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Rare ruling: Quitter may get unemployment

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Employees who quit their jobs usually are resigned to losing their claims for unemployment compensation benefits.

Under Minn. Stat. sec. 268.095, subd 1(1), an employee who quits without “good reason caused by the employer” generally is excluded from receiving unemployment compensation benefits.

There are a few exceptions to the tendency of the Department of Employment and Economic Development, the agency that oversees unemployment compensation benefits in Minnesota, and the tribunals reviewing DEED’s decisions of holding quitting employees statutorily ineligible for unemployment benefits. They include medical necessity, sexual harassment or other severe hostility in the workplace, and other forms of constructive discharge, such as a significant diminution in compensation or material adverse change in compensation or other working conditions.

But even in most of these instances, an employee usually is required to try to rectify the situation before renouncing a job and seeking post-employment benefits.

Unusual unemployment

But a recent ruling of the Minnesota Court of Appeals involving a quitting employee is notable for several unusual features. It held that an employee who resigned was eligible for benefits despite not attempting to mitigate the problem that caused her to quit.

The ruling by the appellate court had several unusual features for an unemployment compensation case. The court reversed a decision of an Unemployment Law Judge (ULJ) for DEED, which occurs less than 10 percent of the time at the appellate level. The employee actually won the case, which also is a rarity in Minnesota unemployment appellate jurisprudence. Moreover, the appellate court deemed the case sufficiently worthy to warrant publication, a characterization that accompanies only a handful of unemployment decisions each year in this state. Thao v. Command Center, Inc., 2012 WL 5188032 (Minn. App. Oct. 22, 2012).

The case was brought by a woman who worked for a temporary staffing company. Her duties consisted of recruiting temporary workers for a Twin Cities company that made bagels. After working 32-40 hours per week for a while, the woman’s hours were sliced in half after the bagel company canceled its contract with her for temporary employees. Shortly thereafter, when she was scheduled to work only 8-10 hours in a week, she quit without complaining to anyone about her hours being reduced. Management claimed that if she had not quit, her hours would probably have been doubled or trebled.

The former employee sought unemployment compensation benefits, which initially were granted. But a ULJ deemed her ineligible because she did not complain to the company about the reduction of hours and did not allow a reasonable opportunity to correct the problem before she quit. The appellate court reversed, beginning its analysis by noting the case law holding that “a substantial wage or hours reduction [constitutes] good reason to quit” and remain eligible for unemployment benefits.

But the issue here, as determined by the ULJ, turned on whether the employee was required to complain and try to have the problem alleviated before quitting, a matter “not yet addressed in a published opinion” by the appellate tribunal. Although common sense “tempts a conclusion” that a complaint is not necessary because management is aware of the change in working hours, the “very complicated and murky legislative history” of the statute makes “such a common-sense conclusion … overly simplistic.”

The provision that an employee complaint about any adverse working “condition” before quitting pursuant to Minn. Stat. sec. 268.095, subd. 3 (c), is “ambiguous.” The determination of ambiguity necessitated examining the legislative history, including amendments in 1999 and 2004, leading to the conclusion that the legislature never intended that an employee who experiences “significant reduction in hours” must have first complained before quitting.

Having traveled an arduous journey in its 20-page opinion, the court stopped short of granting benefits to the quitting employee. Rather, it remanded the case to determine whether the diminution of hours “were actually adverse” and, if so, whether the reduction would have caused an average, reasonable employee to quit.” These issues were sent back for resolution by the ULJ, which gives the quitting employee an opportunity to obtain what few resigning workers achieve: unemployment compensation benefits.

Unfortunate unemployment

But a pair of other employees who, like Thao, quit after reduction in their hours, were unfortunate in seeking unemployment benefits.

A production employee who was failing to meet efficiency standards quit after a supervisor cut his hours and overtime pay in Villa v. Detect Alarm, Inc., 2012 WL 5289783 (Minn. App. Oct. 29, 2012) (unpublished). His claim was rejected by a ULJ, and the appellate court affirmed because the cut in work hours and pay was attributable to a policy change by the supervisor, apparently aimed at remedying the employee’s performance problems.

Another employee who quit after reduction of his hours, coupled with change from salary to hourly pay lost his claim in Opela v. Forensic Building Science, Inc., 2012 WL 3553122 (Minn. App. Aug. 20, 2012) (unpublished). The employee, an engineer at a company in St. Paul, was denied unemployment benefits because the “unfavorable change” in his position was not substantial, and a “reasonable employee would not have walked away from the job.”

Another quitting employee was dealt a setback in seeking unemployment benefits in Wiley v. Dolphin Staffing, 2012 WL 5476134 (Minn. App. Nov. 13, 2012). Reversing a ULJ ruling, the appellate court held that a quitting employee is deemed to have resigned at the time notice of intent to quit is given to the employer.

Like the claimant in the Thao case, the employee worked for a temporary staffing company before giving two weeks’ notice of intent to quit on her 30th day of work. Her claim for unemployment benefits was rejected by a ULJ.

The date of quitting was crucial because of sec. 268.095, subd. 1(3), which allows benefits if an employee quits “within 30 days of beginning” the job because the position was “unsuitable.” Disagreeing with the ULJ, the court deemed the “time of notice” to be controlling, which fell within the 30-day provision, rather than the effective date of the resignation. Therefore, the case was remanded to determine if the employee “quit because the employment was unsuitable” because her family obligations as a single mother impeded her ability to work the required schedule.

Quitters generally do not fare well in seeking unemployment compensation benefits. These cases give a glimpse at the issues they face in navigating through the process.

Originally published in the December 17, 2012 edition of Minnesota Laywer.