This opinion will be unpublished and
may not be cited except as provided by
IN COURT OF APPEALS
Relator (A05-1898, A05-1972),
Respondent (A05-1943, A05-1944),
Minnstar Builders, Inc.,
Department of Employment and Economic Development,
Filed September 19, 2006
Affirmed; motion denied
Department of Employment and Economic Development
File Nos. 5307 05; 5308 05; 6863 05; 6864 05
Thomas A. Harder, Rebecka A. VanderWerf, Foley & Mansfield, 250 Marquette Avenue, Suite 1200, Minneapolis, MN 55401 (for respondents REC, Inc. and Minnstar)
Holmes, Department of Employment and Economic Development,
Considered and decided by Dietzen, Presiding Judge; Peterson, Judge; and Klaphake, Judge.
U N P U B L I S H E D O P I N I O N
In these consolidated appeals, REC, Inc. and Minnstar Builders, Inc. challenge a senior unemployment review judge’s (SURJ) decision that services performed for them by Vicki Kollross were in covered employment for unemployment tax and benefit purposes, and Kollross challenges the SURJ’s decision that she quit her employment at REC, Inc. and Minnstar Builders, Inc. We affirm.
In 1975, Vicki
Kollross began working for her brother-in-law, Ron Clark (
testified that although she had authority to take money from the Image
Interiors account, she routinely signed
The address on
Image Interiors letterhead was the
Kollross was paid when she submitted invoices to RCC. A $25-per-hour pay rate was established early during her relationship with RCC. A letter to RCC’s vice president, Cindy Volkart, states that Kollross did not add a profit to carpets, pads, labor, or furnishings provided to RCC.
In early 2002,
the professional relationship between Kollross and Volkart deteriorated to the
point where they would not talk to each other.
The personal relationships among the Clarks and Kollross and her husband
also deteriorated. In 2002, Kollross
stopped providing services to RCC through Image Interiors and began personally
providing services to RCC. Kollross
In April 2002, Kollross’s husband sent Sandy a letter stating that Kollross was going to quit and that they were going to move to their house in Wisconsin and try another venture. But Kollross continued to work at RCC, and the strained relationship between Kollross and RCC management, especially Volkart, continued until December 9, 2003, when Kollross and Volkart met for lunch. The original purpose of the meeting was for Kollross and Volkart to discuss the scope of Kollross’s work. Kollross and Volkart gave very different accounts of the meeting, but both agreed that nothing was accomplished and Volkart ended up leaving the meeting early.
The next day, Volkart left on Kollross’s desk a document that described the scope of Kollross’s work for RCC. The document listed addresses of five model homes that needed decorating and contained details regarding model furnishings, payment terms, and future projects. Kollross testified that the document she received was very different from the document that was introduced at the hearing before the unemployment law judge (ULJ). Kollross claimed that the document she received listed only one job duty, moving furniture. Kollross’s husband testified that he saw the document limiting Kollross’s duties to moving furniture, but he threw it away.
Along with the scope-of-work document, Volkart left a note stating: “If you are interested in doing this, please let me know. Would you also please confirm your hourly rate to do this type of work. I do need to know by Friday, December 12. If I do not hear by then we’ll pursue other resources.” Kollross did not contact Volkart or the Clarks about any further work.
Kollross applied for unemployment benefits, and the Department of Employment and Economic Development (DEED) determined that she was an employee of RCC and had quit her employment without good cause. RCC appealed the determination that Kollross was an employee, and Kollross appealed the determination that she quit without good cause. A hearing was held before a ULJ, and on May 31, 2005, the ULJ affirmed the initial determinations. Both RCC and Kollross sought further review, and a SURJ affirmed the ULJ’s determinations. This certiorari appeal from the SURJ’s decision followed.
certiorari appeal, a reviewing court examines the decision of the SURJ, rather
than the decision of the ULJ. Kalberg
v. Park & Recreation Bd., 563 N.W.2d 275, 276 (
1. Employment Status
RCC argues that the SURJ’s conclusion that Kollross was an employee is seriously flawed because the decision does not address the ownership and control of Image Interiors. RCC contends that if Kollross ran Image Interiors in an independent manner as her own business, she was an independent contractor and not an employee. But the primary issue before the SURJ was not, as RCC contends, who owned and controlled Image Interiors. Even if Kollross owned and completely controlled Image Interiors, that fact does not demonstrate that she was an independent contractor. Image Interiors was simply a business name; it was not a separate legal entity. Providing services and receiving payment under a business name does not, by itself, establish an independent-contractor status.
Whether a worker
is an independent contractor or an employee is a mixed question of law and
fact. Blue & White Taxi v. Carlson, 496 N.W.2d 826, 828 (
five essential factors used to determine whether an individual is an employee
or an independent contractor are: (1) the right to control the means and manner
of performance; (2) the right to discharge the worker without incurring
liability; (3) the mode of payment; (4) the furnishing of materials and tools;
and (5) the degree of control over the premises where the services are
performed. Minn. R. 3315.0555, subp. 1 (2005).
The first two factors are the most
RCC argues that it did not have the right to control the means and manner of Kollross’s performance and that “Kollross was very much in control of her own business practices, and was in no way required to comply with any instructions regarding when, where, and how she was to perform interior decorating services.” But there was conflicting testimony regarding the relationship between Kollross and RCC, and we defer to the SURJ’s ability to weigh the evidence and make credibility assessments. See Whitehead, 529 N.W.2d at 352. Kollross testified that RCC, “told me exactly when to be at places, who to meet with, what to do, and each client I contacted, I was given a directive.” With respect to homes built for specific customers, Kollross testified that she would attend a meeting where she would start with the basic plan of a house and ask what needed to be changed. Then she
would do the drawing and change room designs and whatever for the client. The coordinator was there and the salesperson for Ron Clark was there and we’d all meet and go through this how they wanted the house built to begin with. And then from there, selection of materials that they want to add, decorative trim or anything like that, I assisted them. Then we went to showrooms to pick out tile or carpet.
With respect to model homes, Kollross testified that she would choose the window shades, paint colors, carpeting, and other items
within the parameters of the salesman’s sheet. In other words, if he wanted granite on the countertops instead of Formica, let’s say, in the kitchen, he’d indicate that on his sheet of finishing. And then I would just, I would select what color granite would go with the plan, but he would direct that. And if he didn’t want any more extras, we called them in a home or he would upgrade to different, adding things like crown molding in a room or something like that. They’d tell me what to do exactly how they wanted it. Then I would pick out the materials and set the pallet or the color scheme.
Volkart testified that “[Kollross] had never had set hours. She came and went as she wanted. She set her own schedule,” and “[Kollross] did what she wanted to do.” Volkart also testified that any instruction Kollross received from a sales person
was a guideline, that was not written direction. It was, yes, I want to put extra money in ceramic. What was happening was she would spend money in areas that the salespeople didn’t feel the customers perceived there was a great value to. So to keep our costs in line, we wanted to show what, for instance, granite, when they walk in the door, they perceive that as [a] real upgrade. They may or may not know a doorknob is a certain amount of money. And those were the guidelines we were trying to give her.
Although Volkart’s testimony indicates that
Kollross had a flexible work schedule, it does not demonstrate that there is not
evidentiary support for the SURJ’s finding that “[RCC] had the right to control
Kollross’ means and manner of performance, including when she must be at work.” “[I]t is the right to control, rather than the exercise of that right, that is
RCC argues that there is no evidentiary support for the SURJ’s findings that Kollross could have quit without incurring liability and that RCC could have terminated Kollross without incurring liability. But Volkart testified that although RCC had contracts with its other subcontractors, it did not have a contract with Kollross. The only evidence that RCC cites to support its claim that Kollross could not quit without incurring liability is a statement on an RCC purchase-order form that, “This vendor agrees to conform to all Ron Clark Construction Service and Warranty Standards.” But RCC does not cite any evidence that indicates that RCC had service and warranty standards, and without such evidence, the statement on the purchase-order form does not provide a basis for us to conclude that the evidence does not reasonably tend to support the SURJ’s findings that RCC and Kollross could terminate their relationship without incurring liability.
RCC argues that there is no support in the record for the SURJ’s finding that Kollross was paid $25 per hour, rather than by the job. But Kollross testified that she was paid $25 per hour, and the note that Volkart left on Kollross’s desk on December 10, 2003, asked Kollross to confirm her hourly rate for doing the work identified in the scope-of-work document, which suggests that Kollross was paid an hourly rate. The record also contains copies of numerous invoices that Kollross sent to RCC billing specific dollar amounts for design hours. The invoices do not state the number of hours worked, but RCC does not cite any evidence indicating that the amounts billed were not calculated by multiplying a number of hours worked by $25 per hour. The fact that many of the invoices are for even amounts, such as $500 or $1,500, raises a suspicion that they do not reflect a $25-per-hour pay rate. But this suspicion is not a sufficient basis for us to conclude that the SURJ’s finding is not reasonably supported by the evidence.
RCC argues that the SURJ’s finding that Kollross did not make her services available to the public runs counter to the evidence in the record. But the SURJ did not find that Kollross did not make her services available to the public; the SURJ found that “Kollross performed nearly all of her services for [RCC],” and “Kollross did not advertise her services or have a listing in a business or telephone directory.” Kollross and subcontractors with whom Kollross worked testified that over the years, Kollross did not work exclusively for RCC, and they identified others for whom she worked. But the testimony indicates that most of the work that Kollross did was for RCC, and there is no evidence that Kollross advertised her services or listed Image Interiors in a business or telephone directory. The evidence reasonably supports the SURJ’s finding.
RCC argues that the SURJ’s finding that “Kollross would not suffer a loss or realize a profit for the work she performed for [RCC]” is not supported by the record. But in a letter to Volkart, Kollross stated, “As you know Image Interiors has always worked for [RCC] on a time and material basis. No profit has been added to carpet, pad, carpet labor or furnishings purchased with Image Interior accounts.” RCC contends that regardless of whether Kollross chose to make a profit on services and materials provided to RCC, she had the ability to realize a profit. But the SURJ reviewed evidence of what Kollross did, not what she could have done. The evidence indicates that when Kollross purchased products or services for RCC, she billed RCC for the purchase price without adding an amount for profit and when she provided services directly, she billed at an hourly rate. This evidence reasonably supports the SURJ’s finding.
Although the evidence could have supported different findings of fact, the evidence reasonably tends to sustain the findings that the SURJ made. Therefore, we will not disturb the findings. Based on the SURJ’s findings that RCC controlled the means and manner of Kollross’s performance, that RCC and Kollross could terminate their relationship without incurring liability, and that Kollross was paid $25 per hour and would not suffer a loss or realize a profit for the work she performed for RCC, we conclude that the SURJ did not err in concluding that Kollross was an employee of RCC.
2. Good Cause to Quit
argues that the SURJ erred in determining that she quit her employment. Whether an employee quit or was discharged is
a question of fact. Goodwin v. BPS Guard Servs., Inc., 524 N.W.2d 28, 29 (
The SURJ determined that RCC provided credible testimony and evidence that Kollross could have continued working if she had responded to Volkart’s December 9, 2003 memo and found that it was Kollross’s decision to end her employment on December 10, 2003. Volkart’s memo described the scope of work for an interior decorator, identified five homes to be decorated during the spring of 2004, and stated the payment terms for the work. Volkart left the memo on Kollross’s desk along with a note stating that if Kollross was interested in doing the work described in the memo, she should let Volkart know by December 12, and if Kollross did not contact Volkart by December 12, RCC would pursue other resources. Kollross did not contact Volkart about the work. Because this evidence reasonably tends to sustain the SURJ’s finding that it was Kollross’s decision to end her employment, we will not disturb the finding.
Kollross argues in
the alternative that if she quit, she had a good reason to quit caused by the
employer. An employee who voluntarily
quits is not disqualified from receiving unemployment benefits if the employee
“quit the employment because of a good reason caused by the employer.” Minn. Stat. § 268.095, subd. 1(1)
(2004). Whether an employee quit for a
good reason caused by the employer is a question of law, which this court
reviews de novo. Peppi v. Phyllis Wheatley Cmty. Ctr., 614 N.W.2d 750, 752 (
substantial pay reduction or unreasonable change in terms of employment gives
an employee good cause for quitting.” Rutten v. Rockie Int’l., Inc., 349
N.W.2d 334, 336 (
SURJ found that Kollross quit because of dissatisfaction with her employment
conditions and because she was moving to
moved to supplement the record on appeal.
Generally, the record may be supplemented if “anything material to
either party is omitted from the record by error or accident or is misstated in
Affirmed; motion denied.
owns 100% of Minnstar and 50% of REC, and
 Kollross testified that
 Kollross wrote checks to her husband, her investment club, and to pay her son’s tuition. She testified that these checks were how she took her pay from RCC.
 Kollross contended that Volkart came to the meeting, blamed Kollross for all of the problems, and demanded an apology. Volkart contended that Kollross blamed Volkart for ruining Kollross’s life and taking her family and job away from her.
 The statutory procedure for judicial review
of a SURJ’s decision was amended by 2005
 The other factors include: (1) availability to public, (2) compensation on job basis, (3) realization of profit or loss, (4) obligation, (5) substantial investment, (6) simultaneous contracts, (7) responsibility, and (8) services in the course of the employing unit’s organization, trade, or business. Minn. R. 3315.0555, subp. 2 (2005).