STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1129

Karen M. Lynch,
Relator,

vs.

Northland Group,
Respondent,
Department of Employment and Economic Development,
Respondent.

Filed May 22, 2007

Affirmed

Stoneburner, Judge

Department of Employment and Economic Development

File No. 4771 06

Michael W. Jonak, 426 Northwest Fourth Street, Grand Rapids, MN 55744 (for relator)

Jeffrey A. Olson, Suite 185, 7831 Glenroy Road, Edina, MN 55439 (for respondent Northland)

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

Considered and decided by Stoneburner, Presiding Judge; Dietzen, Judge; and Worke, Judge.

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

STONEBURNER, Judge

Relator challenges a decision by the unemployment-law judge (ULJ) that she is not entitled to unemployment benefits because she quit her job without good reason caused by the employer. We affirm.

FACTS

Relator Karen Lynch worked full-time as a collector for Northland Group from September 2002 until February 16, 2006. Throughout her employment, Lynch was compensated with a base salary plus commissions. Lynch’s base salary was always $1,500 per month, but the commission structure changed during her employment.

Lynch asserts that she quit her job because the commission structure changed from nine percent at the time she began work to three percent at the time she quit. The vice president of operations for Northland testified that, at the time Lynch was hired, the commission on collections was seven percent on amounts over $12,500 the first month and increased one percent in each successive month that the collector met the $12,500 goal, up to ten percent. In August 2005, in an effort to reward early collection on new accounts, Northland changed the commission structure so that collectors earned 20% from the first dollar collected on new accounts less than 30 days old; 12% on accounts between 30 and 60 days old; seven percent on accounts between 60 and 90 days old; and three percent on accounts more than 90 days old. The new structure required collectors to shift their focus to aggressive collection of new accounts. Collectors received training on the new system, which required making more telephone calls during the evenings and weekends.

Lynch testified that it was difficult to earn the 20% commission on new accounts because of the short time (about two weeks) after notification of the accounts that a collector had to reach the debtors before 30 days expired. She testified that many of her accounts were older accounts that she had been monitoring for a period of time, where debtors had made a payment arrangement. She also testified that when the commission structure changed, “a lot of my accounts were just automatically taken off my desk.” Northland’s vice president testified that the company only pulled nonpaying accounts that were over six months old from Lynch’s desk.

Lynch testified that her income dropped significantly and she was unable to pay her mortgage after the commission structure was changed. She testified that she suffered anxiety attacks and physical strain in her back and neck, for which she sought medical attention, due to the drop in income. She testified that she brought her concerns about the commission structure to the vice president for operations and that he yelled at her in a meeting, but she did not report the incident as harassment because she felt intimidated. Lynch gave her two-week notice in February 2006 and then terminated her employment at Northland. She testified that she “had money in savings so . . . I just could no longer take the emotional abuse that I was taking . . . for me just continuing my employment there without my voice being heard.” She also testified that “the reason that I left was directly related to my decrease in pay.”

Lynch’s application for unemployment benefits was denied. She appealed, and after a hearing, a ULJ determined that Lynch was disqualified from receiving benefits because she quit voluntarily, without a good reason to quit caused by the employer. On reconsideration, the ULJ affirmed that determination. This certiorari appeal followed.

D E C I S I O N

On review, this court may affirm a ULJ’s decision, remand it for further proceedings, or reverse or modify it if the petitioner’s substantial rights may have been prejudiced because the findings, inferences, conclusion or decision are:

(1) in violation of constitutional provisions;

(2) in excess of the statutory authority or jurisdiction of the department;

(3) made upon unlawful procedure;

(4) affected by other error of law;

(5) unsupported by substantial evidence in view of the entire record as submitted; or

(6) arbitrary or capricious.

Minn. Stat. § 268.105, subd. 7(d) (2006).

An employee who quits employment is disqualified from receiving unemployment benefits unless the employee quits for a good reason caused by the employer, as defined by statute. Minn. Stat. § 268.095, subd. 1(1) (Supp. 2005).

A good reason caused by the employer for quitting is a reason:

(1) that is directly related to the employment and for which the employer is responsible;

(2) that is adverse to the worker; and

(3) that would compel an average, reasonable worker to quit and become unemployed rather than remaining in the employment.

Minn. Stat. § 268.095, subd. 3(a) (2004).

The determination that an employee quit without a good reason caused by the employer is a legal conclusion, but that conclusion must be based on findings that have the requisite evidentiary support. Zepp v. Arthur Treacher Fish & Chips, Inc., 272 N.W.2d 262, 263 (Minn. 1978). This court defers to the decisionmaker’s assessment of credibility and the resolution of conflicting testimony. Skarhus v. Davanni’s, 721 N.W.2d 340, 344 (Minn. App. 2006). But this court exercises independent judgment on issues of law. Jenkins v. Am. Express Fin. Corp., 721 N.W.2d 286, 289 (Minn. 2006).

The ULJ found that (1) Lynch grossed $70,604.43 in 2004 and $62,867.51 in 2005; (2) the reason for the decrease was partly due to the change in the commission structure and partly due to a decline in her performance in 2005; and (3) in any event, the change in her gross salary was only 11%, which does not meet the level of decrease that this court has determined is necessary to support a finding that an employee quit because of a good reason caused by the employer.

Lynch argues that the ULJ erred by determining that Lynch’s employment terminated as a result of a voluntary quit, rather than because of a good cause attributable to the employer, because her “main reason for tendering her resignation, i.e., the substantial decrease in her income, was a reason that was both directly related to her employment and for which the employer was responsible.” Lynch argues that, under the new commission system, the “substantial decrease in [her] income occurred, to a great extent, because of the employer’s decision to take away . . . long-standing accounts which [Lynch] had developed over a period of years.” Under the new commission system, collectors were compensated with a higher percentage commission on new accounts than on longstanding accounts, which had already been set up for collection. Lynch testified that she had a larger number of older accounts, which, under the new structure generated a lower percentage commission than they generated under the old structure.

The vice president of operations testified that collectors who were able to change their focus to collecting the newer accounts were able to earn more in commissions under the new system than under the old system. He also presented evidence that Lynch’s decline in earnings was due to a decline in her performance. The ULJ credited this testimony. This court defers to the credibility determinations of the ULJ. Skarhus v. Davanni’s, 721 N.W.2d 340 (Minn. App. 2006).

Lynch asserts that the ULJ miscalculated the decline in her earnings and erred by determining that the decrease was not large enough to be considered a good reason to quit caused by her employer. Minnesota courts, while avoiding a bright-line rule, have generally held that a good reason to quit exists when an employer imposes pay reductions of 15% to 25%. See, e.g., Scott v. The Photo Ctr., Inc., 306 Minn. 535, 535-36, 235 N.W.2d 616, 216-17 (Minn. 1975) (holding that a 25% wage reduction was “substantial” and constituted good cause to quit); Danielson Mobil, Inc. v. Johnson,394 N.W.2d 251, 253 (Minn. App. 1986) (holding that a 19% wage reduction constituted good reason to quit); Rootes v. Wal-Mart Assocs., Inc, 669 N.W.2d 416, 419 (Minn. App. 2003) (holding that a pay reduction of 15%, demotion, and change in working hours was good reason to quit). But courts have been reluctant to find good cause to quit attributable to the employer solely on the basis of pay reduction when that reduction is less than 15%. Sunstar Foods, Inc. v. Uhlendorf, 310 N.W.2d 80, 84 (Minn. 1981).

Lynch maintains that the ULJ erred by comparing gross-pay figures for the full years of 2004 and 2005 and asserts that the ULJ should have compared only fourth-quarter earnings from those years, which show that her pay decrease was “substantial” and formed a good reason to quit. See Minn. Stat. § 268.095, subd. 3(b) (2004) (stating that the analysis required by statute “must be applied to the specific facts of each case”). Lynch’s commission check decreased from $13,148 in the fourth quarter of 2004 to $6,876 in the fourth quarter of 2005, a 48% decrease, which Lynch attributes to the change in commission structure in August 2005. But the record shows that Lynch’s first quarter commission check for 2006, seasonally the best time for collections, only declined about ten percent from the same quarter in 2005, before the commission structure was changed. And there was evidence in the record that several collectors increased their commissions under the new structure. Despite the drop in Lynch’s commission during the first quarter in which the new commission structure was in place, the record does not support Lynch’s assertion that the change in the commission structure “would compel an average, reasonable worker to quit and become unemployed rather than remaining in the employment.” Minn. Stat. § 268.095, subd. 3(a)(3).

Determining whether an employee had good reason to quit caused by an employer requires consideration of “the reasonableness of an employee’s action[s] considering all relevant circumstances.” Cook v. Playworks, 541 N.W.2d 366, 369 (Minn. App. 1996). In this case, Lynch’s base salary remained the same: $1,500 per month, and Lynch has not clearly shown that she would have experienced net loss of income under the new system over a period of several quarters. See, e.g., Johnson v. Walch & Walch, Inc., 696 N.W.2d 799, 801 (Minn. App. 2005) (upholding disqualification from benefits when employee of beauty salon was required to move to new salon located a few minutes’ drive away and claimed that clients would not follow her to new location, stating that “the evidence of income loss is unclear”), review denied (Minn. July 19, 2005).

Lynch testified that the commission structure and her inability to be heard about that policy caused her stress that produced anxiety and other physical symptoms. But the record does not establish that she complained to anyone at Northland about the way she was treated. A good reason to quit attributable to the employer “does not encompass situations where an employee experiences irreconcilable differences . . . at work or where the employee is simply frustrated or dissatisfied with . . . working conditions.” Portz v. Pipestone Skelgas, 397 N.W.2d 12, 14 (Minn. App. 1986). Lynch also claims that to increase her commissions by working with new accounts, she would be required to work more weekends and evenings, which was not required with her old accounts. But “[a] good personal reason does not equate with good cause” to quit. Kehoe v. Minn. Dep’t of Econ. Sec., 568 N.W.2d 889, 891 (Minn. App. 1997) (quotation omitted). Because substantial evidence supports the ULJ’s decision, we affirm.

Affirmed.