This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Pallet Service Corporation,



Tom L. Saari,


Filed November 17, 1998


Shumaker, Judge

Department of Economic Security

Agency No. 158 UC 98

Mark C. McCullough, Skaar & McCullough, The Colonnade, Suite 730, 5500 Wayzata Blvd., Minneapolis, MN 55416 (for relator)

Tom L. Saari, 4606 65th Avenue North, Brooklyn Center, MN 55429-2113 (respondent - pro se)

Kent E. Todd, 390 North Robert Street, St. Paul, MN 55101 (for respondent commissioner)

Considered and decided by Shumaker, Presiding Judge, Crippen, Judge, and Holtan, Judge.[*]



Relator Pallet Services Corporation appeals from the Commissioner of Economic Security's decision granting reemployment insurance benefits to relator's employee. Relator argues that its employee's refusal to sign a new employment and non-compete agreement constitutes misconduct sufficient to disqualify him from receiving reemployment benefits. We affirm.


Respondent Tom L. Saari began working for relator in 1987. In March of 1996, Saari signed a non-compete agreement that covered relator's geographical area of business and was to be effective for two years.

In November 1997, relator heard a rumor that Saari intended to form a competing business. Realizing that the non-compete agreement would expire in March 1998, relator requested that Saari enter a new agreement and told Saari that he would have to sign it if he wanted to continue working for relator. Unlike the initial non-compete agreement, this one provided that Saari would not compete with relator for one year after termination of his employment. Concerned that if he signed the new agreement relator would terminate him immediately, Saari declined to sign. Relator terminated him on December 8, 1997, for refusing to sign the new agreement.

Saari applied for and was granted reemployment insurance benefits. Relator appealed, contending that Saari's refusal to sign the non-compete agreement constituted misconduct and disqualified him from reemployment insurance benefits. After an evidentiary hearing, a reemployment insurance judge found that the new agreement did not substantially change Saari's employment contract, that it was reasonable for relator to require Saari to sign the agreement, and that Saari's refusal to do so was misconduct.

Saari appealed. A representative of the Commissioner of Economic Security concluded that the one-year, post-termination, non-compete provision materially altered the terms and conditions of Saari's employment in that the restriction effectively prevented Saari from working in his normal occupation. The commissioner's representative concluded, therefore, that Saari had good reason to decline to sign the new agreement.


The permissible scope of review of the decision of the commissioner's representative is very narrow. Markel v. City of Circle Pines, 479 N.W.2d 382, 383-84 (Minn. 1992). Findings are to be viewed in a light most favorable to the decision and are not to be disturbed on appeal if there is evidence reasonably tending to support them. Id.

A discharged employee is disqualified from receiving reemployment insurance benefits if the termination resulted from misconduct that interfered with and adversely affected employment. Minn. Stat. § 268.09, subd. 10 (Supp. 1997). "Misconduct" is defined by law as any intentional conduct that shows a disregard of: (1) the employer's interest; (2) the standards of behavior the employer has a right to expect; or (3) the employee's duties and obligations to the employer. Minn. Stat. § 268.09, subd. 12 (Supp. 1997). The employer has the burden of proving disqualifying misconduct and must do so by the greater weight of the evidence. Marz v. Department of Employment Servs., 256 N.W.2d 287, 289 (Minn. 1997).

In concluding that Saari had good reason not to sign the new non-compete agreement, the commissioner's representative found that the new agreement materially altered the terms and conditions of Saari's employment. The non-compete provision in the initial contract was for a fixed two-year duration and was set to expire a few months after relator requested that Saari sign a new contract. Under the initial agreement, Saari would have been precluded from competing with relator until the expiration date. Under the new contract the preclusion would exist throughout Saari's employment with relator and for one year after termination of that employment. The new non-compete provision clearly altered a term of Saari's employment and gave Saari good reason not to sign it. The issue of "good cause" in employment law is a question of law. Wood v. Menard, Inc., 490 N.W.2d 441, 443 (Minn. App. 1992). We review questions of law de novo. Smith v. Employers' Overload Co., 314 N.W.2d 220, 221 (Minn. 1981).

Relator states the issue as "whether or not the commissioner's representative's decision in this case was correct in finding that the employment contract, with limited noncompete clause, was unreasonable." The commissioner's representative did not find either the employment contract or the non-compete provision to be unreasonable. Rather, the findings were that the non-compete provision materially altered the terms and conditions of Saari's employment and that Saari's conduct was reasonable.

Relator cites no authority for its position on the merits other than Hayes v. MSP Communications, No. C9-97-1558, C9-97-1561, 1998 WL 188567 (Minn. App. Apr. 21, 1998), an unpublished decision of this court.[1] As an unpublished decision, Hayes is not precedential. See Minn. Stat. § 480A.08, subd. 3(b), (c)(5) (1996) (unpublished opinions "must not be cited as precedent, except as law of the case, res judicata, or collateral estoppel[;]" "[u]npublished opinions of the court of appeals are not precedential" (respectively)) (emphasis added); Dynamic Air, Inc. v. Bloch, 502 N.W.2d 796, 801 (Minn. App. 1993) (stating dangers of mis-citation and unfairness associated with use of unpublished opinions and that, while persuasive, "[t]he legislature has unequivocally provided that unpublished opinions are not precedential"). Moreover, Hayes is not analogous. In that case, the employee was not bound to sign a non-compete agreement. He had the option of declining, in which event he would retain his job and his salary but he would not receive a bonus. In the present case, signing the new agreement was a condition of retaining employment with relator.


[*] 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] Relator also relies on a decision of the commissioner's representative in the matter of Scott D. Wicklund, claimant, and Pallet Service, employer. Wicklund was Saari's co-employee who was terminated on the same day and for the same reason as Saari. The commissioner's representative found that Wicklund was terminated for misconduct. The decision was not appealed to this court and is neither precedential nor persuasive.