This opinion will be unpublished and

may not be cited except as provided by

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






Roger D. Auren,


Belair Builders, Inc.,

Department of Employment and Economic Development,


Filed March 28, 2006


Minge, Judge


Department of Employment and Economic Development

File No. 653 05



Brendan D. Cummins, Miller O’Brien, One Financial Plaza, 120 South Sixth Street, Minneapolis, MN 55402 (for relator)


Belair Builders, Inc., 2200 Old Highway 8 N.W., New Brighton, MN 55112-1894 (respondent employer)


Linda A. Holmes, Department of Employment and Economic Development, 1st National Bank Building, 332 Minnesota Street, Suite E200, St. Paul, MN 55101-1351 (for respondent Department)


            Considered and decided by Minge, Presiding Judge; Randall, Judge; and Collins, Judge.*

U N P U B L I S H E D  O P I N I O N


MINGE, Judge


Appellant Roger Auren challenges the determination of the senior unemployment review judge that under Minn. Stat. § 268.085, subd. 3 (2004) he was ineligible for unemployment benefits due to receipt of vacation pay.  Because he did not receive the vacation pay from “the employer because of, upon, or after separation from employment,” we reverse. 



            Appellant Roger Auren is a union laborer who works for Belair Builders, Inc., a commercial excavating company.  Auren was laid off due to lack of work on December 14, 2004, and called back to work on January 3, 2005.  Auren applied for unemployment benefits on December 20.  On the application form, he marked “yes” when asked “Did you or will you receive VACATION PAY.”  Auren indicated that the amount of pay was $2,300.

            During Auren’s employment, Belair paid his union $1.50 as vacation pay for every hour that he worked.  The union held these funds from October 2003 to October 2004.  In Auren’s case, the total gross vacation-pay wages for that period was $2,859 and the net was $2,300.  Provided that a request was made, the union sent Auren and other members their accumulated vacation pay on or about December 1, 2004.

The unemployment law judge (ULJ) found that Auren was paid the $2,300 upon being laid off and that he was ineligible for unemployment benefits for the period of December 12, 2004 through January 1, 2005.  The senior unemployment law judge (SURJ) adopted the findings and decision of the ULJ.[1]  Auren brings this certiorari appeal from the SURJ’s decision.


The issue before us is whether the SURJ erred in determining that vacation pay distributed to Auren by the union constituted amounts “paid by the employer because of, upon, or after separation from employment” under Minn. Stat. § 268.085, subd. 3 (2004) and thus were required to be offset from unemployment compensation.

Appellate courts accord the decision of the SURJ “particular deference,” and affirm it if reasonably supported by the record.  Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995).  The SURJ’s factual findings are reviewed in the light most favorable to the commissioner’s decision and will not be disturbed “as long as there is evidence that reasonably tends to sustain those findings.”  Schmidgall v. FilmTec Corp., 644 N.W.2d 801, 804 (Minn. 2002).  “When reviewing questions of law, this court is not bound by the [SURJ’s] conclusions of law, but is free to exercise its independent judgment.”  Markel v. City of Circle Pines, 479 N.W.2d 382, 384 (Minn.1992).  Whether an applicant is disqualified from receiving unemployment benefits is a question of law.  Id.  Statutory construction is a question of law, which this court reviews de novo.  Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998).

Minnesota law contains the following vacation pay limit for unemployment benefits:

            Subd. 3.  Payments that delay unemployment benefits.  (a) An applicant shall not be eligible to receive unemployment benefits for any week with respect to which the applicant is receiving, has received, or has filed for payment, equal to or in excess of the applicant’s weekly unemployment benefit amount, in the form of:

            (1) severance pay, bonus pay, vacation pay, sick pay, and any other money payments . . . paid by an employer because of, upon, or after separation from employment, but only if the money payment is considered wages at the time of payment under section 268.035, subdivision 29, or United States Code, title 26, section 3121, clause (2), of the Federal Insurance Contribution Act . . . 


Minn. Stat. § 268.085, subd. 3 (2004).


Case law interpreting and applying the vacation pay disqualification provision is limited.  In Reserve Mining Co. v. VanderVeer, this court considered the impact of vacation pay on unemployment benefits requested by non-union employees who had been laid off due to a business slowdown.  368 N.W.2d 361 (Minn. App. 1985).  The vacation pay was made at the outset of the layoff and the employer designated the vacation period as the beginning of the layoff.  Id. at 362.  Under those circumstances, we held the employees were not eligible for unemployment benefits because it amounted to a double payment.  Id. at 363. 

In Wheeler v. Dept. of Labor & Indus., we considered whether a state employee covered by a union contract was entitled to unemployment benefits when she received a lump-sum payout at the time of her permanent separation from employment with the state and she had never been assigned vacation time.  419 N.W.2d 516, 516 (Minn. App. 1988), review denied (Minn. Apr. 20, 1988).  We reasoned that the employer could not assign her vacation time because she was no longer an employee and that she was entitled to unemployment benefits.  Id. at 517.

In Minneapolis Park and Recreation Bd. v. LeCuyer, the employer paid the employee from an account in which overtime earnings had been accumulated.  457 N.W.2d 760, 762 (Minn. App. 1990), review denied (Minn. Sept. 20, 1990).  In LeCuyer, evidence indicated that the intent of the collective bargaining agreement which called for the earned overtime account was to provide a “bridge” during times when no work was available.  Id. at 762.  Moreover, the applicant continued to earn seniority and pension credits like other workers still on the job.  Id. at 763.  We determined that appellant was not eligible for unemployment benefits because he was not “laid off” within the meaning of the unemployment statute.  Id. at 763.

Auren claims that his vacation payment did not meet the statutory requisite for disqualifying vacation pay because it was not “paid by the employer because of . . . separation from employment.”  See Minn. Stat. § 268.085, subd. 3(a) (1) (emphasis added).  This statutory standard is awkward in our case.  The record is clear that the money was earned by Auren, held for him by the union, and ultimately paid to him upon his request by the union, not the employer.  In fact, Belair’s representative testified that it remitted the employees’ vacation pay to the union at each pay period, that the union held the vacation pay for several months, and that the union paid it to Auren.  Respondent Department of Employment and Economic Development (DEED) argues that the union was simply acting as an agent for the employer.  The SURJ made no such finding.  In the absence of such a finding and on the sparse record before us, we decline to find that the union played such an agency role.  In fact, the union could just as easily be an agent of Auren and its other members.  In any event, we note there is no claim the funds belonged to the union.

Another difficulty in applying the statute is that Auren received the check 12 days before he was laid off.  The testimony indicates that the union controls the timing, not Belair.  It also indicates that Auren works on commercial excavation projects, and that there is a slow down, if not cessation, of construction work in the winter.  Yet, the representative from Belair testified that the accrued vacation “shouldn’t count for pay when [Auren is] laid off,” and that Belair “doesn’t pay any vacation pay for employees who are laid off.”  DEED argues that because this situation involves payment of benefits financed by the employer and collection of unemployment benefits at the same time, it is the type of double payment that the statute was intended to proscribe and that it is highly abusive of the unemployment system.

There is no evidence in the record that the prospect of a layoff drove the timing of Auren’s receipt of vacation pay.  Auren did not know when he would be laid off.  It could also be viewed as extra holiday income or a year-end bonus.  Furthermore, the record indicates that Auren would receive the “vacation” pay in early December regardless of whether he actually took a vacation or was laid off or was working for another employer.  If the weather was warm, or if he worked in a capacity that was not affected by the weather, he might not be laid off.  For us to assume the union was an agent of the employer and conclude the union is timing the payment to its members based on their employer’s generalized layoff pattern is strained based on the record before us.  Neither the ULJ nor the SURJ addressed or made any findings regarding such matters.  Because the record does not contain any evidence that supports the determination that Auren received the vacation pay in question “because of, upon, or after” the layoff, we conclude it did not affect his eligibility for unemployment benefits.

DEED objects that Auren includes the collective bargaining agreement and vacation fund summary plan in the appendix to his brief on the ground these documents were not before the ULJ.  We agree with DEED that these documents are not properly part of this record and we have not considered them in reaching our conclusion.

DEED also suggests information regarding the timing of income and payroll tax consequences might be relevant to the proper resolution of this case, that the matter could be remanded to reopen the record to include the challenged documents and information on applicable tax law affecting the vacation pay and that the ULJ or SURJ could reconsider its decision.[2]  We appreciate DEED’s suggestion and recognize the potential relevance of such information.  However, because we can decide this matter based on the record properly before us, we do not remand.


* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.

[1] The SURJ found that the determinative facts are not in dispute.  Therefore, pursuant to section 268.105, subdivision 2a, paragraph (a) (2004), the SURJ did not conduct further proceedings and adopted the findings of fact and decision of the ULJ.

[2] We note that an IRS revenue ruling states that payments of vacation compensation by employers to union trust arrangements set up under collective bargaining agreements are an expense to the employer and income to the employee at the time so remitted.  See Rev. Rule 67-351, 1967-2 CB 86.  Although our holding is consistent with that tax determination, the record in this case does not disclose whether the union’s handling of Auren’s vacation pay complies with these requirements.