This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).







Dawn J. DeNio,





Interchange Incorporated,



Commissioner of Economic Security,




Filed February 11, 2003


Halbrooks, Judge


Department of Economic Security

File No. 1039201



John A. Fabian, Nichols Kaster & Anderson, PLLP, 4644 IDS Center, 80 South 8th Street, Minneapolis, MN 55402 (for relator)


Interchange Incorporated, 4820 Park Glen Road, P.O. Box 16244, St. Louis Park, MN 55416-0244 (respondent)


Linda A. Holmes, Department of Economic Security, 390 North Robert Street, St. Paul, MN 55101 (for respondent commissioner)




            Considered and decided by Halbrooks, Presiding Judge, Schumacher, Judge, and Hudson, Judge.

U N P U B L I S H E D   O P I N I O N


            Relator appeals from the commissioner’s representative’s determination that relator voluntarily terminated her employment without good cause attributable to respondent.  Because the record reasonably supports the commissioner’s decision, we affirm. 


            Relator Dawn DeNio worked for respondent Interchange Incorporated from October 1, 1997 until she resigned on August 8, 2001.  In December 2000, Sy Friedman, the owner of Interchange, approached DeNio and three other employees with an offer to sell them his business.  In January 2001, Friedman promoted DeNio to CEO and gave her a raise from $45,000 to $65,000.  About the same time, Friedman offered enhanced health benefits and the addition of life insurance, retirement, short-term disability, and long-term disability benefits to employees at a personal cost of only $10 per month.

DeNio later testified that Friedman told her that he gave her the raise because she deserved it and because he wanted her to be able to buy the company.  DeNio and the other employees presented Friedman with an offer to buy the business on May 4, 2001.  Friedman felt that the offer was offensively low and responded by withdrawing the offer to sell.  That summer, Friedman advised DeNio that he was going to “adjust” the raise she had received in anticipation of her purchase of the company.  The amount of reduction was not specified at that time, but on August 1, 2001, DeNio’s annual salary was reduced by $10,000.

            In July 2001, Friedman issued a memo to all employees advising them that, due to sales and cash-flow problems, they would have to start contributing 25% of the cost of some of their fringe benefits.  Long-term disability and retirement benefits were not affected.  In light of the increased contribution, employees were given the opportunity to cancel any benefits they did not want to continue.

            In the same memo, Friedman notified all employees that an error had been found in the method used to track paid time off (PTO).  Friedman indicated that the use of PTO was temporarily suspended until the error could be corrected and individuals’ totals could be recalculated.  The memo also stated that DeNio would no longer be CEO but would be returning to her former position in international sales. 

DeNio voluntarily submitted her resignation on August 8, 2001 after a heated meeting with Friedman in which he criticized her handling of customer discounts while she was CEO.  Following her resignation, DeNio filed for unemployment benefits, stating that she resigned

[d]ue to an increasingly hostile work environment that includes a cut in pay of $10,000, a discriminatory suspension of [paid time off] for select employees, a cut in health, short term and life insurance benefits, rude and berating behavior, and repeated inappropriate touching * * * .


A representative of the Minnesota Department of Economic Security determined that DeNio was not disqualified for receiving benefits because she quit her employment due to good reason caused by her employer.  Interchange appealed to an unemployment law judge, who affirmed the department’s determination.  Interchange again appealed, and the representative of the Commissioner of Economic Security reversed.  DeNio now appeals from the commissioner’s representative’s decision. 


Because DeNio voluntarily left her employment, she does not qualify for unemployment benefits unless the record reflects that she “quit the employment because of a good reason caused by the employer.”  Minn. Stat. § 268.095, subd. 1(1) (2002).  Among other things, “good reason” for an employee to quit includes both (1) a substantial adverse change in wages or other terms of employment, so long as the change was not based on the applicant’s employment misconduct; and (2) sexual harassment of which the employer was aware or should have been aware and for which he failed to take timely and appropriate action.  Minn. Stat. § 268.095, subd. 3(c), (e) (2002).

On appeal to this court, we review the decision of the commissioner’s representative, not the decision of the unemployment law judge, even when the findings involve determination of witness credibility.  Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995).  The question of whether an employee voluntarily terminated her employment with good cause attributable to the employer is a question of law reviewed de novo.  Biegner v. Bloomington Chrysler/Plymouth, Inc., 426 N.W.2d 483, 485 (Minn. App. 1988).  But “[a] Commissioner’s representative’s determination regarding the reason for an employee’s separation is a factual determination.”  Embaby v. Dep’t of Jobs & Training, 397 N.W.2d 609, 611 (Minn. App. 1986) (citations omitted).  This court must sustain the commissioner’s factual findings if evidence in the record reasonably supports the findings.  White v. Metro. Med. Ctr., 332 N.W.2d 25, 26 (Minn. 1983).  The facts are to be considered in the light most favorable to the decision.  Markel v. City of Circle of Pines, 479 N.W.2d 382, 383-84 (Minn. 1982). 

Here, DeNio argues that she quit for a combination of statutory “good reasons” caused by Friedman.  DeNio contends that she had a substantial adverse change in her wages and other terms of employment because Friedman (1) reduced her salary, (2) increased the employees’ contribution to the cost of benefits, and (3) suspended her PTO.  DeNio also argues that Friedman’s inappropriate touching constituted sexual harassment, constituting good cause.

A good reason to quit must be a reason that is “directly related to the employment and for which the employer is responsible,” and the reason must be significant enough to “compel an average, reasonable worker to quit.”  Minn. Stat. § 268.095, subd. 3(a)(1), (2) (2002).  If an employee is subjected to adverse working conditions, the employee

must complain to the employer and give the employer a reasonable opportunity to correct the adverse working conditions before they may be considered a good reason caused by the employer for quitting.


Id., subd. 3(b) (2002).  Good cause attributable to the employer does not include situations where an employee experiences irreconcilable differences with other employees or mere dissatisfaction with working conditions.  Portz v. Pipestone Skelgas, 397 N.W.2d 12, 14 (Minn. App. 1986).

1.            Reduction in Wages

The commissioner’s representative concluded that DeNio’s 15% reduction in salary and benefits met the statutory definition of a substantial adverse change in wages or other terms of employment.  But the commissioner’s representative also concluded that the reduction was not DeNio’s reason for quitting.  The commissioner’s representative relied on the fact that DeNio conceded that “if [the pay cut] was the only thing that had occurred I could have accepted that.”  In addition, the record reflects that DeNio’s $20,000 raise in 2001 was substantially greater than annual raises she had previously received.  In 1999, DeNio received a $10,000 raise; in 2000, her raise was $5,000.  The record supports the commissioner’s representative’s determination that the temporary suspension of PTO and the increase in employee contributions to some of the benefits were applicable to all employees, not just DeNio.  The record also reflects that DeNio told Friedman that his expectation of increased employee contribution to benefits due to economic difficulties was not all “that unrealistic.” 

The plain language of the statute demands that the record support the conclusion that DeNio quit “because of” the adverse changes.  See Minn. Stat. § 268.095, subd. 1(1) (stating that the employee must “quit the employment because of a good reason caused by the employer.”).  Therefore, DeNio’s argument that the commissioner’s representative erred in not applying the average reasonable worker standard is without merit.  Because the record reasonably supports the commissioner’s representative’s factual findings regarding DeNio’s reason for quitting, we affirm the commissioner’s representative’s determination. 

2.         Sexual Harassment

Under Minnesota law, sexual harassment constitutes good cause for an employee to quit employment if (1) the employer was aware or should have been aware of the harassment, and (2) the employer failed to take timely and appropriate action.  Minn. Stat. § 268.095, subd. 3(e).  Sexual harassment is defined in the statute as

unwelcome sexual advances, requests for sexual favors, sexually motivated physical conduct or other conduct or communication of a sexual nature when:

(1) the applicant’s submission to the conduct or communication is made a term or condition of the employment;

(2) the applicant’s submission to or rejection of the conduct or communication is the basis for decisions affecting employment; or

(3) the conduct or communication has the purpose or effect of substantially interfering with an applicant’s work performance or creating an intimidating, hostile, or offensive working environment.



An employer’s failure to take adequate measures to protect an employee from harassment constitutes good cause for an employee to resign.  Wetterhahn v. Kimm Co., 430 N.W.2d 4, 6 (Minn. App. 1988).  If an employee complains to an appropriate person of sexual harassment, the employer must investigate the complaint and may not defer the decision whether or not to investigate to the complaining employee.  Peppi v. Phyllis Wheatley Cmty. Ctr., 614 N.W.2d 750, 752 (Minn. App. 2000). 

The record reflects physical contact by Friedman such as periodic handholding, hugging, placing his arm around DeNio’s waist, and pinching her cheeks.  DeNio never said anything to Friedman about the touching, although she did not like it.  Instead, she testified that she moved away from Friedman and tried to ignore it.  On one occasion during her almost four years of working at Interchange, DeNio mentioned the touching to the production manager.  He offered to speak to Friedman on her behalf, but she declined the offer.

Friedman, who is 83, testified that he asked DeNio, “[D]oes it offend you when I touch you and she said, ‘oh no, I know that there’s nothing suggestive in that.’”  The commissioner’s representative concluded that the record failed to support a finding that Friedman knew or should have been aware that DeNio found the physical contact offensive.  The commissioner’s representative concluded that the contact DeNio complained of did not meet the definition of sexual harassment because the preponderance of the evidence did not show that physical contact by Friedman was sexually motivated.  Because we agree with the commissioner’s representative’s conclusion that the physical contact that occurred does not meet the statutory definition of sexual harassment, we do not consider whether Friedman, as the company owner, “should have known” of offensive behaviors.

3.            Hostile Workplace Treatment

DeNio also contends that, although the reduction in salary alone did not cause her to quit, the salary reduction in combination with other workplace harassment, even if not sexual in nature, caused her to quit.  Under Minn. Stat. § 268.095, subd. 3(b), DeNio was required to give Interchange notice and an opportunity to correct the adverse working conditions before they may be considered a good reason for quitting caused by the employer.  Moreover, good cause attributable to the employer does not include mere dissatisfaction with working conditions.  Portz,397 N.W.2d at 14. 

The commissioner’s representative found that

While Sy Friedman may have been unreasonably critical of Dawn DeNio, the evidence does not support a finding that he acted outside the bounds of his rights as her supervisor and employer.  A preponderance of the evidence does show that the relationship between Sy Friedman and Dawn DeNio deteriorated after May 2001.  The evidence does not show, however, that Sy Friedman’s behavior was so inappropriate or egregious so as to compel an average, reasonable individual subjected to those conditions to quit. 


            The commissioner’s representative’s determination that DeNio quit without good cause attributable to Interchange is supported by this record.