This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
IN COURT OF APPEALS
Paul F. Ritzenthaler,
Commissioner of Economic Security,
Filed March 28, 2000
Department of Economic Security
File No. 1965 UC 99
Paul F. Ritzenthaler, 9562 Crestview Drive, St. Joseph, MN 56374 (pro se relator)
Kent E. Todd, Minnesota Department of Economic Security, 390 North Robert Street, St. Paul, MN 55101 (for respondent Commissioner); and
Repcom, Inc., 1986 Julep Road, St. Cloud, MN 56301 (respondent employer)
Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Foley, Judge.*
U N P U B L I S H E D O P I N I O N
Relator brings a certiorari appeal from the decision by the commissioner’s representative that he was not entitled to reemployment insurance benefits because he quit employment without good reason caused by his employer. The commissioner’s representative found that changing the relator’s pay from a guarantee of $3,000 per month to a base pay plus commission and bonus pay arrangement was not unreasonable and did not establish good cause to quit. We affirm.
Relator Paul F. Ritzenthaler worked full-time as a sales manager for respondent Repcom, Inc., from February 1, 1997, through February 5, 1999, selling radio advertising. When he was initially hired, Repcom agreed to pay Ritzenthaler $3,000 per month guaranteed for his first three months. After that time, he would receive $1,000 per month guaranteed, plus commissions based on his personal sales and the sales of others under his direction. In addition, he would receive bonuses and commissions based on accounts receivable and the revenue generated by the two radio stations where he was sales manager. According to Dennis G. Carpenter, president of Repcom, although Ritzenthaler failed to achieve the sales that were expected of him, the company continued to pay Ritzenthaler the $3,000 per month in an effort to keep him with the company.
In September 1998, Ritzenthaler was notified that he was being demoted from his managerial duties to a regular salesman because of a complaint about his conduct. Following a meeting with Carpenter, Ritzenthaler, and Repcom's manager, Shaun Skramstad, during which Ritzenthaler apologized for his conduct, it was agreed that Ritzenthaler would continue as a sales manager. Ritzenthaler was informed that he needed to take steps to increase the sales and accounts receivable at the two stations. He was also informed that beginning January 1, 1999, he would be paid $1,400 per month guaranteed plus overrides, bonuses, and commissions on revenue and sales at the two stations. Based on the performance of other Repcom sales managers, Skramstad and Carpenter believed that Ritzenthaler could earn $50,000 per year if he met projected sales. During January 1999, Ritzenthaler earned $2,044.35, which comprised his $1,000 base pay plus bonuses and commissions. Ritzenthaler quit on February 5, 1999.
D E C I S I O N
If the employee quits the employment because of a good reason caused by the employer, the employee is not disqualified from benefits. Minn. Stat. § 268.095, subd. 1(1) (1998). It is the employee's burden to show good reason to quit attributable to the employer. Zepp v. Arthur Treacher Fish & Chips, Inc., 272 N.W.2d 262, 263 (Minn. 1978). This court views the commissioner's representative's factual findings in the light most favorable to the decision, and they will not be disturbed if there is evidence reasonably tending to sustain them. White v. Metropolitan Med. Ctr., 332 N.W.2d 25, 26 (Minn. 1983). Whether an employee quit for good reason is a question of law, which this court reviews de novo. Kehoe v. Minnesota Dep't of Econ. Sec., 568 N.W.2d 889, 890 (Minn. App. 1997).
Generally, "a substantial pay reduction gives an employee good cause for quitting." Scott v. Photo Ctr., Inc., 306 Minn. 535, 536, 235 N.W.2d 616, 617 (1975) (citations omitted). In Scott, it was held that a unilateral change by the employer from a fixed salary to a commission basis for determining the employee's wages that resulted in a 25% wage cut constituted a substantial reduction in pay giving the employee good cause to quit. Id. at 535-36, 235 N.W.2d at 616-17. But good cause to quit is not recognized where the change in the wage arrangement is the result of an honest assessment of the employee's job performance.
In Rutten v. Rockie Int'l, Inc., 349 N.W.2d 334, 335 (Minn. App. 1984), the employee was originally hired on a strict commission basis with no advances promised. He was later allowed to receive advances while he embarked on an experimental sales program. Id. The employer later suspended the experimental program and placed the employee on the original payment plan with no weekly draw on his commissions allowed. Id. at 336. This court held that even if the advances were construed to be salary, the employer had the right to require the employee to return to the original job under the original terms of employment "if those payments and the new job were intended to be 'temporary' or experimental." Id.
In Cary v. Custom Coach, Inc., 349 N.W.2d 331, 331 (Minn. App. 1984), the employee received a regular draw against his commissions. The employee had trouble at home with his children, and his sales dropped off. Id. at 332. The employer discontinued the draw and placed the employee on a strict commission basis. Id. The employee quit. Id. This court held that the employee did not have good cause to quit, stating:
The draw * * * was, in effect, a loan from the employer to be charged against the employee's commissions. Faced with an employee whose performance was poor and who had already drawn $4,000, the employer did not act unreasonably by refusing to allow the employee to draw any more money against his commissions.
Finally, in Cook v. Playworks, 541 N.W.2d 366, 367-68 (Minn. App. 1996), after two weeks of employment, the employee was demoted and his pay reduced from $27,040 to $24,576. Based on a later review of his job performance, the employee was again demoted and his pay reduced to $17,304. Id. at 368. The commissioner's representative concluded that the employee quit for good cause attributable to the employer because of the substantial pay cut. Id. This court noted that although the decrease resulted in a 36% reduction in pay, it was justified on the basis of the employee's skills. Id. at 360. The court stated that
[a] severe decrease in wages may not justify a choice to quit when the employer has made a demotion after honestly assessing an employee's skills, but it does not follow that an employee's choice to quit is unreasonable in every case of this kind.
Here, the commissioner's representative found that Ritzenthaler's job performance was not sufficient to earn the $3,000 per month he had been receiving. The commissioner's representative also found that in September 1998, Repcom was concerned because the two stations where Ritzenthaler was the sales manager were not meeting projected sales. Ritzenthaler was then informed that he needed to take steps to increase the sales and accounts receivable at the two stations and that, starting in January 1999, the company would pay him according to the original compensation plan. Based on these findings, the commissioner's representative concluded that Repcom's decision was not contrary to the original employment agreement and not unreasonable under the circumstances.
There is reasonable evidence in the record to support the commissioner's representative's findings of fact. In a letter dated September 30, 1998, Skramstad wrote to Ritzenthaler, stating that his personal billings needed "immediate improvement" and the accounts receivable at the two stations under his control needed to be "cleaned up" because there were a number of overdue accounts, which did not "reflect well on your account management procedures." In addition, Skramstad noted the company had been generous in providing monetary support exceeding Ritzenthaler's original compensation agreement for the first two years of his employment and that he had been given sufficient time to develop his sales territory. Skramstad then stated that effective January 1, 1999, Ritzenthaler would no longer receive "advance monies beyond your original compensation agreement." This letter was followed up by another letter from Skramstad to Ritzenthaler dated December 16, 1998, in which Skramstad outlined Ritzenthaler's fourth-quarter billings. According to Skramstad, the purpose of the letter was to put Ritzenthaler's billings into perspective and "highlight the seriousness of these billing deficits." The letter also reiterated that, effective January 1, 1999, the company would no longer advance money beyond the original compensation agreement.
Skramstad testified similarly that Ritzenthaler's lack of sales resulted in serious deficiencies and that the FM station under Ritzenthaler's direction failed to meet its budget. This resulted in the company switching the station's format and geographically dividing its selling areas so it could recoup some of the unachieved revenue. Skramstad stated that based on Ritzenthaler's and the company's sales, beginning January 1, 1999, Repcom would no longer make advances to Ritzenthaler in excess of the original compensation plan.
Viewing the evidence in the light most favorable to the commissioner's representative's decision, Repcom's decision to reduce Ritzenthaler's pay was based on Ritzenthaler's job performance. The evidence produced at the hearing established that Ritzenthaler was unable to meet his projected sales both personally and for the radio stations under his direction. We agree that even though he retained the position of sales manager, the reduction in pay worked as a demotion of Ritzenthaler. But we conclude that because the decision to reduce Ritzenthaler's pay was based on Ritzenthaler's job skills, after an assessment by his employer, the commissioner's representative did not err in concluding that Ritzenthaler did not have good reason to quit his employment with Repcom.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. Art. VI, § 10.