Background
Montana Academy of Salons (MAS) is a cosmetology school in Great Falls operated by Michael and Linda McPherson. Between 2014 and 2016, MAS received multiple student complaints alleging inappropriate jokes and physical contact by massage therapy instructor Gene Watson. MAS conducted investigations, issued Watson a formal “last chance” warning in September 2015, and ultimately terminated him in July 2016 after further misconduct was discovered. Watson’s massage therapy license was later revoked and he was criminally convicted of sexual assault in 2020.
In 2020, the Montana Department of Labor and Industry (DLI) initiated a license discipline action against MAS, ultimately asserting that MAS committed “unprofessional conduct” under § 37-1-316(18), MCA, by failing to meet the generally accepted standards of practice when responding to student reports of sexual harassment and sexual violence. After a four-day contested-case hearing, the Office of Administrative Hearings Hearing Officer recommended dismissal, finding that DLI had failed to carry its burden of demonstrating unprofessional conduct. The Board of Barbers and Cosmetologists rejected that recommendation, imposed sanctions, and placed MAS’s school license on five-year probation.
MAS sought judicial review in the First Judicial District Court, which affirmed the Board’s Final Order in January 2025. MAS then appealed to the Montana Supreme Court, arguing the Board acted arbitrarily by imposing discipline based on an unwritten standard that a school’s failure to follow its own internal policies constitutes unprofessional conduct.
The Court’s Holding
The Montana Supreme Court reversed the District Court and remanded with instructions to grant MAS’s petition for judicial review and direct the Board to adopt the Hearing Officer’s Recommended Order dismissing the case. The Court held that the Board’s rejection of the Hearing Officer’s well-reasoned findings was arbitrary and that the Board’s modified conclusions of law were incorrect. Because this issue was dispositive, the Court declined to reach MAS’s constitutional challenges to § 37-1-316(18), MCA.
The Court emphasized that “unprofessional conduct” under § 37-1-316(18), MCA, means conduct that does not meet the “generally accepted standards of practice”—a standard analogous to the professional negligence standard of care, which requires expert testimony to establish. After a four-day hearing and roughly 2,000 pages of administrative record, the expert witnesses described best practices, not generally accepted standards. The Court found that strict adherence to a school’s own internal policies, while aspirational, had not been shown to constitute a generally accepted standard of practice for salon schools.
The Court further reasoned that Title IX caselaw is instructive: a school’s failure to follow Department of Education guidance or its own policies does not ordinarily establish the “deliberate indifference” required for Title IX liability—the functional equivalent of a malpractice or tort judgment. Imposing occupational license discipline based on conduct that would not even support a Title IX damages claim reinforced the Court’s conclusion that the Board grafted an unwritten and unarticulated standard onto an already vague statute, prejudicing MAS without fair notice.
Key Takeaways
- A professional or occupational licensing board may not discipline a licensee for “unprofessional conduct” under § 37-1-316(18), MCA, unless it can demonstrate the licensee’s conduct failed to meet a generally accepted standard of practice—not merely a best practice—supported by competent evidence.
- A school’s failure to strictly follow its own internal sexual-harassment policies and procedures does not, without more, constitute unprofessional conduct subject to license discipline; the Board cannot impose that requirement by fiat where no rule or prior notice articulated it.
- When an OAH Hearing Officer conducts an extensive evidentiary hearing and recommends dismissal for failure of proof, a licensing board’s rejection of that recommendation must rest on correct legal conclusions—arbitrary rejection that substitutes the board’s preferred outcome for the Hearing Officer’s supported findings will not survive judicial review.
- The perverse-incentive problem is real: the Court expressly noted that interpreting any deviation from internal policies as unprofessional conduct could incentivize regulated schools to adopt minimal policies to reduce disciplinary exposure.
Why It Matters
This decision sets a meaningful limit on how Montana occupational licensing boards may use the catchall “unprofessional conduct” provision of § 37-1-316(18), MCA. Boards cannot simply assert that a licensee’s failure to follow its own internal procedures violates generally accepted standards of practice without establishing—through credible expert testimony—that those procedures reflect an actual, recognized standard in the field. The ruling reinforces due-process-adjacent principles of fair notice: regulated entities must be able to know, in advance and with reasonable certainty, what conduct exposes them to license discipline.
For attorneys advising schools, salons, and other licensed entities regulated by Montana’s Department of Labor and Industry, the case underscores the importance of challenging agency discipline that rests on novel or unarticulated standards. It also clarifies the interplay between Title IX enforcement and state occupational licensing: conduct that would not rise to “deliberate indifference” under federal civil rights law is unlikely to satisfy the generally accepted standards of practice bar for license discipline purposes.