to her complaints until after her resignation. Finally, the court held that the Act’s “terms and conditions” language did not apply because — in contrast to failing to improve conditions — Nike positively worsened the plaintiff’s working conditions. The court found that the Act’s “terms and conditions” language bars only those claims predicated on an employer’s failure to improve conditions beyond the status quo; it does not exclude allegations that conditions have worsened past the point that a reasonable person would find them intolerable.

While the case itself seems to be a relatively run-of-the-mill constructive discharge case, what strikes me as interesting is how little attention the Ninth Circuit drew to the reversal of the employment at-will doctrine. Now, the legislation isn’t all that new, but it is still somewhat surprising that the court didn’t really remark upon this provision of the Act. Montana is traditionally viewed as a politically “red” state, which may account for the lack of outcry. Still, as labor and employers battle for the upper hand in these economically difficult times, it may be worth watching whether other state legislatures will feel pressure to adopt similar laws.

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