IN COURT OF APPEALS
Judy A. Johnson,
Walch & Walch, Inc.,
Commissioner of Employment and Economic Development,
May 24, 2005
Employment and Economic Development
File No. 4437 04
Peter B. Knapp, Eric P. Hockman (certified student attorney),
William Mitchell Law Clinic, 875
Summit Avenue, St. Paul, MN 55105
Lee B. Nelson, Linda A. Holmes, Minnesota Department of Employment and Economic
Development, First National Bank Building, 332 Minnesota Street, Suite E200,
St. Paul, MN 55101-1351 (for respondent commissioner)
and decided by Randall, Presiding Judge; Willis, Judge; and Minge, Judge.
S Y L L A B U S
An employee’s unsupported apprehension
that her income at a nearby work site will be substantially less than at her
current work site is not good reason to quit under unemployment compensation
O P I
N I O N
Relator challenges the decision by
the commissioner’s representative that she is not entitled to unemployment
benefits. Because there was substantial
evidence to support the representative’s decision and because relator’s claim
that she would suffer a substantial loss of income was speculative, we
Relator Judy Johnson worked as a hair stylist
for respondent Walch & Walch, Inc. (Walch) at its shop in Apache Plaza. She had worked in the same location since
1966. Although she was paid entirely on
a commission basis and set her own hours, she was considered an employee, not
an independent contractor. Johnson
worked approximately 25 hours a week and her earnings averaged approximately
$16 per hour.
Plaza closed. As a result, Walch lost its lease and that
business location. In anticipation of
closing, the president of Walch visited the Apache
Plaza shop and told Johnson that she
could work at Walch’s Brooklyn Center
location. The Brooklyn Center location is about an
eight-minute drive by freeway from Apache
Plaza. Walch’s president testified that Johnson
stated she would retire after the Apache
Plaza shop closed. Neither party discussed her work situation
Johnson testified that her customer base at Apache Plaza
consisted of about 75 elderly women, that she had developed this base over 38
years, and that most of her clients lived within one mile of Apache Plaza. Based on her informal poll of a small number
of these customers, Johnson concluded that most of her clientele would not
travel to the Brooklyn Center
location and that she would suffer a dramatic drop in income if she accepted
the offer to relocate. Walch’s president
testified that in his experience approximately 70% of a hairstylist’s clients will
travel a few minutes to a new location and that there were extra customers and
other duties at the Brooklyn Center shop that Johnson could pick up to offset
After Apache Plaza
closed, Johnson ceased working and sought unemployment benefits. A hearing was held before an unemployment law
judge (ULJ) who found that Johnson qualified for benefits because she quit her
employment for good reason caused by the employer. The decision of the ULJ was appealed to the commissioner’s
representative. The commissioner’s representative found that the evidence presented by
Walch was more credible than Johnson’s evidence, that in the fall of 2003
Johnson told Walch’s president that she planned to retire after the Apache Mall
store closed, that continuing employment was available at the Brooklyn Center
location, that her claim of dramatic loss of income was speculative, and that Johnson
declined the new opportunity without adequately checking the prospects. Based on these findings, the commissioner’s
representative concluded that Johnson quit without good cause attributable to
her employer and denied unemployment benefits.
Does Johnson qualify
for unemployment benefits?
Johnson contends that she had good reason to
quit caused by her employer because she would have suffered a substantial loss
of income if she moved to the Brooklyn
Center location and that the commissioner’s
representative erred in denying unemployment benefits.
When reviewing a determination of the commissioner’s
representative, this court considers only whether the record reasonably
supports the commissioner’s determination.
Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995).
This court views the commissioner’s representative’s findings in the
light most favorable to the decision. Schmidgall v. FilmTec Corp., 644 N.W.2d 801, 804 (Minn. 2002).
The court defers to the representative’s ability to weigh
conflicting evidence. Whitehead v.
Moonlight Nursing Care, Inc., 529 N.W.2d 350, 352 (Minn. App. 1995). We defer to the representative’s findings of
fact if the record reasonably supports them.
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, which we review de novo. Peppi
v. Phyllis Wheatley Cmty. Ctr., 614 N.W.2d 750, 752 (Minn. App. 2000).
If an employee
quits employment because of a good reason caused by the employer, the employee
is not disqualified from receiving unemployment benefits. Minn. Stat. § 268.095, subd. 1(1) (Supp. 2003). 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; and (2) that is significant and would compel
an average, reasonable worker to quit and become unemployed rather than
remaining in the employment.” Id., subd. 3(a)
(Supp. 2003). Additionally, “[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
what constitutes a substantial adverse change, Minnesota courts have held that a reduction
in wages of between 19 and 25% constitutes a good reason caused by the employer
for quitting, but that a reduction of 15% alone does not constitute a good
reason. See Sunstar Foods, Inc. v.
Uhlendorf, 310 N.W.2d 80, 84-85 (Minn.
1981); Danielson Mobil, Inc. v. Johnson,
394 N.W.2d 251, 253 (Minn.
App. 1986). In Rootes v. Wal-Mart
Assocs., Inc., we held that a 15% pay reduction, a demotion and less
favorable hours constituted a good reason to quit. 669 N.W.2d 416, 418 (Minn. App. 2003). The Rootes
court held that even though the employee did not know the exact terms of the
new employment being offered her, the combination of factors was
substantial. Id.at 419.
Johnson contends that because she expected to
lose a significant number of clients if she moved to the Brooklyn Center location, she would have
suffered a substantial adverse change in the terms of her employment, including
hours and wages. Johnson bases this
conclusion on her belief that her elderly customers would not drive eight minutes
to the Brooklyn Center
location, that as a commissioned employee, this loss in her customer base would
leave her without a steady source of income, and that the employer admitted 30%
of her clients would be lost. However,
unlike the Sunstar Foods, Danielson Mobil, and Rootes cases, the evidence of income
loss is unclear. Although the president
of Walch testified that in his experience, 70% of Johnson’s customers would
follow her to the Brooklyn Center
location, this was not an admission of a 30% income loss. Rather, he testified that there were extra
customers at the Brooklyn Center location that Johnson could pick up to replace
customers she might lose and that these new customers would allow Johnson to
continue to work a similar number of hours and earn a comparable income. He also testified that she told him that she
planned to retire.
appeal presents the following questions: Did Johnson have adequate prospect of
continued employment without a substantial adverse change in the terms of her
employment and was the situation that Johnson faced one that would cause a
reasonable person to quit rather than further investigate the opportunity of
continued employment? The commissioner’s
representative accepted the employer’s testimony and rejected Johnson’s
testimony as speculative and unpersuasive.
The commissioner’s representative also found that Johnson never told
Walch of her concerns about loss of income, that this deprived the employer of
an opportunity to find a solution, and that quitting entirely and applying for
unemployment benefits did not “make sense.”
We conclude that the employer’s evidence of continued employment and
earnings at a nearby location constitutes an adequate factual basis to support
the decision of the commissioner’s representative.
Johnson also argues
that her situation is like Rootes where the employee did not have to inquire
into the terms of her new employment. See
669 N.W.2d at 419. In Rootes, the
employee did not have to inquire because she knew she was being demoted, her
pay reduced and her hours changed and because her employer acknowledged these
While the decision in Rootes supports the proposition that good
reason to quit employment may exist even if an employee does not inquire as to
the exact nature of the adverse change in employment, in that case there was uncontroverted
evidence of a substantial, adverse change in the terms of employment, not just
an apprehension of such a change. See
id. Unlike Rootes, where the change in income was
clear, here it was not. Although Johnson
was not given any assurance of her new income level, her conclusion was
We conclude that it
was not an abuse of discretion for the commissioner’s representative to
determine that Johnson’s concern about loss of income was based on speculation
and that the commissioner’s representative did not err in determining that
Johnson should have sought more information from Walch or tried working at the
alternative location rather than quitting.
E C I S I O N
Because there is
adequate evidence that the replacement employment available to Johnson was on
terms substantially equivalent to those under which she had previously worked,
the commissioner’s representative did not abuse its discretion in determining
that Johnson’s decision to quit disqualified her from receiving benefits. Johnson’s apprehension about loss of income does
not constitute a good reason to quit caused by the employer which would allow
an employee to receive unemployment benefits under Minn. Stat. § 268.095, subd.
1, 3 (Supp. 2003). In the circumstances
of this case, before quitting, Johnson should have sought more information from
the employer about the replacement position or tried working at the alternative