A05-1896

Daniel J. Van Hee,

Relator,

vs.

Dominium Management Services, Inc.,

Respondent,

Department of Employment and Economic Development,

Respondent

Filed August 1, 2006

Reversed

Parker, Judge*

Department of Employment and Economic Development

File No. 8014 05

John C. Hottinger, MacKenzie & Gustafson Ltd., 326 South Minnesota Avenue, St. Peter, MN 56082 (for relator)

Nicholas J. Eugster, Messerli & Kramer, 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402 (for respondent employer)

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

Considered and decided by Lansing, Presiding Judge; Willis, Judge; and Parker, Judge.

U N P U B L I S H E D O P I N I O N

PARKER, Judge

Relator Daniel Van Hee challenges the decision by the unemployment-law judge (ULJ) denying a motion for reconsideration after determination that relator was disqualified from receiving unemployment benefits because he had been discharged for employment misconduct relating to the waiver of penalty fees for early lease termination. Van Hee argues that he did not commit misconduct because (a) he had authority to balance initiatives to maintain high occupancy against charging penalty fees, (b) the employer did not object to his practice of waiving penalty fees over a period of four years, during which he consistently received positive performance reviews, and (c) his acts, at most, constituted good-faith errors in judgment not constituting misconduct. Because we conclude that the evidence does not reasonably support a determination that Van Hee was discharged for employment misconduct, we reverse.

FACTS

Dominium Management Services employed Daniel Van Hee as a property manager for an apartment complex in New Prague from February 2001 until April 2005. Van Hee’s listed job duties included renting and maintaining apartments in the complex, maximizing occupancy and collections, and establishing a pleasant atmosphere and good customer relations with residents. Dominium maintains written policies for its residents. Since at least December 2003, Dominium has had a policy stating that all residents wishing to terminate their leases before the lease ending date must give 60 days’ notice and pay an early-lease-termination fee equal to two months’ rent, in addition to paying rent during the notice period. Although Van Hee was aware of this policy, he did not, as a practice, charge residents the early-lease-termination fee for leaving their leases early if they were buying homes or if the rental unit was occupied within a short time period after the renter left. Dominium consistently gave Van Hee favorable performance reviews, including bonuses, but specified that he needed to focus on enforcing policies, including early lease termination.

Until 2005, Van Hee’s property had a low vacancy rate. But in about April 2005, Dominium’s management noticed a higher-than-usual vacancy rate, and the regional manager and vice-president of property management visited the site to investigate. Van Hee told them that he had been waiving early termination fees and concentrating on immediately re-renting the units. Upon further investigation, the regional manager found that in 2004 and 2005, Van Hee had not imposed the penalty fee on approximately 24 residents, which resulted in a loss of potential income for the property. Dominium discharged Van Hee for failure to impose the early-lease-notice-and-termination fees.

Van Hee established an unemployment-benefits account with the Department of Employment and Economic Development; his benefits were denied. At a hearing on appeal before an unemployment-law judge, Van Hee testified that he believed the waiver of penalty fees would enhance customer relations, which would keep the occupancy rate high; that he was never warned that failure to impose the fee would affect his employment; and that his consistent receipt of raises and bonuses provided evidence that Dominium did not object to this procedure. The ULJ disagreed and determined that Van Hee was discharged because of employment misconduct. A request for reconsideration was denied, and this certiorari appeal followed.

D E C I S I O N

An employee discharged for misconduct is not qualified to receive unemployment benefits. Minn. Stat. § 268.095, subd. 4(1) (2004). Employment misconduct includes “any intentional, negligent, or indifferent conduct, on the job or off the job, . . . display[ing] clearly a serious violation of the standards of behavior the employer has the right to reasonably expect” or “display[ing] clearly a substantial lack of concern for the employment.” Minn. Stat. § 268.095, subd. 6 (2004). Good-faith errors in judgment, if judgment was required, do not constitute employment misconduct. Id.

Whether an employee is disqualified from receiving unemployment benefits is a mixed question of law and fact. Schmidgall v. Filmtec Corp., 644 N.W.2d 801, 804 (Minn. 2002). The determination whether the employee committed a particular act is a factual question. Scheunemann v. Radisson S. Hotel, 562 N.W.2d 32, 34 (Minn. App. 1997). A determination that a particular act constitutes employment misconduct is a question of law. Id. This court may affirm the factual determinations of the ULJ if they are reasonably supported by substantial evidence in the record, or if they are not erroneous as a matter of law. Minn. Stat. § 268.105, subd. 7(d) (Supp. 2005).

Previously, disqualification provisions of the unemployment-compensation statute were narrowly construed. Prickett v. Circuit Science, Inc., 518 N.W.2d 602, 604 (Minn. 1994). In Prickett, this statement was based on the ruling that the unemployment-compensation statute is remedial in nature and must be liberally construed. Id. But in 1999, when the legislature made a number of changes, the statute was amended by a provision stating that: “There shall be no presumption of entitlement or nonentitlement to unemployment benefits.” Minn. Stat. § 268.069, subd. 2 (2004). It further provides that “[t]here shall be no equitable or common law denial or allowance of unemployment benefits.” Id., subd. 3 (2004). In light of these statutory provisions, it does not appear that the statute can be considered remedial in nature.

“As a general rule, refusing to abide by an employer’s reasonable policies and requests amounts to disqualifying misconduct.” Schmidgall, 644 N.W.2d at 804 (citation omitted). Van Hee contends that he was given full authority to manage the apartment complex, that he was never disciplined for failing to enforce the early-lease-termination policy, and that any mistakes he made were good-faith errors in judgment, which should not disqualify him from receiving unemployment benefits. See Tuckerman v. Thoeny, 407 N.W.2d 491, 493 (Minn. App. 1987) (stating that an employee’s good-faith errors, as a result of miscommunications between the employer and employee, generally do not constitute misconduct).

We examine the nature of Van Hee’s job responsibilities and the policy itself to determine whether the evidence reasonably supports the determination that his actions constituted employment misconduct. Van Hee’s five-page job description included the responsibilities of following the procedures in the Operations Policy and Procedures Manual, which presumably included the early-lease-termination policy. The job description, however, included about 65 duties, with no hierarchy indicating which duties were most important. Van Hee was the only full-time employee on the premises. The comprehensive nature of his job description supports his testimony of good-faith belief that he had authority to manage the complex according to his best judgment, consistent with a reasonable belief that the judgment would advance the best interests of his employer. Van Hee testified to his belief that waiving the early-lease-termination fees would result in a high occupancy rate. This belief was apparently confirmed by several years of an unusually high occupancy rate for the complex compared to other Dominium complexes. The record also confirms that the early-lease-termination policy states that its purpose is “[t]o provide direction” if a tenant requests early lease termination, rather than specifying an absolute requirement. Consequently, the record does not support the conclusion that Van Hee’s failure to enforce the early-lease-termination policy clearly displayed a serious violation of the standards of behavior Dominium had the right reasonably to expect, or clearly displayed a substantial lack of concern for his employment.

In order to be disqualified from receiving unemployment benefits, a person must be “discharged because of employment misconduct. . . .” Minn. Stat. § 268.095, subd. 4(1) (emphasis added); see also Hansen v. C.W. Mears, Inc., 486 N.W.2d 776, 780 (Minn. App. 1992) (stating that “[t]o disqualify a person from receiving benefits, the misconduct must be the cause of the discharge”), review denied (Minn. July 16, 1992). Van Hee’s performance reviews over his four-year period of employment were consistently positive but also consistently rated him slightly lower on following policies and procedures. The record reflects that Dominium specifically knew, before Van Hee’s April 2005 discharge, that he did not enforce the early-lease-termination policy: his January 2005 evaluation stated that “[i]n 2005 Dan needs to focus on enforcing policies (early lease termination, security deposit charges etc),” and in a separate section, that he needed to “improve on enforcing policies in 2005.” Thus, the record suggests that Dominium did not discharge Van Hee in April 2005 solely because of his failure to follow the early-lease-termination policy.

This court cannot substitute our judgment for that of the administrative body when its findings are supported by the evidence. Vicker v. Starkey, 265 Minn. 464, 470, 122 N.W.2d 169, 173 (1963). This court may reverse, however, “if substantial rights of the petitioner may have been prejudiced because the findings . . . are . . . unsupported by substantial evidence in view of the entire record as submitted.” Minn. Stat. § 268.105, subd. 7(d)(5). Because the evidence shows that Dominium knew of the waiver of the penalties during the period of time when Van Hee received positive employment reviews, that Van Hee’s exercise of judgment in waiving the penalty fees had produced a very high occupancy rate, that the policy was a policy issued to residents rather than a specific directive to managers, and that Dominium never told Van Hee that he had no discretion to waive the penalty fee, the record does not reasonably support the determination that he was discharged for employment misconduct, and we reverse.

Reversed.

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