This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Elinor L. Jackson,
Global Marketing Opportunities Inc.,
Department of Employment and
Filed October 16, 2007
Department of Employment and
File No. 10178 06
Elinor L. Jackson,
Global Marketing Opportunities
Lee B. Nelson, Minnesota Department of Employment and Economic Development, First National Bank Building, 332 Minnesota Street, Suite E200, St. Paul, Minnesota 55101-1351 (for respondent Department)
Considered and decided by Hudson, Presiding Judge; Willis, Judge; and Minge, Judge.
U N P U B L I S H E D O P I N I O N
Relator, the owner and employee of a consulting business, challenges the unemployment-law judge’s (ULJ’s) decision that she was not eligible for benefits because she did not submit the proper form in 2004 that would have made her eligible to receive unemployment benefits. She argues that this was a good-faith mistake that she and her accountant made because they were confused about whether the form was required. Because the record shows that relator did not, after being notified, file the election form required by statute in order to remain in the unemployment-compensation system, we affirm.
Relator Elinor Jackson challenges the decision of an unemployment-law judge (ULJ) that she was not entitled to unemployment-compensation benefits because, as the sole owner and officer of a subchapter S corporation, she failed to file the required form to designate her employment as “covered employment” under the unemployment statutes.
Jackson was the 100% owner of the employer, Global Marketing Opportunities Inc., a marketing-consulting firm. Jackson paid unemployment taxes on her wages beginning in 1995, when she opened her business.
In 2004, the Minnesota legislature amended the definition of “noncovered employment” for unemployment-compensation purposes. 2004 Minn. Laws, ch. 183, § 10. As of January 1, 2005, “noncovered employment” includes the “employment of a corporate officer, if the officer owns 25 percent or more of the employer corporation.” Minn. Stat. § 268.035, subd. 20 (28) (Supp. 2005). The legislature also provided that a corporation could elect to have such employment treated as “covered employment” so that the employee’s wages would still count toward establishing an unemployment-compensation benefits account. 2004 Minn. Laws ch. 183, § 14. That process required filing an election form with the commissioner, who then had discretion whether to allow the election. Minn. Stat. § 268.042, subd. 3 (2004).
Before the new law took effect, the Department of Employment and Economic Development (DEED) sent a notice to Minnesota employers informing them of the pending change in the law and the process for filing an election along with an election form. Jackson, who did not understand what to do when she received the notice, consulted with her accountant. According to Jackson, the accountant “explained the situation,” and they “agreed [Jackson] wanted to continue to pay into the system.” Because the accountant erroneously thought that filing the election form was not required if Jackson wanted to continue to pay into the unemployment-compensation system, neither Jackson nor the accountant filed the form.
Jackson, unaware that she had not elected to remain in the system, continued to pay unemployment taxes on her wages until July 2006, when she closed her business because of the financial difficulties of her major client. She then applied for unemployment-compensation benefits, and DEED issued an amended determination that she was ineligible for benefits on the ground that she was a corporate officer who owned 25% or more of the corporation and that she had failed to elect unemployment-insurance coverage.
Jackson appealed the determination. After a hearing, an unemployment-law judge (ULJ) issued a decision concluding that Jackson’s employment was not covered employment for the purpose of determining her eligibility for unemployment-compensation benefits because the corporation had failed to file the form necessary to elect coverage. On reconsideration, the ULJ affirmed his original decision, and this certiorari appeal follows.
D E C I S I O N
This court on review may affirm an unemployment-law judge’s decision, remand it for further proceedings, or reverse or modify it
if the substantial rights of the petitioner[s] may have been prejudiced because the findings, inferences, conclusion or decision are:
(1) in violation of constitutional provisions;
(2) in excess of the statutory authority or jurisdiction of the department;
(3) made upon unlawful procedure;
(4) affected by other error of law;
(5) unsupported by substantial evidence in view of the entire record as submitted; or
(6) arbitrary or capricious.
Minn. Stat. § 268.105, subd. 7(d) (2006).
On undisputed facts, whether a statute precludes an application for benefits is a legal question, which this court reviews de novo. Ress v. Abbott Nw. Hosp., Inc., 448 N.W.2d 519, 523 (1989).
Under Minnesota law, an applicant must meet five requirements to receive unemployment benefits. Minn. Stat. § 268.069, subd. 1 (Supp. 2005). The first requirement is that an applicant must “file an application for unemployment benefits and establish a benefit account in accordance with [Minn. Stat.] section 268.07.” Id. In order to establish a benefit account, an applicant must earn a certain amount of “wage credits” paid within an applicant’s base period for covered employment. Minn. Stat. § 268.07, subd. 2(a) (2004). “Covered employment” is defined essentially as any employment performed in Minnesota unless it is excluded as “noncovered employment.” See Minn. Stat. § 268.035, subd. 12 (2004).
As of January 1, 2005, “noncovered employment” specifically includes “employment of a corporate officer, if the officer owns 25 percent or more of the employer corporation.” Minn. Stat. § 268.035, subd. 20 (28) (Supp. 2005); see 2004 Minn. Laws ch. 183, § 10 (providing effective date). Before that date, Jackson received a notice from DEED stating that she could elect under Minn. Stat. § 268.042, subd. 3 (2004), to have her “noncovered employment” still considered “covered employment” for purposes of maintaining coverage under the unemployment-insurance system. That process required filing an election with the commissioner. Id.
On appeal, Jackson does not dispute that Global Marketing Opportunities failed to file the required election form with DEED. She argues, however, that the ULJ erred by determining that her work after the effective date of the statutory change was noncovered employment because she did not file the form on the advice of her accountant, who “did not realize that in order to continue the status quo (payment) [the corporation] had to fill out a form.” She maintains that although the form was not filed, “[her] intent was to continue to be covered” and that “the system should take mistakes by busy, lay people into account.” She claims that the election form was confusing, it had to be explained to her, and “that action should have been required to CHANGE the status quo, not to maintain it.”
The legislature has directed that there is to be “no equitable or common law denial or allowance of unemployment benefits.” Minn. Stat. § 268.069, subd. 3 (2006). Thus, even if Jackson is correct that the notice of election was confusing, her good-faith mistake does not entitle her to unemployment-compensation benefits in the absence of a statutory provision allowing those benefits. On reconsideration, the ULJ correctly stated that “[t]he statute does not have an exception for good faith mistakes.” In contrast to the provision excluding good-faith errors in judgment from the definition of employment misconduct, the legislature did not enact a provision allowing such mistakes as exceptions to the requirement for filing an election to have employment considered covered employment in order to remain in the unemployment-compensation system. Compare Minn. Stat. § 268.095, subd. 6(a)(2) (2006) (providing that “good faith errors in judgment if judgment was required” do not constitute employment misconduct for purpose of determining entitlement to unemployment-compensation benefits). Here, DEED offered, as required by statute, to refund to Jackson the amount she paid into the unemployment-compensation system during the two-year period that she was deemed to have engaged in noncovered employment. See Minn. Stat. § 268.057, subd. 7(a) (2006) (providing that commissioner shall issue a credit for any amount erroneously paid). This statutory refund provides Jackson’s sole remedy, and the ULJ did not err by denying her benefits.
DEED acknowledges that the ULJ erred by using the wrong statutory provision as a reason to deny benefits. Minn. Stat. § 268.085, subd. 9 (2004), cited in the ULJ’s decision, limits the amount of unemployment benefits that may be collected in a single benefit year by corporate owners or certain of their relatives and is inapplicable to this case. But we independently apply the correct statute, Minn. Stat. § 268.035, subd. 20 (28), to uphold the ULJ’s determination that Jackson was not entitled to unemployment-compensation benefits. See Ress, 448 N.W.2d at 523 (stating that appellate courts exercise independent judgment with respect to legal questions).