STATE OF MINNESOTA
IN COURT OF APPEALS
David D. Samuelson,
Prudential Real Estate,
Commissioner of Employment and Economic Development,
Filed May 31, 2005
Reversed and remanded
Department of Employment and Economic Development
File No. 17196 03
David D. Samuelson, 1203 19th Street South, Virginia, MN 55792 (pro se relator)
Prudential Real Estate, 600 South Highway 169, Suite 1000, St. Louis Park, MN 55426 (respondent)
Lee B. Nelson, Linda A. Holmes, 332 Minnesota Street, Suite E200, St. Paul, MN 55101-1351 (for respondent Commissioner of Employment and Economic Development)
Considered and decided by Toussaint, Chief Judge; Kalitowski, Judge; and Klaphake, Judge.
S Y L L A B U S
For purposes of establishing an unemployment benefits account, an insurance salesperson who is compensated by both a commission and an employer-provided benefits package is not compensated “solely” by commission, and therefore is not engaged in noncovered employment under Minn. Stat. § 268.035, subd. 20(26) (2002).
O P I N I O N
Relator David Samuelson challenges the decision by the commissioner’s representative that he was a noncovered employee and therefore not entitled to establish an unemployment benefits account.
Relator, an insurance salesperson, was employed by respondent Prudential Real Estate from March 1984 through August 20, 2003, when he was terminated. Relator applied for unemployment benefits and the department determined he was disqualified because he had been discharged for employment misconduct. He appealed to the unemployment law judge (ULJ), who affirmed. Relator appealed to the commissioner’s representative, who remanded to the ULJ for a new evidentiary hearing on the issue of whether the employment relator performed constituted “noncovered employment” under Minn. Stat. § 268.035, subd. 20(26) (2002).
At the hearing before the ULJ, relator testified that his pay rate was based primarily on commission, but that: (1) his employer provided health, short-term disability, and dental insurance, as well as workers’ compensation insurance, for a benefits package worth approximately $8,000; and (2) his employer considered relator to be a common-law employee and paid unemployment taxes. The ULJ determined that relator’s employment as an insurance salesperson was noncovered employment because he was paid solely by commission. Relator appealed to the commissioner’s representative, who affirmed. This certiorari appeal followed. Respondent commissioner did not file a brief, but instead advised this court by letter that respondent’s position on the issue had changed and respondent did not object to a reversal.
Was relator’s employment noncovered employment under Minn. Stat. § 268.035, subd. 20(26) (2002)?
interpretation is a question of law reviewed de novo. Harms
v. Oak Meadows, 619 N.W.2d 201, 202 (
establish an unemployment benefits account, an applicant must earn a certain
minimum amount of wage credits. “Wage
credits” are defined as “the amount of wages paid within an applicant’s base
period for covered employment.” Minn.
Stat. § 268.035, subd. 27 (2002).
Generally, covered employment includes employment performed in
statute includes a long list of employment that is noncovered. See
Minn. Stat. § 268.035, subd. 20. In
the provision at issue here, the statute provides that noncovered employment
includes “employment as an insurance salesperson, by other than a corporate
officer, if all the compensation for the employment is solely by way of
The issue here is whether “compensation” refers only to money the salesperson received from commissions, or whether it includes remuneration from the employer’s payment for benefits such as health, disability, and dental insurance. Relator asserts that he was not compensated solely by commission because his employer provided health, short-term disability, and dental insurance, as well as workers’ compensation insurance, for a benefits package worth approximately $8,000.
We must first examine the statutory language at issue. While the unemployment statute does not define the word “compensation,” the law dictionary defines compensation as: “Remuneration and other benefits received in return for services rendered; esp., salary or wages.” Black’s Law Dictionary 277 (7th ed. 1999). In contrast, wages are defined by statute as follows:
[A]ll compensation for services, including commissions; bonuses; severance payments; vacation and holiday pay; back pay as of the date of payment; tips and gratuities paid to an employee by a customer of an employer and accounted for by the employee to the employer; sickness and accident disability payments, except as otherwise provided in this subdivision; and the cash value of all compensation in any medium other than cash . . . .
Minn. Stat. § 268.035, subd. 29 (Supp. 2003). In addition, there are a number of specific
exclusions from the definition of wages, including payments made on behalf of
the employee under a plan established by an employer providing for employees
generally, “including any amount paid by an employer for insurance or
annuities, or into a plan, to provide for a payment, on account of (i) retirement
or (ii) medical and hospitalization expenses in connection with sickness or
accident disability, or (iii) death.”
is a case of first impression in
The Reynolds court held that the exclusion
clearly applied only to “the services of those individuals who ordinarily
receive nothing of value from their employer in addition to commissions” and
that the “General Assembly’s use of the word ‘solely’ manifests the legislative
intent to exclude only those agents who are compensated entirely by
commission.” Id. at 93. The court further
noted that the legislature could have completely barred insurance agents who
receive commissions from receiving unemployment benefits either by using the
word “wages” instead of “remuneration” or by omitting the word “solely.”
Reynolds court rejected the argument
that the definition of “wages,” which excluded some fringe benefits from
calculable wages, should be applied to likewise exclude some fringe benefits
from the definition of remuneration.
Applying the same reasoning, we conclude that because the Minnesota legislature chose to use the word “compensation” in Minn. Stat. § 268.035, subd. 29, rather than the term “wages,” the statutory definition of wages does not control the meaning of “compensation.” Rather, compensation is defined by its common meaning: “[r]emuneration and other benefits.” Black’s at 277 (emphasis added). Further, as in Delaware, the legislature here provided that noncovered employment was established when compensation was “solely” from commissions. Thus, as in Reynolds, relator’s benefits package here included compensation in addition to commissions.
Following Reynolds we conclude that where an insurance salesperson receives additional employer-paid compensation by way of benefits, the employment is not noncovered employment under Minn. Stat. § 268.035, subd. 20(26), and that relator is not prohibited from establishing an unemployment benefits account.
D E C I S I O N
An insurance salesperson who is compensated by commission and an employer-provided benefits package is engaged in covered employment for purposes of establishing an unemployment benefits account. Therefore, the decision by the commissioner’s representative that relator engaged in noncovered employment is reversed and the matter is remanded for further proceedings.
Reversed and remanded.