Department of Labor and Industry

Wage and Hour/Wage Payment Act

Montana's Wage and Hour Labor Law Reference Guide

Introduction

This "reference guide" to Montana's wage and hours laws provides general information only and should not be considered as an official document.

Employers may want to write/phone the Employment Relations Division to determine whether their business or farm is covered under state or federal wage and hour law.

Official statements of policy and procedure are contained in the regulations formally adopted by the Wage and Hour Unit of the Montana Department of Labor and Industry and are published in the Administrative Rules of Montana (ARM).

Copies of ARM are available at the office of the Secretary of State, State Capital, Helena MT 59620.

Assistance

Whether an employer is covered or exempt under the Montana Minimum Wage Law may require a case-by-case evaluation. If you have a question as to the application of the law to any worker, write or call the Wage and Hour unit. Provide information on the type of firm, what it does, with whom it does business, the job involved, the method of pay, the hours of work and any other details you think will be needed to answer your questions.

Inquiries about the Montana Minimum Wage laws and other Montana labor laws and their application will be answered by mail, telephone or personal interview at the:

Deptartment of Labor and Industry
Wage and Hour Unit
PO Box 201503
Helena MT 59620-1503
(406) 444-5600
www.mtwagehourbopa.com

Montana Codes Annotated –– Title 39, Chapter 3

Minimum Wages and Hours

Sections 39-3-401 to 39-3-409 provide for minimum wage and hours for workers in the State of Montana, delegating to the Commissioner of Labor and Industry the duty of administering the Act, and providing enforcement.

"Declaration of Policy. It is declared to be the policy of this Act to (1) establish minimum wage and overtime compensation standards for workers at levels consistent with their health, efficiency, and general well-being; (2) safeguard existing minimum wage and overtime compensation standards adequate to maintain the health, efficiency, and general well-being of workers against the unfair competition of wage and hour standards that do not provided such adequate standards of living, and (3) sustain the purchasing power and increase employment opportunities."

General provisions of the wage and hour laws

The Montana Minimum Wage Law of 1971 establishes minimum wage, maximum hours and overtime pay for all employment covered under the law -- unless specifically exempted.

The Montana Minimum Wage Law applies to all workers in Montana. Employees covered by the Fair Labor Standards Act must be paid at least the federal minimum wage but in no case can they be paid less than the wage required by Montana law -- unless the law provides for a specific exemption.

Minimum Wage

The state minimum wage is $7.90 per hour. The federal minimum wage is $7.25 per hour. The state minimum wage is subject to a cost-of-living adjustment based on the Consumer Price Index no later than September 30th of each year, which becomes effective January 1st of the following year.

A business not covered by the Fair Labor Standards Act whose gross annual sales are $110,000 or less may pay $4.00 per hour. However, if an individual employee of such a business is producing or moving goods between states or is otherwise covered by the Fair Labor Standards Act, that employee must be paid the greater of either the federal minimum wage or Montana's minimum wage.

There is no training wage in Montana.

Tips, gratuities or service charges belong to the employee and cannot be used by the employer to make up any part of the worker's wage. At least the current state minimum wage must be paid. Service charges, if imposed by a business engaged into the food, beverage or lodging industry, belongs to the employee. A service charge is defined as an arbitrary fixed charge added to the customer's bill by an employer in lieu of a tip which is collected by the employer and must be distributed directly to the non-management employee preparing or serving the food or beverage or to any other employee involved in related services, pursuant to a tip pool agreement. This applies to contracts entered into on or after April 14, 1995.

Meals may not be used to make up any part of an employee's wage.

Overtime payment

Unless specifically exempt by Montana law, all employees must be paid at least one-and-one-half times the employee's regular rate of pay for all hours worked in excess of 40 hours in a work week (1.5 x$ = $).

Student employees of seasonal amusement or recreational areas (who are furnished board and room) must receive one-and-one-half time (1.5 x) their regular rate of pay for all hours worked in excess of 48 in any work week.

Overtime pay provisions do not apply for farm workers under Montana statute. They can be paid the state minimum wage per hour or paid on a monthly basis of $635.

Application of the overtime provisions of subsection (1) to the employment of firefighters and law enforcement officers by the state must be consistent with the Fair Labor Standards Act of 1938, as amended, and consistent with regulations promulgated under the act.

Exemption from both minimum wage and overtime provisions

The following lists are employees are exempt from both the minimum wage and overtime provisions or only the overtime provisions of the law.

The exemptions, however, are subject to Department of Labor and Industry rules and regulations. Employers can write or phone the Wage and Hour Unit to determine whether an exemption is authorized.

    Exempt from minimum wage/overtime:

       1. Persons enrolled in a distributive education program administered by an accredited educational agency. (Prior approval required.)
       2. Persons working in private homes whose duties consist of "chores" baby-sitting, mowing lawns, cleaning sidewalks.
       3. Persons employed by the head of a household to care for dependent children.
       4. Immediate family members of an employer, or persons dependent upon the employer for at least half of their support as a "dependent."
       5. Persons who are not regular employees of a non-profit organization and who volunteer their services to a non-profit organization -- on a fully or partially reimbursed basis.
       6. Handicapped workers (1) engaged in work incidental to training or evaluation programs, or (2) whose earning capacity is impaired to the extent that they are unable to work in competitive employment. (Prior approval required.)
       7. Apprentices or learners who can be exempted by the Commissioner of Labor and Industry for a period not to exceed 30 days. (Prior approval required.)
       8. Learners under age 18, employed as farm workers provided such exclusion not exceed a period of 180 days from their initial date of employment. Further provided: during this exclusion period, wages paid such learners may not be less than 50 percent of the minimum wage rate.
       9. Retired or semi-retired persons performing part-time work as a condition of their residence (on a farm or ranch).
      10. Any person employed in an executive, administrative, or professional capacity as these terms are defined by regulations of the Commissioner,  a computer systems analyst, computer programmer, software engineer, network administrator, or other similarly computer employee who earns not less than $27.63 an hour pursuant to 29 CFR 541.400 or 541.402*, or an individual employed in an outside sales capacity as defined in 29 CFR 541.500.  (*Underlined portion in effect 10/01/13)
      11. Any person employed by the United States of America.
      12. Resident Managers employed in lodging establishments or assisted living facilities who, under the terms of their employment, live in the establishment or facility.
      13. A direct seller as defined in 26 U.S.C. 3508.
      14. A person serving as a foster parent, licensed as a foster care provider in accordance with 41-3-1131, and providing care without wage compensation to no more than six foster children in the provider's own residence. The person may receive reimbursement for providing room and board, obtaining training, respite care, leisure and recreational activities, and providing for other needs and activities arising in the provision of in-home foster care.
      15. A person placed as a participant in a public assistance program authorized by Title 53 into a work setting for the purpose of developing employment skills. The placement may be with either a public or private employer. The exclusion does not apply to an employment relationship formed in the work setting outside the scope of the employment skills activities authorized by Title 53.
      16. An employee employed in domestic service employment to provide companionship services, as defined in 29 CFR 552.6, or respite care for individuals who, because of age or infirmity, are unable to care for themselves as provided under Section 213(a)(15) of the Fair Labor Standards Act (29 U.S.C. 213),when the person providing the service is employed directly by a family member or an individual who is legal guardian.

Exempt from overtime

The following employees are exempt from the overtime provisions of Montana statute:

       1. An employee over who the U.S. Secretary of Transportation has power to establish qualifications and maximum hours of service under provisions of 49 U.S.C. 304.
       2. A worker of an employer who is subject to part I of the Interstate Commerce Act.
       3. A person employed as outside buyer of poultry, eggs, cream or milk in raw or natural state.
       4. A salesperson, part person, or mechanic paid on a commision or contract basis and primarily engaged in selling or servicing automobiles, trucks, mobile homes, recreational vehicles, or farm implements if the salesperson, parts person, or mechanic is employed by a nonmanufacturing establishment primarily engaged in the business of selling the vehicles or implements to ultimate purchasers.
       5. A salesperson engaged primarily in selling trailers, boats or aircraft if employed by a non-manufacturing establishment engaged primarily in selling trailers, boats, or aircraft.
       6. A salesperson paid on a commission or contract basis who is primarily engaged in selling advertising for a radio or television employer.
       7. An employee employed as a driver or driver's helper making local deliveries -- compensated for such employment on the basis of trip rates, or other delivery plan -- if the Commissioner of Labor and Industry finds that such plan has the general purpose and effect of reducing hours worked by such workers to (or below) the maximum work week applicable to them under 39-3-405 MCA.
       8. An employee employed in agriculture in connection with the operation or maintenance of ditches, canals, reservoirs, or waterways not owned or operated for profit and not operated on a sharecrop basis, and which are used exclusively for supply and storing of wager for agricultural purposes.
       9. A worker employed in agriculture by a farmer/rancher, who may also be employed in the farmer/rancher's livestock auction operation. Such an employee is exempt if:
          a) primarily employed during the work week in agriculture by the farmer/rancher, and
          b) paid for work in connection with the livestock auction operation at a rate not less than that specified by 39-3-404 MCA.
      10. A driver working for an employer engaged in the operation of taxicabs.
      11. An employee (with spouse) employed by a nonprofit educational institution to serve as the parent(s) of children who are orphans, or one of whose natural parents is deceased, or who are enrolled in the institution, and reside in residential facilities of the institutions -- for as long as the children are in residence at the institution and for as long as such employee (with spouse) are in residence at the institution and receive -- without cost-- board and lodging from the institution and is compensated at the rate of not less than $10,000 annually.
      12. An employee employed to plant or tend trees, to cruise, survey or fell timber or to transport logs or other forestry products to a mill, processing plant, railroad, or other transportation terminal -- if the number of workers employed by the employer does not exceed eight.
      13. An employee in a country elevator that may sell products and services used in the operation of a farm -- if no more than five workers are employed by the employer.
      14. An employee is a sheriff's department who is working under an established work period other than a "normal" work week (7-4-2509(1)).
      15. An employee of a municipal or county government who is working under a work period not exceeding 40 hours in a seven-day period established through a collective bargaining agreement when applicable or by mutual agreement of the employer and employee where no bargaining unit is recognized. Employment in excess of 40 hours in a seven-day, 40 hour work period must be compensated at a rate of not less than 1.5 times the hourly wage rate for the employee.
      16. An employee in a hospital or other establishment primarily engaged in the care of the sick, disabled, aged, or mentally ill or defective who works a work period not exceeding 80 hours in a 14-day period established through either a collective bargaining agreement when applicable or mutual agreement of employer and employee when not applicable. (More than eight hours a day or 80 hours in a 14-day period must be compensated for a rate of at least one-and-one-half time the hourly wage rate for the employee.)
      17. A firefighter who works a work period agreed on in collective bargaining between the employer and a firefighters' organization or its official representative.
      18. An officer or other employee in a police department in a first-or-second-class city who works a work period established by the chief of police (7-32-4118 MCA).
      19. An employee of a department of public safety working under a work period established pursuant to 7-32-115.
      20. An employee of a retail establishment if that employee's regular rate of pay exceeds 1½ times the minimum hourly rate applicable under section 206 of the Fair Labor Standards Act of 1938 and if more than half of the employee's compensation for a period of not less than 1 month is derived from commissions on goods and services.
      21. A person employed as a guide, cook, camp tender, outfitter's assistant* or livestock handler by a licensed outfitter as defined in 37-47-101 MCA.  (*Underlined portion in effect from 09/01/13 thru 08/31/15)
      22. An employee employed as a radio announcer, news editor, or chief engineer by an employer in a second-or-third class city or town.
      23. An employee of the consolidated legislative branch as provided in 5-2-503.
      24. An employee of the state or its political subdivisions employed, at the employee's option, on an occasional or sporadic basis in a capacity other than the employee's regular occupation. Only the hours that the employee was employed in a capacity other than the employee's regular occupation may be excluded form the calculation of hours to determine overtime compensation.

Definitions

Work week: The work week is defined as a period of 168 hours during seven consecutive 24-hour periods. The work week can begin any day of the week or at any hour established by the employer. Employment for two or more work weeks cannot be averaged for overtime or minimum wages. Any changes in the beginning of the work week must be made in accordance with regulations governing such a change. Worker coverage, compliance with the wage payment requirements and application of most exemptions are determined on an individual work week basis.

Pay period: Any consistent period established by an employer; i.e., weekly, biweekly, semimonthly, monthly or yearly.

Hours worked: Any employee subject to the Montana Minimum Wage Law must be paid in accordance with its provisions for all hours worked during the work week. In general, "hours worked" includes the time an employee must be on duty or on the employer's premises or at other designated places of work as well as additional time they are required or permitted to work for the employer.

Employer-furnished facilities: The term "wage" can include the reasonable cost to the employer for furnishing the employee with lodging or other facilities. Reasonable cost is not more than the actual cost to the employer and does not include a profit for the employer or others. Records of the facilities furnished must be kept in accordance with regulations. The cost of furnishing facilities is not included in wages to the extent they are excluded under an applicable collective bargaining agreement.

Regular rate: The "regular rate" can be more than the minimum wage; it cannot be less. An employee's regular rate includes all payments made by the employer to or on behalf of the employee. Commissions, monthly salary and hourly wages all are considered a part of the employee's regular rate.

In general, an employee's regular rate includes all payments made by the employer to, or on behalf of, the employee. Assuming the employee receives no compensation other than that stated, here are some typical examples based on a maximum work week of 40 hours:

       1. Hourly rate: The regular rate of pay for an employee (paid by the hour) is their hourly rate. When they work more than 40 hours in a work week, they are due at least one-and -one-half times (1.5 X) their regular rate for each hour in excess of 40.
          (Example: An employee is paid $8.00 an hour. This is their regular rate. If they worked a 44-hour work week, they would be entitled to at least one-and-one-half times (1.5 x) $8.00 or $12.00 for each hour over 40. Their pay for 40 hours of regular time and 4 hours overtime would total $368.)
       2. Piece rate: The regular rate for an employee paid on a piece-rate basis is arrived at by dividing the total weekly earnings by the total number of hours worked in the week. The employee is entitled to payment of one-half this regular rate for each hour worked over 40 -- in addition to the full piece work earnings.
          (Example: An employee is paid on a piece rate basis. Working 45 hours a week, their earnings come to $375. Their regular rate of pay for the week was $8.33 ($375 ÷ 45). In addition to the regular rate, the employee is entitled to $4.17 (½ their regular rate) for each hour worked over 40 -- or five times $4.17 for the five overtime hours. The $20.85 overtime premium brings the employee's total earnings to $395.85.)
       3. Salaries: The regular rate for an employee who is paid a salary for a specified number of hours a week is arrived at by dividing the weekly salary by the number of hours worked.
          (Example: An employee is paid a salary of $375 for a 40-hour week. Their regular rate of pay is $375 ÷ 40 hours, or $9.38 an hour. When they work overtime, they will be entitled to one-and-one-half times (1.5 X) the $9.38, or $14.07 for each hour more than 40 hours.)

If, under the employment agreement, a salary sufficient to meet the minimum wage requirements in every work week is paid as straight time pay for whatever number of hours are worked, the regular rate is arrived at by dividing the salary by the hours worked each week. For example, suppose an employee's work hours vary each week and the agreement with employer is that they will be paid $400 a week for whatever number of hours of work are required. Under this pay agreement, their regular rate will vary when they work overtime. If they work 50 hours, their regular rate is $8 an hour ($400 divided by 50 hours). In addition to their salary, they are due one-half the regular rate for each of the 10 overtime hours -- or a total of $440 for the week.

If a salary is paid on other than a weekly basis, the weekly pay must be determined in order to compute the regular rate and overtime. If the salary is for a half-month, it must be multiplied by 24 and the product divided by 52 weeks to get the weekly equivalent. A monthly salary must be multiplied by 12 and the product divided by 52.

Records

Employers must keep records as required by regulations
(ARM 24.16.6101 through 24.16.6102(9)(b). Almost all the required information is needed by employers in their ordinary business practices and in complying with other laws and regulations. No particular form of records is required. The following records are required for employees subject to the Montana Minimum Wage Law:

    Name
    Social Security Number
    Home Address
    Date of Birth
    Sex and occupation
    Time of day and day of week worker's work week begins
    Regular hourly rate of pay and length of pay period
    Hours worked each work day and total hours worked each work week
    Total daily or weekly straight-time earnings
    Total weekly overtime compensation
    Total additions to, or deductions from earnings
    Total wages paid each pay period
    Date of payment and pay period covered by payment

Wage Payment Act

Sec. 39-3-201 MCA. "Wages" in Montana includes any money due an employee from an employer -- including commissions, bonuses, tips and gratuities of any kind.

Sec. 39-3-204 MCA. Payment of wages generally.
(1) Except as provided in subsections (2) and (3), every employer of labor in the state of Montana shall pay to each employee the wages earned by the employee in lawful money of the United States or checks on banks convertible into cash on demand at the full face value of the checks, and a person for whom labor has been performed may not withhold from any employee any wages earned or unpaid for a longer period than 10 business days after the wages are due and payable, except as provided in 39-3-205. However, reasonable deductions may be made for board, room, and other incidentals supplied by the employer, whenever the deductions are a part of the conditions of employment, or as otherwise provided for by law.
(2) Wages may be paid to the employee by electronic funds transfer or similar means of direct deposit if the employee has consented in writing or electronically, if a record is retained, to be paid in this manner. However, an employee may not be required to use electronic funds transfer or similar means of direct deposit as a method for payment of wages.
(3) If an employee submits a timesheet after the employer's established deadline for processing employee timesheets for a particular time period and the employer does not pay the employee within the 10-day period provided for in subsection (1), the employer may pay the employee the wages due in the ensuing pay period. An employer may not withhold payment of the employee's wages beyond the next ensuing pay period. If there is not an established time period or time when wages are due and payable, the pay period is presumed to be semimonthly in length.

Sec. 39-3-205 MCA. Payment of wages when employee is separated from employment prior to pay day -- exceptions:
(1) Except as provided in subsection (2) or (3), when an employee separates from the employ of any employer, all the unpaid wages of the employee are due and payable on the next regular payday for the pay period during which the employee was separated from employment or 15 days from the date of separation from employment, whichever occurs first, either through the regular pay channels or by mail if requested by the employee.
(2) Except as provided in subsection (3), when an employee is separated for cause or laid off from employment by the employer, all the unpaid wages of the employee are due and payable immediately upon separation unless the employer has a written personnel policy governing the employment that extends the time for payment of final wages to the employee's next regular payday for the pay period or to within 15 days from the separation, whichever occurs first.
(3) When an employee is discharged by reason of allegation of theft of property or funds connected to the employee's work, the employer may withhold from the employee's final paycheck an amount sufficient to cover the value of the theft if:

    (a) The employee agrees in writing to the withholding; or
    (b) The employers files a report of the theft with the local law enforcement agency within 7 business days of seperation from employment, subject to the following conditions:

        (i) If no charges are filed in a court of competent jurisdiction against the employee for the alleged theft within 30 days of the filing of the report with a local law enforcement agency, wages are due and payable upon the expiration of the 30-day waiting period.
        (ii) If charges are filed against the employee for theft, the court may order the withheld wages to be offset by the value of the theft. If the employee is found not guilty or if the employer withholds an amount in excess of the value of the theft, the court may order the employers to pay the employee the withheld amount plus interest.

Sec. 39-3-206 MCA. If wages are not paid as described above, a penalty can be assessed against an employer who does not pay accordingly.

Wage Claims

If an employee believes they have not been paid properly by an employer they can file a wage claim. The claim needs to be filed within 180 days of default or delay and may be investigated 2 to 3 years prior to last day of employment. If the Employment Relations Division is not able to settle the claim, and after mediation, a hearing will be conducted to resolve the claim. Both the employee and the employer can be represented by counsel.

Wage claim forms are available at any Montana Job Service Office or from the Wage and Hour Unit.

Preventive Measures

The Wage and Hour Unit is please to provide presentations to groups of employers and employees interested in learning about wage and hour law and wage payment law. If you are interested in such a presentation, please call or write to the Wage and Hour Unit.