This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).







Kforce Flexible Solutions, LLC,





Department of Employment and

Economic Development,




Filed March 6, 2007

Crippen, Judge


Department of Employment and Economic Development

File No. 766005



Walter A. Pickhardt, Adam B. Thimmesch, Faegre & Benson, LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 (for relator)


Linda A. Holmes, Minnesota Department of Employment and Economic Development, 1st National Bank Building, Suite E200, 332 Minnesota Street, St. Paul, MN 55101-1351 (for respondent)


            Considered and decided by Dietzen, Presiding Judge, Worke, Judge, and Crippen, Judge.

U N P U B L I S H E D   O P I N I O N


            Relator Kforce Flexible Solutions, LLC, challenges the unemployment law judge’s decision that the respondent department had jurisdiction to correct an erroneous succession determination and thus to impose on relator the experience rating of its predecessor.  Relator also disputes the finding that it was a full successor of Kforce, Inc., its parent.  We affirm.


            Relator is wholly owned by its parent corporation.  On January 1, 2003, the parent transferred to relator all of its flexible employees:  the temporary service employees that are contracted out to clients.  The parent corporation retained its client contracts and staff employees. 

            On January 20, 2003, relator filed with the department a report to determine succession, certifying that it acquired 87% of its parent’s assets.  On February 5, 2003, the department informed relator that the department was classifying relator as a partial-successor to the parent, a classification that permitted relator to elect whether to assume the parent’s experience rating.  This succession determination became final 30 days later.  But on March 11, 2005, the department informed relator that it had erred in its previous succession determination and that relator was actually a full-successor to the parent because it acquired substantially all of the parent’s assets.  As a full-successor, the law required relator to assume the parent’s experience rating for the computation of its tax rates for 2003 and subsequent years. 

            Relator appealed this decision, arguing that the department lacked jurisdiction to amend a final succession determination and claiming that its January 2003 successor report erroneously stated the amount of assets relator acquired from its parent.  A telephone hearing was held to consider relator’s appeal. 

            During the hearing, two accountants testified on relator’s behalf.  According to these accountants, the preparer of the January 2003 successor report erred in disclosing the amount of assets transferred.  But they lacked sufficient knowledge about the transaction to testify as to the exact amount of assets transferred.  Still, although they could not substantiate the claim, they were adamant that relator acquired less than 70% of parent’s assets. 

            The unemployment law judge concluded that the department had jurisdiction to correct its erroneous succession determination and that relator was a full-successor to parent.  The judge found that relator did not offer “any evidence of substance or specificity which could be quantified to show that the assets transferred . . . were less than the 70 percent threshold.” The judge refused relator’s reconsideration request, premised on new documentation, explaining that relator failed to articulate a good reason for why it did not provide this evidence at the original hearing.



            Whether or not an agency has jurisdiction is a question of law which this court reviews de novo.  St. Otto’s Home v. Minn. Dep’t of Human Servs., 437 N.W. 35, 39-40 (Minn. 1989); Frost-Benco Elec. Ass’n v. Minn. Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn. 1984).

            Each year respondent must notify an employer about its tax rate and state the factors used in determining the experience rating.  Minn. Stat. § 268.051, subd. 6(a) (2002).  An employer’s tax rate is computed “by adding the base tax rate to the employer’s experience rating.”  Id., subd. 2(a) (2002).  An employer’s succession status is a factor in determining its experience rating; for partial successors, their use of the predecessor’s experience rating is optional.  Id., subd. 4(a), (b) (2002).  Absent a timely rate protest, “the assigned rate shall be final.”  Id., subd. 6(a).  But “[t]he commissioner may at any time . . . correct any error in the computation or the assignment of an employer’s tax rate.”  Id., subd. 6(d). 

            The unemployment law judge concluded that respondent had jurisdiction to amend its succession determination because it was correcting its own error in the computation or assignment of relator’s tax rate.  Relator argues that the judge erred because an erroneous succession-determination is not an error in the assignment of a tax rate.  But relator does not cite to any authority supporting a construction of the word assignment which excludes errors in succession determinations.  Vavoulis v. In re Contribution Rate of Elec. Dev. Co., 282 Minn. 318, 164 N.W.2d 377 (1969), and In re Fingerhut Corp. v. Dep’t of Employment Servs., 306 Minn. 516, 238 N.W.2d 604 (1976), are distinguishable because neither case deals with a version of Minn. Stat. § 268.051, subd. 6(d) that contains the word assignment, nor does either case deal with respondent’s correction of its own mistake. 

            Furthermore, an employer’s succession status is an inescapable factor in determining an employer’s experience rating, which directly relates to the computation of an employer’s tax rate.  Minn. Stat. § 268.051, subds. 2(a), 4.  In addition, since every tax-rate notice must include the factors determining an employer’s experience rating, the notice assigning relator its tax rate was erroneous because it relied on the wrong factors.  Respondent had jurisdiction in the circumstances of this case


            A presumption of correctness surrounds an agency decision.  In re Friedenson, 574 N.W.2d 463, 465 (Minn. App. 1998), review denied (Minn. Apr. 30, 1998).  We are not to disturb an agency decision that is supported by substantial evidence.  Minn. Stat. § 268.105, subd. 7(d)(5) (2006); City of Moorhead v. Minn. Pub. Utils. Comm’n, 343 N.W.2d 843, 847 (Minn. 1994).  Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”  Saif Food Mkt. v. Comm’r Dep’t of Health, 664 N.W.2d 428, 430 (Minn. App. 2003) (quotation omitted). 

            An employer is a full successor to its predecessor and must assume its predecessor’s experience rating when it acquires “substantially all the assets of another employer” and there is requisite common ownership of the entities.  Minn. Stat. § 268.051, subd. 4(a).  The statute does not define “substantially all the assets,” but a department rule defines it to mean “at least 70 percent of the market value of the assets.”  Minn. R. 3315.3210, subp. 5 (2003). 

            It is undisputed that the requisite common ownership exists between relator and its parent, and relator certified as accurate the succession report which disclosed that relator acquired 87% of parent’s assets.  The unemployment law judge found that relator acquired substantially all of its parent’s assets, citing the succession report and finding that the accountant’s contrary testimony was not credible.  Courts are to defer to an agency’s conclusions regarding conflicts in testimony, weight to be given testimony, and inferences to be drawn from testimony.  In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 278 (Minn. 2001).  Since the record reasonably supports this finding, the conclusion that relator is a full successor to parent is supported by substantial evidence.




* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.