Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Commissioner of Economic Security,
Department of Economic Security
File Nos. 3537UC97, 4482UC97
David J. Lauth, Mary B. Thomas, Dorsey & Whitney LLP, Pillsbury Center South, 220 South Sixth Street, Minneapolis, MN 55402-1498 (for respondent MSP Communications)
Kent E. Todd, 390 North Robert Street, St. Paul, MN 55101 (for respondent Commissioner of Economic Security)
Considered and decided by Huspeni, Presiding Judge, Willis, Judge, and Shumaker, Judge.
Relator contends the commissioner's representative arbitrarily and capriciously determined that relator (1) was disqualified from receiving reemployment insurance benefits because he had voluntarily quit work without good cause attributable to the employer and (2) was ineligible to receive benefits because he had failed to file continued claims. We affirm.
In February 1997, MSP's new owner requested all MSP employees sign an employment agreement that contained a confidentiality policy and a non-compete agreement. The employee agreement explained that relator would, "in the course of his employment, come into possession of certain confidential business information, including proprietary information" regarding MSP publications and conduct of business. MSP offered relator a $1,404 salary increase for signing this non-compete clause:
For a period of two years from the time the Employee works on a publication or electronic equivalent, Employee agrees not to engage in any activity in competition with that publication or electronic equivalent in any geographic area in which MSP does business. Exhibit A attached to the Agreement shows by way of example which publications or electronic equivalents we would currently view as competitors.
During such period, Employee shall not participate as a partner, stockholder (except by ownership of less than ten (10%) percent of the outstanding voting stock of a publicly held corporation), director, trustee, associate, principal, agent, employee, consultant, independent contractor, or otherwise of any person, firm, or corporation which is engaged in any business activity competitive with any business activity the Employee works on for MSP.
Exhibit A described the company's publications and listed competing publications such as Minnesota Monthly, Corporate Report Minnesota, Computer Currents, and Corporate Report Fact Book, among others. Relator understood that he could decline to sign the non-compete agreement and not receive the raise in salary.
Relator refused to sign the non-compete agreement and tendered his resignation soon thereafter. He felt he deserved the raise without signing the agreement. He considered the non-compete agreement a "breach of trust," "like a punishment for my couple of years of * * * hard work." He also felt the agreement was an unreasonable limitation on his ability to do his job as a journalist and make a living in the future, should he leave MSP.
Relator contends that after he filed his claim for reemployment compensation he sent in his first certification for benefits form, but the Department of Economic Security (department) claims it never received the form. Relator sent in no other forms until he sought, on May 13, 1997, to file continued claims forms for the period of March 16 to May 10, 1997. Relator said he "believed" he had sent the certification form in, but admitted "the possibility" that he had not. Relator has no photocopy of the form he believes he sent.
Relator brought these two cases before the department. The claims representatives who reviewed relator's initial claims denied them, concluding that relator had quit without good cause attributable to his employer and had failed to file the continued claim forms to be eligible for benefits. After hearings on each claim, reinsurance judges made the same findings and conclusions on relator's claims. On appeal, the commissioner's representative found relator disqualified from receiving benefits because he had quit without good cause, and ineligible for benefits because he had failed to make continued claims for benefits as required by statute. Relator appeals.
The reasons behind an employee's separation from employment, and whether the employee quit, are questions of fact. Embaby v. Department of Jobs & Training, 397 N.W.2d 609, 611 (Minn. App. 1986); Hollar v. Richard Mfg. Co., 346 N.W.2d 692, 694 (Minn. App. 1984). When reviewing decisions of the commissioner's representative, this court determines whether the evidence in the record reasonably tends to support the findings of fact. Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995). Whether an employee had good cause attributable to the employer to quit, however, is a question of law. Wood v. Menard, Inc., 490 N.W.2d 441, 443 (Minn. App. 1992). This court considers questions of law de novo. Smith v. Employers' Overload Co., 314 N.W.2d 220, 221 (Minn. 1981).
Minnesota law disqualifies from receiving benefits any person who discontinues employment voluntarily and without good cause attributable to the employer. Minn. Stat. § 268.09, subd. 1(a) (1996). To constitute "good cause," an employee's working conditions must be "real, not imaginary, substantial not trifling, and reasonable, not whimsical." Ferguson v. Department of Employment Servs., 311 Minn. 34, 44, n.5, 247 N.W.2d 895, 900 n.5 (1976). The court judges reasonableness based on the average man or woman's standard, not the oversensitive. Id.
Still, the employer bears the burden of proving an employee is disqualified from receiving benefits. Johnson v. Ford Motor Co., 289 Minn. 388, 394, 184 N.W.2d 786, 790 (1971). Once the employer shows the employee voluntarily left his employment, the burden shifts to the employee to prove he left for good cause attributable to the employer. Marz v. Department of Employment Servs., 256 N.W.2d 287, 289 (Minn. 1977).
Relator admits he quit his job voluntarily. The commissioner's representative concluded that relator did not have good cause to quit and based his decision to quit on the fact that relator would not receive a pay increase unless he signed the non-compete agreement. Relator's testimony in the record supports that finding. Relator testified that the salary issue was part of his reasoning for quitting. On appeal, relator urges the court to consider the various other concerns that led to his decision, namely the allegedly problematic non-compete clause and the alleged threat it posed to relator's future. The commissioner's representative had all this evidence before him and rejected relator's argument. We defer to the commissioner's credibility determinations. See Tuff, 526 N.W.2d at 51 (court reviews findings on credibility, gives them particular deference, and affirms so long as findings have reasonable support in record).
Relator correctly notes that Minnesota disfavors non-compete agreements as a partial restriction on trade and the ability to earn a living. Freeman v. Duluth Clinic, Ltd., 334 N.W.2d 626, 630 (Minn. 1983); Bennett v. Storz Broad. Co., 270 Minn. 525, 533, 134 N.W.2d 892, 898 (1965). When evaluating the validity of non-compete agreements, the court considers the offer of consideration for the agreement, the reasonableness of the agreement's restrictive terms, and whether the agreement was designed to protect an employer's legitimate interest that is greater than the employee's interest. Webb Pub. Co. v. Fosshage, 426 N.W.2d 445, 450 (Minn. App. 1988). "[N]oncompete agreements are enforceable if they serve a legitimate employer interest and are not broader than necessary to protect this interest." Kallok v. Medtronic, Inc., 573 N.W.2d 356, 361 (Minn. 1998).
Contrary to relator's contention, MSP's non-compete clause passes the reasonableness test. MSP offered $1,404 to relator as consideration. The agreement limited an employee's rights for two years after separation from MSP. The covenant detailed the various types of publications and technological services MSP provides and enumerated the specific types of competition that would trigger application of the non-compete agreement. Contrary to relator's characterization, this clause does not appear on its face so loose that it could be interpreted so liberally as to apply to "any" other media job. Finally, the text of the non-compete clause, read in conjunction with Exhibit A, which outlines the competition, reveals that MSP sought to protect its creative process and market share by limiting employees' abilities to disseminate confidential and proprietary information to those publications directly in competition with MSP. This covenant does not appear so overly broad in scope, geographic territory, or duration as to be invalid for unreasonableness. Cf. Klick v. Crosstown State Bank, 372 N.W.2d 85, 88 (Minn. App. 1985) (holding non-compete provision invalid because it imposed overly restrictive and unreasonable limits on time and place and was more than necessary to protect bank's interests).
Furthermore, as the commissioner's representative noted and relator admitted, relator was not bound to sign the non-compete clause. Relator had the option of declining the non-compete agreement, maintaining his job, and not losing his salary. See Guida v. Sweeney, 655 N.Y.S.2d 686, 687 (N.Y. App. Div. 1997) (holding that claimant, who resigned because he refused to accept new work assignment involving similar duties and sign non-compete agreement, left his employment without good cause). Although relator would not receive a raise if he declined to sign the non-compete agreement, his salary would not have been reduced either. Given all of these factors, the record does not support relator's theory that he was coerced into either signing the non-compete clause or quitting. Like Guida, we conclude that the commissioner's representative correctly determined that relator had left his employment without good cause attributable to MSP. The record supports the findings and determination of the commissioner's representative.
Given our conclusion that relator is disqualified from receiving benefits, we need not address the procedural issue regarding the proper filing of claims.