Vogue Homes, Inc. a Minnesota Corporation, Relator, vs. Department of Employment and Economic Development, Respondent.

Vogue Homes, Inc. a Minnesota Corporation, Relator, vs. Department of Employment and Economic Development, Respondent. A04-2300, Court of Appeals Unpublished, December 6, 2005.

This opinion will be unpublished and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

A04-2300

 

Vogue Homes, Inc. a Minnesota Corporation,

Relator,

 

vs.

 

Department of Employment and Economic Development,

Respondent.

 

 

Filed December 6, 2005

Affirmed in part, reversed in part and remanded

Toussaint, Chief Judge

 

Agency File No. 18001 03

    Martin Patrick Judge, 2116 Second Avenue South, Minneapolis, MN 55404 (for relator)

 

Linda Alison Holmes, Department of Employment and Economic Development, 332 Minnesota Street, Suite E200, St. Paul, MN 55101 (for respondent DEED)

 

            Considered and decided by Willis, Presiding Judge; Toussaint, Chief Judge; and Randall, Judge.

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

            Relator Vogue Homes, Inc., challenges the conclusion of a senior unemployment review judge (SURJ) of respondent Department of Employment and Economic Development (DEED) that various individuals who performed work for relator between 1999 and 2002 were employees whose wages were subject to unemployment-insurance taxes.  We affirm in part, reverse in part, and remand for further proceedings by the SURJ. 

D E C I S I O N

Relator is a Minnesota corporation whose business consists of hiring subcontractors to construct new homes, which relator then sells.  Paul Vogstrom and Eric Vogstrom were relator's corporate officers between 1999 and 2002.  During the same period, John Vogstrom worked for relator as a home salesman; he was compensated by direct commissions and by draws against future commissions.

The Minnesota Unemployment Insurance Program Law (MUIPL) requires employers to report wages paid to employees, as statutorily defined, and to pay taxes based on those wages into the Minnesota unemployment insurance program trust fund; payments to independent contractors are not similarly taxed.  Minn. Stat. § 268.03-.23 (2004).  Relator challenges the SURJ's conclusion that it violated the MUIPL by failing to report employee wages, or pay the taxes thereon, after erroneously classifying certain employees as independent contractors.   

Ourreview in unemployment-insurance cases is limited to determining whether the evidence reasonably sustains the decision of the SURJ.  Markel v. City of Circle Pines, 479 N.W.2d 382, 383-84 (Minn. 1992).  Questions of statutory interpretation are issues of law subject to de novo review.  Illinois Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 803 (Minn. 2004).  "[W]hether a worker is an employee or independent contractor is a mixed question of law and fact."  Neve v. Austin Daily Herald, 552 N.W.2d 45, 47 (Minn. App. 1996).  We will not disturb the SURJ's factual findings where there is evidence reasonably tending to sustain them.  White v. Metro. Med. Ctr., 332 N.W.2d 25, 26 (Minn. 1983).  But when the facts are not in dispute, we review de novo whether, as a matter of law, an individual is an employee or an independent contractor.  Neve, 552 N.W.2d at 48.

The SURJ made three separate classifications under Minn. Stat. § 268.035: one concerning a group of approximately 60 individuals and entities to whom relator had subcontracted construction work; one concerning John Vogstrom; and one concerning Paul Vogstrom and Eric Vogstrom.  The SURJ concluded that every member of the group of 60 individuals and entities was a covered employee under the MUIPL because relator had failed to provide the DEED with a verifiable federal employer identification number (FEIN) for each, as required by the statute.  See Minn. Stat. § 268.035, subd. 9, 9(2) (providing that a person working in commercial or residential building construction or improvement "shall be considered an employee and not an ‘independent contractor' unless she meets [all of nine enumerated] conditions," including that the person "holds or has applied for a federal employer identification number").  Respondent concedes that the evidence in the record is not sufficient to support the SURJ's conclusion and argues that this issue should be remanded for reconsideration.  We agree.  The DEED investigator acknowledged in testimony that the Minnesota Department of Revenue records upon which he relied to verify the FEINs are not exhaustive or necessarily reliable as to FEINs.  We conclude that justice will best be served in this case by remanding this issue for reconsideration by the SURJ.

We also conclude that the evidence in the record does not reasonably support the SURJ's conclusion that John Vogstrom is a covered employee.  Minn. Stat. § 268.035, subd. 20(29) (2004), provides that noncovered employment includes "employment as a real estate salesperson, by other than a corporate officer, if all the compensation for the employment is solely by way of commission."  The SURJ concluded that John Vogstrom did not perform noncovered employment under the statute because he was compensated both by direct commission and by draws against commission.  But the record does not sufficiently describe the nature of John Vogstrom's financial arrangement with relator to support a conclusion that he was a covered employee.  We therefore remand this issue to the SURJ for further consideration.

The SURJ concluded that because Paul Vogstrom and Eric Vogstrom are corporate officers, they performed employment under Minn. Stat. § 268.035, subd. 15(2) (providing that services performed by "an officer of the corporation" constitute covered employment).  We agree.  Relator argues that because the two men are also licensed real estate brokers, they are excepted from the definition of employee by section 268.035, subd. 29 (exempting "employment as a real estate salesperson, by other than a corporate officer, if all the compensation for the employment is solely by way of commission").  But the record is clear that the men are corporate officers, and the real-estate-broker exception therefore does not apply. 

Affirmed in part, reversed in part, and remanded.