Department of Employment and Economic Development File No. 30329156-2.
Edward F. Kautzer, Ruvelson and Kautzer, Ltd., St. Paul, Minnesota (for relator).
Lee B. Nelson, Christine E. Hinrichs, Department of Employment and Economic Development, St. Paul, Minnesota (for respondent).
Considered and decided by Kirk, Presiding Judge; Kalitowski, Judge; and Chutich, Judge.
Relator Don Robinson Motors, Inc. (DRM), challenges the determination by the unemployment-law judge (ULJ) that drivers who transport used vehicles from auctions to DRM's lot are employees rather than independent contractors. Because the record lacks substantial evidence to support the ULJ's determination, we reverse.
DRM, based in St. Cloud, sells and repairs used motor vehicles purchased at auctions. Donald Robinson is president and owner of DRM. In 2012, respondent Minnesota Department of Employment and Economic Development (DEED) initiated a field audit of DRM for the 2011 tax year. The field auditor concluded that drivers who transport used vehicles purchased at auction back to DRM's lot are employees and DRM owed unemployment taxes on the drivers' wages. DRM appealed, and after a hearing the ULJ determined that the drivers are employees, not independent contractors. DRM requested reconsideration, and the ULJ affirmed its determination. This certiorari appeal followed.
"When reviewing a ULJ's decision, we may affirm the decision, remand for further proceedings, or reverse or modify the decision if the substantial rights of the relator have been prejudiced." Stassen v. Lone Mountain Truck Leasing, LLC, 814 N.W.2d 25, 29 (Minn.App. 2012) (citing Minn. Stat. § 268.105, subd. 7(d) (2012)). A relator's substantial rights "may have been prejudiced" if "the findings, inferences, conclusion, or decision" are affected by an error of law, are "unsupported by substantial evidence in view of the entire record as submitted, " or are "arbitrary or capricious." Minn. Stat. § 268.105, subd. 7(d). "Substantial evidence is (1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more than any evidence; or (5) the evidence considered in its entirety." Dourney v. CMAK Corp., 796 N.W.2d 537, 539 (Minn.App. 2011) (quoting Minn. Ctr. for Envtl. Advoacy v. Minn. Pollution Control Agency, 644 N.W.2d 457, 466 (Minn. 2002)) (quotation marks omitted).
"Whether an individual is an employee or an independent contractor is a mixed question of law and fact. We review factual findings in the light most favorable to the decision. But where the facts are not disputed, a legal question is presented. We review questions of law de novo." St. Croix Sensory Inc. v. Dep't of Emp't & Econ. Dev., 785 N.W.2d 796, 799 (Minn.App. 2010) (citations omitted).
An employee is an "individual who is performing or has performed services for an employer in employment." Minn. Stat. § 268.035, subd. 13(1) (2012). Employment includes services performed by "an individual who is considered an employee under the common law of employer-employee and not considered an independent contractor." Id., subd. 15(a)(1) (2012). Taxes are "money payments required by the Minnesota Unemployment Insurance Law to be paid into the trust fund by an employer on account of paying wages to employees in covered employment." Id., subd. 25 (2012). Compensation paid to independent contractors is not taxable under the unemployment-benefits law. Nicollet Hotel Co. v. Christgau, 230 Minn. 67, 68, 40 N.W.2d 622, 622-23 (1950). "In employment-status cases, there is no general rule that covers all situations, and each case will depend in large part upon its own particular facts." St. Croix Sensory Inc., 785 N.W.2d at 800.
When determining whether an individual is an employee or an independent contractor, five essential factors must be considered and weighed within a particular set of circumstances. Of the five essential ...