Employee Rights and Employment Policy Journal

Since 1982 Montana has made two significant innovations in labor law. Between 1982 and mid-1987, employees who were fired in violation of a common law "good faith and fair dealing" standard could recover in tort. Since then, employees have been able to recover only if fired without "good cause," as defined in the Wrongful Discharge from Employment Act. Employers concerned with tort awards advocated the statute. The statute caps damages as a multiple of a plaintiffÆs salary. Punitive damages are allowed only where malice or fraud by the employer can be shown by clear and convincing evidence. The statute gives both parties to a wrongful discharge claim the right to request arbitration, and to receive costs if the opposing party refuses and loses in subsequent litigation. Using data on jury verdicts and arbitration awards, this essay examines each regime statistically. Descriptive statistics include mean, median and variance for the duration of litigation, and for the value of jury and arbitration awards. Statistical tests show that the statute significantly reduced the time it takes to litigate a wrongful discharge case. Tests also show that the statute produced a statistically significant reduction in the mean and variance of jury awards. Mean jury awards to women exceed those to men under the tort regime, while under the statute the mean award to men is greater. However, there is no statistically significant difference between mean awards to men and women within each regime. It is also shown that arbitration awards are significantly larger than jury awards. This may suggest that arbitration is more an option for higher income plaintiffs. The per employee cost of wrongful discharge awards is estimated for each regime. It is shown the statute reduced this cost. However, under each regime the cost of wrongful discharge claims per-employee is not much different from the cost of unemployment insurance.