Preemption as Statutory Interpretation: Montana Agencies May Decide Federal Preemption; EO 14042 Expressly Preempted § 49-2-312 for Federal Contractors

Introduction

In Qlarant Integrity Solutions, LLC v. Guthneck, 2025 MT 55, the Montana Supreme Court affirmed a district court order instructing the Montana Human Rights Commission (HRC) to adopt an administrative hearing officer’s dismissal of a discrimination claim. The case arises at the intersection of Montana’s vaccine–status discrimination statute, § 49-2-312, MCA (enacted via House Bill 702 in 2021), and Executive Order 14042, which required federal contractors to implement COVID-19 safety protocols, including a vaccination mandate, during the height of the pandemic.

The dispute centers on whether a Montana administrative hearing officer could adjudicate a federal preemption defense, and—if so—whether EO 14042 preempted § 49-2-312, MCA, as applied to a federal contractor employing a remote Montana worker.

Parties and posture:

• Petitioner/Appellee: Qlarant Integrity Solutions, LLC, a Maryland company performing services on federally funded contracts.
• Respondent/Appellant: Nicholas Guthneck, a remote Montana-based health fraud investigator employed by Qlarant.
• Procedural path: HRB reasonable cause finding → OAH dismissal on preemption → HRC vacatur for lack of agency authority → District Court reversal and remand to adopt dismissal → Supreme Court of Montana affirmance.

Key issues on appeal:

• Whether an OAH hearing officer has authority to decide federal preemption—a purportedly “constitutional” question—over § 49-2-312, MCA.
• Whether, on the pleadings, EO 14042 expressly preempted § 49-2-312, MCA, for covered federal contractors during the relevant period.

Summary of the Opinion

The Court affirmed the district court and reinstated the administrative dismissal of Guthneck’s discrimination complaint. It held:

• Agency authority to decide preemption: Preemption analysis in this context is a matter of statutory interpretation, not a free-standing constitutional challenge, and therefore falls within the competence of executive-branch administrative adjudicators. The HRC erred in concluding otherwise.
• Express preemption by EO 14042: EO 14042, issued under the Federal Property and Administrative Services Act (the “Procurement Act”), and the contemporaneous Task Force Guidance, expressly preempted contrary state laws during the relevant period. Montana’s § 49-2-312, MCA, which forbids employers from conditioning employment on vaccination status, directly conflicted with the federal contractor vaccination requirement and thus was preempted as applied to covered federal contractors like Qlarant at that time.
• Pleading stage resolution: On a Rule 12(b)(6) posture, the court accepted as true Guthneck’s allegations that Qlarant worked on federally funded contracts and imposed a vaccine policy accordingly, which sufficed to treat Qlarant as a “covered contractor” and Guthneck as a “covered contractor employee” for preemption analysis.
• Timing matters: Substantive rights are determined by the law in effect on the date of injury. On November 4, 2021—the date of termination and complaint—EO 14042 was operative and not enjoined; subsequent extensions, litigation, and ultimate rescission did not alter that.
• No need to reach conflict or implied preemption: Because the court found express preemption, it declined to decide conflict or field preemption.

Justice Shea concurred to emphasize a narrow point: today’s decision does not bless employers “moving the goalposts” on deadlines. Guthneck did not argue that Qlarant wrongfully fired him before an asserted November 24 deadline; that distinct issue remains for another case.

Analysis

Precedents Cited and Their Role

• Jarussi v. Board of Trustees, 204 Mont. 131, 664 P.2d 316 (1983): Jarussi holds that courts, not administrative officials, decide constitutional questions and that exhaustion does not apply to constitutional challenges. The HRC relied on Jarussi to conclude the preemption issue was “constitutional,” beyond agency power. The Supreme Court distinguished Jarussi: Qlarant did not challenge the constitutionality of either the Montana statute or the federal EO; it raised preemption as a statutory interpretation question. Therefore, Jarussi’s separation-of-powers caution against agency resolution of pure constitutional claims did not apply.
• Reavis v. Pennsylvania Higher Education Assistance Agency, 2020 MT 181, ¶ 17, 400 Mont. 424, 467 P.3d 588; English v. General Electric Co., 496 U.S. 72 (1990); Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996): These authorities set out the taxonomy of preemption—express, conflict, field—and emphasize that express preemption is a question of statutory interpretation suitable for early resolution (including at the pleading stage). The Court invoked this framework to categorize the issue and to justify agency and judicial competence to address it without a constitutional adjudication.
• Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co., 450 U.S. 311 (1981): While Kalo Brick references a “constitutional question” when laws conflict, the Montana Supreme Court explained that, here, the “constitutional question” is already answered by the Supremacy Clause; the operative work is statutory construction to determine whether an actual conflict exists.
• Core-Mark Int’l, Inc. v. Montana Board of Livestock, 2014 MT 197, ¶ 45: Montana courts give “respectful consideration” to an agency’s interpretation of its statutory authority, underscoring agencies’ familiar role in statutory analysis.
• BNSF Ry. Co. v. Swanson, No. CV-23-43, 2024 U.S. Dist. LEXIS 234230 (D. Mont. Dec. 30, 2024); Cabela’s Wholesale, LLC v. Chavez, No. CV-23-41, 2024 U.S. Dist. LEXIS 112936 (D. Mont. May 29, 2024), adopted, 2024 U.S. Dist. LEXIS 111871 (D. Mont. June 25, 2024): Federal district decisions in Montana held that OAH hearing officers may adjudicate preemption defenses and that EO 14042 (and, in Cabela’s, OSHA’s ETS) preempted § 49-2-312, MCA, during the relevant period. The Supreme Court aligned with these persuasive authorities.
• California Coastal Commission v. Granite Rock Co., 480 U.S. 572, 591 (1987): Cited for the proposition that once federal law expressly states that it supersedes contrary state law, the preemption inquiry ends. The Court used Granite Rock to conclude that EO 14042 and the Task Force Guidance, which declared that federal requirements “supersede any contrary State or local law,” sufficed for express preemption as to covered contractors.
• Anderson v. Werner Enterprises, Inc., 1998 MT 333, ¶ 28; Cadwell v. Bechtel Power Corp., 225 Mont. 423, 732 P.2d 1352 (1987): These establish that substantive rights are determined by the law in effect on the date of injury. Applied here, they render subsequent extensions, injunctions, or rescission of EO 14042 immaterial to the November 4, 2021 termination.
• Georgia v. President of the United States, 46 F.4th 1283 (11th Cir. 2022); Mayes v. Biden, 67 F.4th 921 (9th Cir. 2023), vacated as moot, 89 F.4th 1186 (9th Cir. 2023); Executive Order 14099 (May 9, 2023): These authorities reflect post hoc federal litigation and policy changes. The Court noted the split on EO 14042’s validity and its rescission, emphasizing that none of this undermined the binding effect of the EO at the time of Guthneck’s termination, when no injunction barred enforcement.

Legal Reasoning

The Court’s reasoning proceeds in two stages: authority and merits.

First, on authority, the Court rejected the HRC’s premise that preemption is a “constitutional” question beyond administrative purview. The Supremacy Clause is the constitutional backdrop, but deciding whether a federal directive and a state statute conflict is a matter of interpreting legal texts—something agencies routinely do. Montana law treats express preemption as statutory interpretation; conflict preemption is a pure question of law that can be resolved at the pleading stage. Because Qlarant did not attack the validity of § 49-2-312, MCA, and no party asked the agency to decide the constitutionality of the EO or statute, Jarussi’s rule about agencies avoiding constitutional adjudication did not apply.

Second, on the merits of preemption, the Court accepted the complaint’s well-pleaded facts: Qlarant performed federally funded work; it implemented a vaccine policy because of federal requirements; and Guthneck, a remote Montana worker, refused to disclose his vaccination status. Under the Task Force Guidance, remote workers performing on covered contracts are “covered contractor employees” subject to the vaccination requirement even if never present at federal or contractor worksites.

EO 14042—issued under the Procurement Act and carrying the force of federal law—directed federal contractors to comply with the Task Force Guidance, which squarely stated:

These requirements are promulgated pursuant to Federal law and supersede any contrary State or local law or ordinance. (Task Force Guidance Q19)

Meanwhile, § 49-2-312, MCA, made it unlawful for employers to condition employment on vaccination status. The state statute thus directly conflicted with the federal vaccination mandate for covered contractors. Relying on Granite Rock, the Court held that where federal law declares that it supersedes contrary state law, the express preemption analysis ends: EO 14042 and the Guidance expressly preempted § 49-2-312, MCA, as applied to covered contractors during the relevant period.

On timing, the Court emphasized the date-of-injury rule: the controlling law is that in effect when the alleged injury occurred. On November 4, 2021, EO 14042 was operative and unenjoined; Qlarant was not obliged to predict future injunctions, guidance updates, or ultimate rescission. Nor was Qlarant compelled to wait until the federal compliance deadline to enforce its internal policy; contractors bore implementation burdens (policy drafting, verification, accommodations) that reasonably required earlier employer-side milestones.

Finally, because the Court found express preemption dispositive, it declined to reach conflict or field preemption.

Impact

The Opinion carries two enduring consequences for Montana administrative law and for contractor compliance defenses:

• Administrative adjudicators may decide preemption defenses. The Court clarifies that Montana executive-branch adjudicators (e.g., OAH hearing officers, the HRC) have authority to resolve federal preemption questions that do not require them to pass on the constitutionality of statutes or executive orders. Practically, preemption arguments are now squarely in play at the agency level and can be dispositive at the pleading stage.
• Federal procurement directives can displace contrary state employment laws for covered contractors—while operative. For the period EO 14042 was effective, § 49-2-312, MCA, could not be enforced against covered federal contractors. This reasoning may inform future conflicts between Montana statutes and federal procurement mandates (e.g., cybersecurity, supply-chain, safety, or workplace standards) where the federal directive carries the force of law and expressly supersedes contrary state requirements.
• Temporal anchoring of rights and defenses. Claims will be assessed under the law existing on the injury date. Employers complying with then-operative federal mandates are protected from later state-law claims notwithstanding subsequent injunctions, policy reversals, or rescissions.
• Scope and limits. The ruling is carefully confined: it does not strike down § 49-2-312, MCA; rather, it recognizes preemption as to covered contractors during EO 14042’s effective window. Non-covered employers remain fully subject to state law. Nor does the Court decide the underlying validity of EO 14042—an issue mooted by rescission and split federal authority—only its effect during the relevant period.
• Employment litigation strategy. Contractors facing § 49-2-312 claims tied to the EO 14042 period may raise preemption as an early dispositive defense. Conversely, employees may consider non-preemption theories—e.g., whether employer representations or shifting deadlines created independent wrongful discharge or contract-based issues—subject to Justice Shea’s caveat.

Complex Concepts Simplified

• Preemption: When federal law conflicts with state law, federal law controls (Supremacy Clause). Types include:
  • Express preemption: a federal law explicitly says it supersedes state law.
  • Conflict preemption: it’s impossible to comply with both, or state law frustrates federal objectives.
  • Field preemption: federal law is so pervasive that it leaves no room for states.
• Why an administrative officer can decide preemption here: The officer is not judging a law’s constitutionality. Instead, she compares texts to see if they conflict—standard statutory interpretation, which agencies regularly perform.
• Executive Order 14042 and “covered contractors”: Issued under the Procurement Act, EO 14042 required contractors doing business with the federal government to implement COVID-19 safety protocols. The Task Force Guidance made clear that these requirements applied to remote employees performing work on covered contracts.
• Rule 12(b)(6) (Motion to Dismiss): At this stage, the decision-maker accepts the complaint’s factual allegations as true and asks whether, as a matter of law, the claim is viable. The Court found preemption could be resolved on the pleadings based on Guthneck’s own allegations.
• Date-of-injury rule: The law in effect when the alleged harm occurred controls the parties’ substantive rights. Later legal changes typically do not retroactively alter that analysis.
• Mootness of EO 14042 litigation: Because EO 14042 was rescinded by EO 14099, most federal challenges were dismissed as moot. That does not retroactively negate the EO’s legal effect during its operative period.

Conclusion

Qlarant v. Guthneck cements two key principles in Montana law. First, preemption questions that turn on statutory interpretation—not constitutional invalidation—fall within the decisional authority of administrative hearing officers. Second, during its effective period, EO 14042 and its implementing Task Force Guidance expressly preempted Montana’s vaccine–status discrimination statute as applied to covered federal contractors, including with respect to remote employees performing on covered contracts.

The decision provides practical clarity: agencies may adjudicate preemption defenses, preemption can be decided on the pleadings, and contractors required to comply with federal procurement mandates during their effective period are not liable under contrary state employment laws for actions taken to ensure compliance. While the EO 14042 chapter has closed, the Court’s approach will reverberate in future state–federal conflicts in the procurement space and beyond. Justice Shea’s concurrence signals a remaining open question: independent wrongful discharge theories predicated on changed or accelerated employer deadlines were not before the Court and may yield different outcomes in future cases.