Hiring Employees in Montana

Classifying Your Workers Correctly

Your company must distinguish properly between employees and independent contractors under IRS common law tests and Montana’s wage and hour rules. You should look at behavioral control, financial control, and the overall relationship to decide if a worker is truly independent. Misclassification can trigger back wages, unpaid overtime, tax assessments, interest, and civil penalties at both state and federal levels.

Montana follows federal Fair Labor Standards Act (FLSA) principles for exempt vs nonexempt employees, so you must check salary level, salary basis, and duties tests before treating someone as exempt from overtime. If you are unsure, you should treat the worker as an employee and review guidance such as Playroll’s employee misclassification guide at https://www.playroll.com/blog/employee-misclassification-guide.

Verify Employee Work Eligibility

Every time you hire in Montana, you must complete federal Form I-9 within 3 business days of the employee’s start date. You must physically inspect acceptable identity and work authorization documents, such as a U.S. passport or a combination of a driver’s license and Social Security card. Completed I-9s must be retained for at least 3 years after the hire date or 1 year after termination, whichever is later.

Montana does not have a statewide E-Verify mandate for private employers, so you only need to use E-Verify if a federal contract or specific program requires it. If you do enroll, you must follow federal E-Verify rules consistently for all new hires at the participating hiring site.

Create an Employee Onboarding Process

For each Montana hire, you should issue a written offer letter outlining pay rate, pay schedule, classification, and at-will status. You will need to collect federal Form W-4, Montana Form MW-4 for state withholding, direct deposit authorization if used, and signed acknowledgments for your employee handbook and key policies. Montana also requires you to report new hires to the state New Hire Reporting Program within 20 days.

Make sure your onboarding packet includes any benefit enrollment forms and required notices about workers’ compensation and unemployment insurance coverage. When you standardize this process, you gain clearer visibility into the full cost of hiring in Montana, from wages to taxes and benefits.

Pay Frequency & Methods

Montana law requires you to establish regular paydays and pay employees at least twice per month, with no more than 15 days between paydays. If you terminate an employee, you must pay all wages due by the next regular payday or within 15 days, whichever occurs first, unless a written policy promises earlier payment. Failure to pay on time can expose your company to wage claims, penalties, and attorney fees.

Payment Methods (How You Can Pay)

In Montana, you can choose among several payment methods as long as employees receive full wages on time and get an accurate written wage statement each pay period.

• Payroll Check: You may pay by check drawn on a Montana bank and you must ensure employees can cash it at full face value without fees.
• Cash: You can pay wages in cash, but you must still provide a detailed pay stub showing hours, rates, deductions, and net pay.
• Direct Deposit (EFT): You may use direct deposit, but in practice you should obtain written employee consent and offer an alternative for those who opt out.
• Paycards: You can pay by payroll card as long as employees have fee free access to their full wages and receive clear disclosures of any card fees.
• Outsourced Payroll: You may use a third party payroll provider, but your company remains legally responsible for accurate withholding, reporting, and timely wage payments.

When choosing methods, you should consider employee access to banking, the cost of processing, and how easily you can correct errors or issue final pay. Outsourcing or using integrated platforms can help you stay aligned with Montana’s timing and recordkeeping rules.

When you hire in Montana, you must withhold and remit federal and state payroll taxes and pay several employer contributions. You will need to register with both the Montana Department of Revenue and the Montana Department of Labor & Industry before running payroll.

Employer Tax Contributions

As an employer, you are responsible for federal Social Security and Medicare contributions, federal unemployment tax (FUTA), Montana unemployment insurance (UI), and any required workers’ compensation premiums. You must obtain a Montana UI account number and follow the state’s quarterly reporting and payment schedules.

Employee Payroll Tax Contributions

You must withhold federal income tax, Social Security, Medicare, and Montana state income tax from employee wages. Employees complete Form W-4 and Montana Form MW-4 so you can calculate the correct withholding amounts.

Minimum Wage in Montana

Most Montana employers must pay at least the state minimum wage, which is indexed annually for inflation and is $10.30 per hour in 2025. Very small employers with gross annual sales under a federal threshold may be allowed to pay the lower federal minimum, but many businesses still choose the higher state rate to stay competitive. You should review the Montana Department of Labor & Industry updates each January to keep your pay rates compliant.

Working Hours in Montana

Montana does not cap the number of hours adults can work in a day or week, but you must pay for all hours suffered or permitted to work and follow child labor restrictions for minors. State law requires a 30 minute meal period only for certain minors, though providing reasonable breaks for all staff is a best practice. You should track hours accurately for all nonexempt employees to support correct wage and overtime calculations.

Overtime in Montana

Montana follows federal FLSA rules, so nonexempt employees must receive overtime pay at 1.5 times their regular rate for all hours worked over 40 in a workweek. There is no daily overtime requirement, but you must define a fixed, recurring 7 day workweek for each employee. Misclassifying employees as exempt or paying straight time over 40 hours can lead to back pay, liquidated damages, and penalties.

In Montana, you are not required to offer most fringe benefits, but health insurance, retirement plans, and paid leave can make your roles more competitive. If you average 50 or more full time employees across the U.S., the Affordable Care Act requires you to offer affordable, minimum value health coverage or face potential federal penalties. You should document all benefits clearly in your handbook and plan materials so employees understand eligibility and costs.

Mandatory Leave Policies in Montana

Paid Time Off in Montana

Montana law does not require you to offer paid vacation or general PTO, but once you promise it, earned vacation is treated as wages. This means you generally must pay out accrued, unused vacation at separation unless your written policy clearly limits accrual or payout in a lawful way. You should define accrual rates, carryover rules, caps, and payout terms in writing and apply them consistently.

Many Montana employers combine vacation and sick time into a single PTO bank to simplify administration. Whatever structure you choose, you should track balances accurately and show them on pay stubs or in your HR system so employees know what they have available.

Maternity & Paternity Leave in Montana

Montana does not have a separate paid parental leave law for private employers, but eligible employees may qualify for unpaid, job protected leave under federal FMLA. If you have 50 or more employees within a 75 mile radius, qualifying employees can take up to 12 weeks of unpaid leave for the birth, adoption, or foster placement of a child. You must maintain group health benefits during FMLA leave on the same terms as active employment.

Some Montana employers voluntarily offer paid parental leave or allow employees to use accrued PTO or sick leave during maternity or paternity leave. You should spell out eligibility, pay replacement, and coordination with FMLA or short term disability in your policies and benefit documents.

Sick Leave in Montana

Private employers in Montana are not required to provide paid sick leave, but public employers often do, and many private companies offer it to stay competitive. If you choose to offer sick leave, your company must follow its written policy on accrual, usage, and any documentation requirements. You should also consider how sick leave interacts with FMLA, workers’ compensation absences, and disability accommodations.

Even without a paid sick leave mandate, you must comply with federal and state disability and pregnancy accommodation laws, which may require unpaid time off or schedule changes as a reasonable accommodation. Clear communication with employees and consistent documentation will help you manage these requests fairly.

Military Leave in Montana

Employees in Montana who serve in the armed forces, National Guard, or reserves are protected by federal USERRA and applicable state statutes. You must allow unpaid leave for qualifying military service and training and restore the employee to the same or an equivalent position upon timely return. You cannot require employees to use vacation or PTO for mandatory military duty, though they may choose to do so.

Benefits such as health insurance continuation and pension accrual during military leave must follow USERRA rules. You should keep copies of military orders and track leave dates carefully to ensure proper reinstatement and benefit handling.

Jury Duty in Montana

In Montana, you must allow employees time off to serve on a jury or respond to a court subpoena. State law prohibits you from disciplining or firing an employee because of jury service. You are not required to pay for this time unless your policy or contract promises otherwise, but many employers choose to provide some paid jury leave.

You may request proof of jury service, such as a summons or attendance slip, and you can ask employees to report back to work if they are released early. Your policy should explain how jury duty interacts with PTO or other paid leave.

Voting Leave in Montana

Montana law requires you to provide employees with paid time off to vote if they do not have a reasonable opportunity to vote outside their working hours. You may set the time when the employee can be absent, as long as it allows enough time to reach the polls and vote. You cannot penalize or deduct wages for this approved voting time.

To minimize disruption, you can encourage employees to notify supervisors in advance if they expect to need voting leave. Documenting your voting leave procedure in your handbook helps ensure consistent treatment across teams.

Bereavement Leave in Montana

Montana does not mandate bereavement leave, paid or unpaid, for private sector employees. However, many employers voluntarily offer a few days of paid leave for the death of an immediate family member to support employees during difficult times. If you adopt a bereavement policy, you must follow it consistently and apply any eligibility rules fairly.

Your policy should define who qualifies as a covered family member, how many days are available, and whether employees may use additional PTO if needed. Clear guidelines help managers respond compassionately while maintaining predictable staffing.

Termination Process

Montana is unique because, after a probationary period, many private employees are protected by the Wrongful Discharge from Employment Act, which limits terminations to good cause. You should document performance issues, policy violations, and business reasons carefully and follow your disciplinary procedures before ending employment. Providing a written termination notice that briefly states the reason can help demonstrate compliance if a dispute arises.

Notice Period

Montana law does not require you to give advance notice of termination or resignation, unless a contract or collective bargaining agreement says otherwise. However, your company should define any expected notice in offer letters or policies and apply it consistently. Remember that even if no notice is required, you must still pay all final wages by the next regular payday or within 15 days, whichever is sooner.

Severance

Severance pay is not required under Montana law, but you may choose to offer it in layoffs, reorganizations, or negotiated separations. If you provide severance, you should document the terms in a written agreement, often in exchange for a release of claims reviewed under applicable federal and state rules. Make sure your severance practices are consistent and do not discriminate based on protected characteristics.