Greg T. Kryzer, et al., Respondents,
Frederic W. Knaak, et al., Appellants.
Ramsey County District Court File No. 62-CV-12-7537
Richard A. Williams, Jr., Megan A. Spriggs, R.A. Williams Law Firm, P.A., St. Paul, Minnesota (for respondents)
Wayne B. Holstad, Holstad & Knaak, P.L.C., St. Paul, Minnesota (for appellants)
Considered and decided by Connolly, Presiding Judge; Larkin, Judge; and Cleary, Judge.
Appellants, a law firm and its owner, challenge the district court's grant of summary judgment in favor of respondents on breach-of-contract claims asserted by respondents, two attorneys who performed legal work for appellants. Appellants assert that the district court erred by determining that (1) one of the respondents was an employee and is entitled to wages owed and costs under Minn. Stat. § 181.14 (2012), despite appellants' good-faith belief that no wages were owed; and (2) the other respondent was an independent contractor and is entitled to amounts owed for services rendered, despite appellants' assertion that the right to payment was contingent on appellants being paid for that work by their clients. Because there are no material facts in dispute and the district court did not err in applying the law, we affirm.
Appellant Frederic W. Knaak is a principal of appellant law firm, Knaak & Associates (law firm). The law firm is registered as a domestic corporation and has been registered with the Minnesota Secretary of State previously as both Knaak & Kantrud P.A. and Knaak & Kryzer P.A. Knaak has, at all times, been a majority shareholder of the law firm.
Respondent Greg Kryzer began working for Knaak in 2003, while he was still in law school. After Kryzer was admitted to practice law in 2005, he became an associate attorney at the law firm. Kryzer held this position until he terminated his employment on June 25, 2010. During his time at the law firm, Kryzer was a salaried employee. As of July 1, 2009, Kryzer's salary was $62, 000 per year, payable on a monthly basis. Kryzer was typically paid on the 15th of the month for work that he did in the previous month.
The law firm did not have a formal vacation policy, but the informal policy was to grant paid time off if it worked with the court schedule and there were no scheduling conflicts. In March 2010, Kryzer notified Knaak that he would be taking a vacation from May 13 to May 19, and Knaak approved the vacation. On May 20, Kryzer interviewed for a new job and was offered the position on May 24.
Kryzer apparently intended to quit on June 25. On June 15, Knaak gave Kryzer a check that purported to cover Kryzer's pay from June 1 to June 25. But based on the law firm's payroll policy, a June 15 check should have been payment covering Kryzer's work in May. When Kryzer confronted Knaak about this discrepancy, he was informed that the June 15 check was his final check. Kryzer thereafter refused to do any more work for the law firm and, through his attorney, made a 24-hour demand for payment as compensation for 23 days of work.
Respondent Jessica Johnson began working for the law firm as a law clerk in August 2008. In October 2008, Johnson was admitted to practice law and was hired as a contract attorney at the law firm. At that time, it was agreed that the law firm would compensate Johnson at the rate of $50 per hour for each billable hour of work Johnson produced. In January 2010, Johnson informed Knaak that she would no longer provide contract services to the law firm because she was owed over $12, 000 in arrears. On March 8, 2010, Johnson received a $1, 000 check from Knaak. On April 30, 2010, Johnson sent Knaak an invoice reflecting an outstanding balance of $11, 832.
In September 2012, Kryzer and Johnson filed a complaint against Knaak and the law firm, alleging breach of contract, promissory estoppel, and unjust enrichment, and sought the payment of wages and statutory penalties. Knaak and the law firm then answered and Knaak filed a counterclaim alleging that Kryzer breached a duty of loyalty to the law firm. Kryzer and Johnson filed motions for summary judgment and sanctions. Following a hearing, the district court granted the motion for summary judgment, denied the motion for sanctions, and dismissed Knaak's counterclaim without prejudice. The district court awarded Johnson $11, 832 and awarded Kryzer $6, 454.68, which included statutory penalties of $2, 547.90 pursuant to Minn. Stat. § 181.14. Section 181.14 provides that an employer must pay an employee's earned wages within 24 hours after the demand of the ...