D & D Associates, Inc., Relator, vs. Richard F. Skjod, Respondent, Commissioner of Employment and Economic Development, Respondent.

D & D Associates, Inc., Relator, vs. Richard F. Skjod, Respondent, Commissioner of Employment and Economic Development, Respondent. A04-1544, Court of Appeals Unpublished, June 7, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-1544

 

D & D Associates, Inc.,

Relator,

 

vs.

 

Richard F. Skjod,

Respondent,

 

Commissioner of Employment and Economic Development,

Respondent.

 

Filed June 7, 2005

Affirmed

Gordon W. Shumaker, Judge

 

Department of Employment and Economic Development

File No. 6229 04

 

 

Allan R. Poncin, 550 Wells Fargo Midland Building, 401 Second Avenue South, Suite 550, Minneapolis, MN 55401 (for relator-employer)

 

Richard F. Skjod, 14402 Hunters Lane, Savage, MN 55378-2282 (pro se respondent-applicant)

 

Lee B. Nelson, Linda A. Holmes, Minnesota Department of Employment and Economic Development, E-200 First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101 (for respondent-commissioner)

 

 

            Considered and decided by Dietzen, Presiding Judge; Toussaint, Chief Judge; and Shumaker, Judge.

 

U N P U B L I S H E D   O P I N I O N

GORDON W. SHUMAKER, Judge

Relator-employer challenges the decision of the commissioner's representative that the employee quit his job for a good reason caused by the employer.  The reason cited was that the employer changed the employee's compensation scheme from full salary to straight commission without warning, which would likely result in less income.  Relator argues that (a) the change was the result of the contract between the parties, and (b) the employee never demonstrated that he suffered an actual substantial reduction in pay before he quit.  We affirm the commissioner's representative's decision.

FACTS

Relator D & D Associates, Inc. hired respondent Richard F. Skjod on March 13, 2000, to work as a sales representative to sell wallpaper and fabric to interior designers primarily in the states of Kansas and Missouri.  At the start of his employment, Skjod received a salary of $72,000, with the understanding that eventually he would be paid "straight commission when things get going well."  Skjod was responsible for his own travel expenses. 

In early 2003, relator changed Skjod's compensation from $72,000 in salary to $60,000 a year, plus commission.  The percentage of commission Skjod received varied by the type of sale.  Skjod received 50% of the sales in Kansas and Missouri, 4% from sales to D&D Associates, and 2% from sales in the Minneapolis and Brenchwood areas in Minnesota.  Relator testified that it decreased Skjod's salary because his sales did not justify the previous amount.

Then, on February 4, 2004, relator informed Skjod that it would be changing his compensation structure to one of straight commission with no base salary.  Because of this new compensation method, Skjod quit his job with relator.  Skjod established an account with the Minnesota Department of Employment and Economic Development, and the commissioner's representative determined that Skjod was qualified for benefits on July 20, 2004.  Relator appealed that determination.

D E C I S I O N

            On certiorari appeal, a reviewing court must examine the decision of the commissioner's representative, rather than that of the unemployment law judge.  Kalberg v. Park & Recreation Bd., 563 N.W.2d 275, 276 (Minn. App. 1997).  And decisions of the commissioner's representative are "accorded particular deference."  Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995). 

            Although this court defers to the commissioner's findings of fact if they are reasonably supported by the evidence in the record, we exercise our independent judgment on the commissioner's conclusions of law.  Ress v. Abbott Northwestern Hosp., Inc., 448 N.W.2d 519, 523 (Minn. 1989).  Whether an employee had good cause to quit is a question of law subject to de novo review.  Kehoe v. Minn. Dep't of Econ. Sec., 568 N.W.2d 889, 890 (Minn. App. 1997).

            Relator argues that the commissioner's representative erred because no change occurred in Skjod's employment conditions.  A person who quits his employment is disqualified from receiving unemployment benefits except when the employee quit for a good reason caused by the employer.  Minn. Stat. § 268.095, subd. 1(1) (Supp. 2003).[1]  The statute defines a good reason caused by the employer as a reason "(1) that is directly related to the employment and for which the employer is responsible; and (2) that is significant and would compel an average, reasonable worker to quit and become unemployed rather than remaining in the employment."  Minn. Stat. § 268.095, subd. 3.  The statute also states that "[a] substantial adverse change in the wages, hours, or other terms of employment by the employer shall be considered a good reason caused by the employer for quitting unless the change occurred because of the applicant's employment misconduct."  Id.  This court has determined that an employee's transfer back to his original job after a probationary term at a different position did not constitute a substantial change in circumstances.  Rutten v. Rockie Int'l, Inc., 349 N.W.2d 334, 336 (Minn. App. 1984).  

            Relator argues that no change took place because it had an agreement with Skjod when he was hired that he would eventually be paid a straight commission.  Skjod agrees that he knew at some point he was to be paid a straight commission but not until "things got going well."  Relator testified that no time frame existed for the transfer of Skjod from salary to commission.  And the commissioner's representative found that Skjod's compensation scheme was changed "without prior warning."  No time frame or specific criteria were in place to determine when things were "going well" so that Skjod could expect this change in compensation.  In fact, Skjod asserts that his understanding of things "going well" meant that the business was financially sound and profitable, whereas relator asserts that things "going well" meant that Skjod was comfortable and knowledgeable in his job.  Because this arrangement was fatally vague and indefinite, relator's argument that Skjod had agreed to the change in compensation fails. 

            Relator's second argument is that, even if this court determines that a change occurred, it was not a substantial change.  Generally, a unilateral reduction in pay gives an employee good cause for quitting.  Scott v. The Photo Ctr., Inc., 306 Minn. 535, 536, 235 N.W.2d 616, 617 (1975); see also Sunstar Foods, Inc. v. Uhlendorf, 310 N.W.2d 80 (Minn. 1981) (holding unilateral wage decreases of 21-26 percent constituted a lockout).  However, the wage decrease must be substantial.  See Minn. Stat. § 268.095, subd. 3; Sunstar, 310 N.W.2d at 84 (stating wage cuts of 2-4 percent do not amount to good cause). 

            Relator challenges the commissioner's representative's finding that Skjod quit his employment because of a substantial adverse change in the terms of his employment.  Relator claims that Skjod's income could have increased under the new compensation scheme, while Skjod urges that his income would decrease.  Conflicts are questions of credibility, and "determinations regarding credibility lie within the province of the Commissioner's representative."  Dean v. Allied Aviation Fueling Co., 381 N.W.2d 80, 83 (Minn. App. 1986).  Here, the commissioner's representative found relator's justification to be "speculative" and determined that relator's testimony regarding this claim was less credible than Skjod's testimony that his income would decrease.

Skjod went from a guaranteed yearly salary to a straight commission compensation scheme.  Under a salary scheme, an employee knows how much money he will make in a year and can budget accordingly, whereas, under a straight commission scheme, an employee assumes the pure risk of earning no money.  Thus, the alteration in Skjod's compensation scheme changed his risk from none under the salary to total under the commission plan.  This transfer in risk from none to total demonstrates a substantial change in Skjod's terms of employment.  Therefore, the new compensation basis constituted a substantial adverse change in Skjod's wages and provided a good reason caused by relator for Skjod to quit his job. 

            Affirmed.

[1]The revisor of statutes inadvertently substituted the term "ineligible for" for the term "disqualified from" in Minn. Stat. § 268.095, subds. 1, 4, 7, 8(a) (Supp. 2003).  See Minn. Stat. § 268.095, subds. 1, 4, 7, 8(a) (2002) (using term "disqualified from"); 2003 Minn. Laws 1st Spec. Sess. ch. 3, art. 2, § 11 (making other changes to Minn. Stat. § 268.095, subd. 1, but retaining term "disqualified from"); 2003 Minn. Laws 1st Spec. Sess. ch. 3, art. 2, § 20(j), (k) (directing revisor to change the term "disqualified from" to "ineligible for" only in Minn. Stat. § 268.095, subd. 12, and then to renumber to Minn. Stat. § 268.085, subd. 13b).