Montana Severance — § 28-2-703 Non-Compete Void, WDEA, 5.9% Top Rate, 2026

Montana WARN: what applies#

Montana has no state-level mini-WARN notice statute. The operative layoff-notice regime for Montana private employers is federal WARN (29 U.S.C. §§ 2101–2109): employers with 100 or more full-time employees must give 60 days advance written notice for a mass layoff (50+ affected at a single site of employment constituting at least 33% of the active workforce, or 500+ regardless of percentage) or a plant closing. Notice must go to affected employees (or their representatives), the Montana Department of Labor and Industry Rapid Response unit, and the chief elected official of the local government. Federal WARN penalties: back pay and benefits for each day notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government. Montana adds no shorter notice and no lower employer-size trigger. However, Montana DOES have a statutory just-cause termination protection (WDEA, MCA §§ 39-2-901 to 39-2-915) that operates independently of WARN — see below.

How severance is taxed in Montana#

Montana operates a two-bracket graduated individual income tax under MCA § 15-30-2103 (effective tax year 2024 forward per SB 121 of 2021 / 2021 Mont. Sess. Laws ch. 503, which collapsed Montana's prior seven-bracket structure): 4.7% on Montana taxable income up to $20,500 single / $41,000 MFJ (2024 thresholds; inflation-indexed annually — verify against the live 2026 Withholding Tables) and 5.9% on Montana taxable income above that threshold. Severance-recipient earners commonly fall in the top 5.9% bracket. Montana does NOT publish a separate flat supplemental withholding rate; the Montana Withholding Tax Guide directs employers to apply the graduated tables to all wages including supplemental wages, producing an effective ~5.9% rate for top-bracket earners. Montana has no state-level local income tax on wages. On top of Montana state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ).

Calculate your situation#

Inputs default to Montana; adjust to your specifics.

FAQ#

Does Montana require severance pay?

No Montana statute generally requires private employers to pay severance. However, Montana is unique in two ways that effectively give departing employees more leverage than at-will-state norms: (a) MCA § 28-2-703 statutorily voids most employer non-competes (with narrow goodwill-sale and partnership-dissolution exceptions), and (b) the Montana Wrongful Discharge from Employment Act (WDEA), MCA §§ 39-2-901 to 39-2-915, is the ONLY statutory just-cause termination protection in the U.S. — under § 39-2-904, after the probationary period (default 12 months under § 39-2-910), an employer may NOT terminate the employee except for good cause, violation of the employer's express personnel policy, or wrongful retaliation for whistleblowing. A non-probationary Montana employee terminated WITHOUT good cause has a statutory wrongful-discharge claim under WDEA worth potentially years of back pay (up to 4 years lost wages plus benefits under § 39-2-905). Severance packages in Montana are therefore often structured to release substantive WDEA claims — not mere employer goodwill — which materially increases the value the EMPLOYEE brings to the negotiating table.

How is severance taxed in Montana?

Montana's individual income tax operates under MCA § 15-30-2103 with a two-bracket graduated structure (effective tax year 2024 forward per SB 121 of 2021 / 2021 Mont. Sess. Laws ch. 503, which collapsed Montana's prior seven-bracket structure): 4.7% on Montana taxable income up to $20,500 single / $41,000 MFJ (2024 thresholds; inflation-indexed annually) and 5.9% on Montana taxable income above that threshold. Severance-recipient earners commonly fall in the top 5.9% bracket. Montana does NOT publish a separate flat supplemental withholding rate; the Montana Withholding Tax Guide directs employers to apply the graduated tables to all wages including supplemental wages, producing an effective ~5.9% rate for top-bracket earners. Montana has no state-level local income tax on wages. On top of Montana state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ).

Does Montana have a mini-WARN statute?

No. Montana has no state-level mini-WARN that imposes employer notice obligations independent of federal WARN. The operative regime is federal WARN (29 U.S.C. §§ 2101–2109): 60 days advance notice at employers of 100+ for mass layoffs affecting 50+ at a single site that constitute at least 33% of the active workforce (or 500+ regardless of percentage). Notice goes to affected employees, the Montana Department of Labor and Industry Rapid Response unit, and the chief elected local official. Federal WARN penalties: back pay and benefits for each day notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government. Montana adds no shorter notice or lower trigger. HOWEVER, Montana DOES have the statutory WDEA just-cause regime under MCA §§ 39-2-901 to 39-2-915, which operates independently of WARN and provides substantive remedies for non-probationary employees terminated without good cause.

Does OWBPA apply in Montana?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Montana employer asks you to sign a waiver of age-discrimination claims under the ADEA in your severance agreement, the waiver is enforceable only if you receive at least 21 days to consider the agreement (45 days for group exits — a 'reduction in force' or 'exit incentive program'), and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all selected and non-selected employees in the decisional unit. The Montana Human Rights Act (MCA § 49-2-101 et seq.) separately prohibits age discrimination by employers with 1 or more employees — a substantially lower threshold than the federal ADEA's 20-employee minimum, so virtually all Montana employers are covered by state law. A release of state-law age claims under MHRA does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does. Note: a Montana severance release commonly covers MHRA, federal ADEA AND a release of WDEA claims under MCA §§ 39-2-901 to 39-2-915 — confirm the agreement explicitly waives WDEA before signing.

Can I collect Montana unemployment while receiving severance?

It depends on how the severance is structured. Montana's unemployment severance treatment lives at MCA § 39-51-2306 and related Montana Unemployment Insurance Law sections. In practice, the Montana DLI Unemployment Insurance Division treats severance pay based on allocation: severance designated as 'wages in lieu of notice' or salary continuation tied to a specific notice period typically offsets UI benefits week-by-week during the allocated weeks; a lump-sum severance not designated to specific weeks is more likely to be allocated to the separation date. Practical takeaways: (a) file your Montana UI claim with Montana DLI on or shortly after your last day worked at montanaworks.gov to establish your benefit year; (b) fully disclose the severance amount, structure, and any employer designation when you apply and on weekly certifications — failure to report severance is fraud; (c) Montana's UI maximum weekly benefit amount is in the $629 range for 2026 — verify the live figure at uid.dli.mt.gov before relying on net-of-benefits figures.

Are non-competes enforceable in Montana after a layoff?

NO for most ordinary employment non-competes — this is the HEADLINE Montana fact. MCA § 28-2-703 (Contracts in restraint of trade generally void) provides: 'Any contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided for by 28-2-704 or 28-2-705, is to that extent void.' The narrow exceptions are MCA § 28-2-704 (which permits restraints on the seller of business goodwill for as long as the buyer operates the business in the area of the principal office, the county, adjacent cities or counties, or combinations thereof) and MCA § 28-2-705 (which permits restraints upon partnership dissolution). The narrow exceptions do NOT cover ordinary employment non-competes — a typical 'one-year non-compete in the same industry within 50 miles' signed at the start or during ordinary employment is VOID in Montana under § 28-2-703. Montana joins California (Cal. Bus. & Prof. Code § 16600), North Dakota (N.D.C.C. § 9-08-06), Oklahoma (15 OK Stat. § 219A), and Minnesota (MN HF 100 of 2023) as states where most employer post-employment non-competes are categorically VOID by statute rather than evaluated under a reasonableness test. Confidentiality and non-solicitation provisions are separately enforceable to the extent reasonable, and trade-secret protections under the Montana Uniform Trade Secrets Act remain fully enforceable. PRACTICAL IMPLICATION: a non-compete release clause in a Montana severance offer is typically releasing a covenant that is already statutorily void — assigning low marginal value to the release on its own. Have an attorney confirm before assigning value.

What is the Montana Wrongful Discharge from Employment Act (WDEA) and why does it matter for severance?

Montana is the ONLY U.S. state with statutory just-cause termination protection. The Montana Wrongful Discharge from Employment Act (WDEA), MCA §§ 39-2-901 to 39-2-915, enacted in 1987 by 1987 Mont. Sess. Laws ch. 641, displaces Montana's at-will employment doctrine after the probationary period. Under MCA § 39-2-904, after completion of the employer's probationary period (default 12 months under § 39-2-910), an employer may NOT terminate the employee EXCEPT for (a) good cause, (b) violation of the employer's express personnel policy, or (c) wrongful retaliation for whistleblowing. Remedies under § 39-2-905 include up to 4 years of lost wages and fringe benefits (with offsets for mitigation), plus interim earnings, plus potentially punitive damages. The WDEA also PREEMPTS common-law wrongful-discharge claims under § 39-2-913, replacing the prior Montana common-law public-policy tort. Note: WDEA covers most private-sector employees but EXEMPTS certain categories under § 39-2-912 (employees covered by collective-bargaining agreements with grievance procedures, public-sector employees with separate civil-service protections, federal employees, and employees covered by federal statutory just-cause regimes). PRACTICAL IMPLICATION FOR SEVERANCE: a non-probationary Montana employee terminated WITHOUT good cause has a STATUTORY wrongful-discharge claim worth potentially years of back pay. A severance offer in Montana is typically releasing substantive WDEA claims (often the dominant economic value of the release) — not merely employer goodwill. This dramatically increases the value the EMPLOYEE brings to the negotiating table. Have an attorney review whether you are past your probationary period and whether the termination meets WDEA's good-cause standard before signing a release.