Opinion
A21-1023
02-22-2022
Ryan Lindsay, Relator, v. Monticello RV Center, Inc., Respondent, Department of Employment and Economic Development, Respondent.
Department of Employment and Economic Development File No. 43466766
Considered and decided by Worke, Presiding Judge; Ross, Judge; and Larkin, Judge.
ORDER OPINION
MICHELLE A. LARKIN JUDGE
BASED ON THE FILE, RECORD, AND PROCEEDINGS, AND BECAUSE:
1. Relator Ryan Lindsay worked as a commissioned salesperson at respondent Monticello RV Center, Inc. from 2016 to 2019. Monticello RV paid him a monthly "draw," that is, a set payment based on commissions both earned and yet to be earned. Monticello RV also paid him accrued commissions, that is, commissions earned in excess of his draws. Lindsay quit, asserting that Monticello RV failed to pay him accrued commissions in a timely manner and failed to provide him accurate and timely assessments of his earned commissions.
2. Lindsay applied for unemployment benefits. In his application, he indicated that he quit because Monticello RV was not paying him his correct commissions, "conveniently forgot numerous weeks," did not pay commissions that were owed, and "[c]heated" him out of commissions "numerous weeks." He argued that it was "[h]ard to sell and make a living when you're being cheated on pay every paycheck." Respondent Minnesota Department of Employment and Economic Development (DEED) determined that Lindsay "quit for a good reason caused by the employer" and that he was eligible for unemployment benefits. Monticello RV appealed DEED's determination, and an unemployment law judge (ULJ) held a hearing on the matter. At the hearing, Lindsay indicated that he quit because Monticello RV had repeatedly failed to timely pay his commissions.
3. The ULJ found that "Lindsay quit because he suspected he was not receiving all of his commissions," but the ULJ determined that Lindsay was ineligible for unemployment benefits because he lacked good cause to quit. Lindsay requested reconsideration. In his request, he assigned error to the ULJ's determination regarding his reason for quitting and noted that, "[a]s [he] stated during the hearing numerous times," he quit because Monticello RV repeatedly failed to timely and accurately pay his commissions even though he repeatedly brought the issue to its attention. The ULJ affirmed the decision. The ULJ noted that "Lindsay gave many reasons for quitting," but the ULJ did not address all of them. This certiorari appeal followed.
4. Lindsay challenges the ULJ's determination that he did not have good cause to quit. DEED indicates that based on its "thorough review of the record," the ULJ "did not develop the record and make necessary findings of fact regarding one of [Lindsay's] asserted reasons for quitting." DEED asks this court to reverse and remand for an additional hearing and fact-finding.
5. On review of a decision of a ULJ, we may affirm the decision, remand for further proceedings, or reverse or modify the decision "if the substantial rights of the petitioner may have been prejudiced" for one of six enumerated reasons. Minn. Stat. § 268.105, subd. 7(d) (2020). One basis for reversal is that the ULJ's decision was arbitrary or capricious. Id.
6. If an employee quits his job, he is ineligible for unemployment benefits unless he qualifies under one of the enumerated exceptions to ineligibility. Minn. Stat. § 268.095, subd. 1 (2020). If an employee quits because of a "good reason caused by the employer," the employee is not disqualified from receiving unemployment benefits. Id., subd. 1(1). A good reason caused by the employer is defined as a reason: "(1) that is directly related to the employment and for which the employer is responsible; (2) that is adverse to the worker; and (3) that would compel an average, reasonable worker to quit and become unemployed rather than remaining in the employment." Id., subd. 3(a) (2020). "Whether an employee had good cause to quit is a question of law, which we review de novo." Rowan v. Dream It, Inc., 812 N.W.2d 879, 883 (Minn.App. 2012) (quotation omitted).
7. In his application for unemployment benefits, Lindsay stated that Monticello RV did not timely pay him promised commissions. At the hearing before the ULJ, Lindsay described several instances in which Monticello RV did not timely pay all his earned commissions. Yet, the ULJ did not fully address Lindsay's claim of untimely payments or analyze whether it constituted a "good reason" to quit "caused by the employer." In his request for reconsideration, Lindsay again asserted that his reason for quitting was Monticello RV's failure to timely pay him accrued commissions. In denying Lindsay's reconsideration request, the ULJ acknowledged that "Lindsay gave many reasons for quitting," yet the ULJ again failed to consider whether the untimely payments provided good cause to quit.
8. An employee may have multiple reasons for quitting, and an employer's failure to timely pay an employee may provide good cause to quit. Hawthorne v. Universal Studios, Inc., 432 N.W.2d 759, 761-62 (Minn.App. 1988). Minnesota Statutes section 181.101(a) (2020) governs the timeframe within which wages and commissions must be paid, and states in pertinent part:
[E]very employer must pay all wages, including salary, earnings, and gratuities earned by an employee at least once every 31 days and all commissions earned by an employee at least once every three months, on a regular payday designated in advance by the employer regardless of whether the employee requests payment at longer intervals.
9. "An employer who violates a state law in its treatment of its employees is per se guilty of employer misconduct, and such breach of the employer-employee relationship furnishes the employee with the requisite good cause for quitting." Kahnke Bros., Inc. v. Darnall, 346 N.W.2d 194, 196 (Minn.App. 1984). In addition, good cause to quit "is generally found where an employer has breached the terms of an employment agreement." Kehoe v. Minn. Dep't of Econ. Sec., 568 N.W.2d 889, 891 (Minn.App. 1997).
10. Despite finding that "Lindsay was right about not receiving all of his commissions" and that Monticello RV failed to pay him commissions from 2018 until after he quit in 2019, the ULJ did not address whether the untimely payments constituted a good reason for quitting.
11. The ULJ must gather evidence, make written findings of fact based upon that evidence, and provide reasons for the decision reached. Minn. Stat. § 268.105, subd. 1a(a) (2020); Minn. R. 3310.2921 (2021). DEED notes that the ULJ "did not make findings of fact regarding the terms of Lindsay's employment agreement with Monticello RV for commission payment, whether Monticello RV's commission payments to Lindsay were untimely, and whether the alleged untimely payment of commissions was a reason for quitting." DEED also notes that "the ULJ did not make a credibility determination necessary to support certain" findings that he did make. Under Minn. Stat. § 268.105, subd. 1a(a), "When the credibility of a witness testifying in a hearing has a significant effect on the outcome of a decision, the unemployment law judge must set out the reason for crediting or discrediting that testimony." We appreciate DEED's forthright assessment of the circumstances in this case: "if Monticello RV breached an agreement or promise to pay [Lindsay] commissions on a certain schedule, or if Monticello RV violated state law with regard to the payment of commissions," Lindsay may have had a good reason for quitting caused by Monticello RV.
12. Even though Lindsay raised the issue of untimely payment from Monticello RV as his reason for quitting and even though precedent establishes the ways in which untimely payment may constitute good cause for quitting, the ULJ did not analyze that issue. Instead, the ULJ simply determined that Lindsay was ineligible for benefits because although "he was short 1% of his income from 2018," he was not aware of it and had been made "whole for 2019."
13. If a ULJ's decision is not the result of judgment, but rather a result of the ULJ's will, and the ULJ failed to consider an important aspect of the problem, the decision is arbitrary or capricious and subject to reversal. See In re Review of 2005 Ann. Automatic Adjustment of Charges for All Elec. & Gas Utils., 768 N.W.2d 112, 118 (Minn. 2009) (discussing agency decisions). Even though Lindsay alleged, at the hearing before the ULJ and again in his request for reconsideration, that Monticello RV repeatedly failed to timely pay his commissions, the ULJ did not consider that issue, develop the record on that issue, or make necessary credibility determinations related to that issue. We therefore conclude that the ULJ's decision was arbitrary and capricious, and we reverse and remand the ULJ's determination that Lindsay is ineligible for unemployment benefits, without addressing Lindsay's other arguments for reversal.
IT IS HEREBY ORDERED:
1. The ULJ's order is reversed, and this matter is remanded for DEED to adjust any overpayment determination and to calculate any benefits still owed Lindsay, consistent with this opinion.
2. Pursuant to Minn. R. Civ. App. P. 136.01, subd. 1(c), this order opinion is nonprecedential, except as law of the case, res judicata, or collateral estoppel.