Opinion
No. A04-1252.
Filed April 26, 2005.
Appeal from the Minnesota Department of Employment and Economic Development, File No. 2666 04.
Vincent J. Ella, Ryan M. Pacyga, Mansfield, Tanick Cohen, P.A., (for relator).
Phillip R. Krass, Benjamin J. Court; Krass, Monroe, P.A., (for employer North Prairie Tileworks).
Lee B. Nelson, Linda A. Holmes, Department of Employment and Economic Development, (for respondent Commissioner).
Considered and decided by Minge, Presiding Judge; Randall, Judge; and Wright, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Relator challenges the decision of the commissioner's representative that he is disqualified from receiving unemployment benefits because he committed employment misconduct. We affirm.
FACTS
Relator Philip Raskin formerly owned the business S P Tileworks, Inc., d/b/a North Prairie Tileworks (S P). In late June 2003, Raskin sold S P to Roger Mayland and Cutting Edge Tile, Inc., who formed the new corporation North Prairie Tileworks, Inc. (North Prairie). The parties agree that the sale was finalized in late June or early July 2003. On June 24, 2003, North Prairie hired Raskin as a studio manager and senior designer. Raskin remained an officer and minority shareholder of North Prairie.
After the sale, North Prairie continued to conduct business through the S P checking account, on which Raskin was the sole signatory. North Prairie deposited receivables, including automatic credit-card payments, into this account and paid business expenses, including its payroll, out of the account. Sometime between June and October, North Prairie opened its own business checking account, on which Raskin also was a signatory.
On September 19, 2003, Raskin accompanied North Prairie's president, Roger Mayland, to Chicago for a trade show. Raskin incurred business expenses totaling $481.35. When he arrived home, Raskin submitted a copy of his credit-card statement for reimbursement of his business expenses. Mayland refused to reimburse Raskin because Raskin failed to follow "regular business procedures" for reviewing and approving payables. The corporate officers agreed that most of Raskin's expenses were reimbursable, but they requested that Raskin bring receipts documenting his expenses to the weekly officers' meeting. Raskin failed to do so. On October 14, 2003, Raskin e-mailed the board of directors and threatened to stop attending trade shows if he could no longer be reimbursed.
On October 30, 2003, Raskin was directed to consolidate North Prairie's two business accounts by transferring the balance from the S P account to the North Prairie account. Rather than transferring the entire balance, Raskin wrote himself a check for $1,042.38 on the S P account and transferred the remaining funds, approximately $4,314.12, to the North Prairie account. In early November, when North Prairie's chief financial officer discovered the $1,042.38 withdrawal and confronted Raskin, Raskin said that he had reimbursed himself for business expenses. Raskin later stated that, from his consultation with an attorney, he learned that he was entitled to the $1,042.38 because this amount was in the S P account prior to the sale. Raskin subsequently refunded North Prairie $1,045; and the parties' ownership of these funds remains in dispute.
During an inspection of the North Prairie account for other suspicious activity, the chief financial officer discovered that Raskin had made an electronic transfer of $403.40 from the North Prairie account to his personal credit-card account on October 16, 2003. Raskin admitted transferring the money to reimburse himself for his Chicago business expenses. On November 11, 2003, Raskin was discharged for making two unauthorized withdrawals from the business accounts.
Raskin applied for unemployment benefits. The Department of Employment and Economic Development determined that Raskin was disqualified from receiving benefits because he was discharged for employment misconduct. Raskin appealed, and an unemployment law judge reversed, concluding that, because Raskin believed in good faith that he was entitled to the $1,042.38 and North Prairie had no set procedure for reimbursement of business expenses, Raskin did not commit employment misconduct by withdrawing funds from the business accounts. North Prairie appealed the decision to the commissioner's representative, who reversed. Finding that Raskin (1) withdrew funds from the employer's business accounts without consulting officials at North Prairie about what funds were his; and (2) reimbursed himself for business expenses without prior authorization, the commissioner's representative determined that Raskin was discharged for employment misconduct. This certiorari appeal followed.
North Prairie originally filed a brief contesting Raskin's claim for unemployment benefits. Based on a subsequent settlement between Raskin and North Prairie in an unrelated matter, North Prairie withdrew its opposition to Raskin's appeal.
DECISION
We review the findings of the commissioner's representative rather than those of the unemployment law judge. Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995). In doing so, we view the factual findings in the light most favorable to the decision, Lolling v. Midwest Patrol, 545 N.W.2d 372, 377 (Minn. 1996), giving deference to the credibility determinations made by the commissioner's representative, Jenson v. Dep't of Econ. Sec., 617 N.W.2d 627, 631 (Minn.App. 2000), review denied (Minn. Dec. 20, 2000). When the evidence reasonably sustains the findings of the commissioner's representative, the findings will not be disturbed. Ress v. Abbott Northwestern Hosp., Inc., 448 N.W.2d 519, 523 (Minn. 1989).
Whether an employee committed employment misconduct is a mixed question of fact and law. Schmidgall v. FilmTec Corp., 644 N.W.2d 801, 804 (Minn. 2002). Whether the employee committed a particular act is a question of fact. Scheunemann v. Radisson S. Hotel, 562 N.W.2d 32, 34 (Minn.App. 1997). But whether the act constitutes employment misconduct is a question of law, which we review de novo. Id.
An employee who is discharged for employment misconduct is disqualified from receiving unemployment benefits. Minn. Stat. § 268.095, subd. 4 (Supp. 2003). Employment misconduct is "any intentional, negligent, or indifferent conduct, on the job or off the job (1) that evinces a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee, or (2) that demonstrates a substantial lack of concern for the employment." Id., subd. 6(a) (Supp. 2003). But "[i]nefficiency, inadvertence, simple unsatisfactory conduct, . . . a single incident that does not have a significant adverse impact on the employer, . . . good faith errors in judgment if judgment was required . . . are not employment misconduct." Id. Subdivision 6(a) admonishes those administering the statute to recognize that employees cannot be held to a standard of perfection. Cf. Risk v. Eastside Beverage, 664 N.W.2d 16, 21 (Minn.App. 2003) (interpreting similar language in 2002 statute).
The revisor of statutes inadvertently substituted the term "ineligible for" for the term "disqualified from" in Minn. Stat. § 268.095, subds. 1, 4, 7, 8(a) (Supp. 2003). See Minn. Stat. § 268.095, subds. 1, 4, 7, 8(a) (2002) (using term "disqualified from"); 2003 Minn. Laws 1st Spec. Sess. ch. 3, art. 2, § 11 (making other changes to Minn. Stat. § 268.095, subd. 1, but retaining term "disqualified from"); 2003 Minn. Laws 1st Spec. Sess. ch. 3, art. 2, § 20(j), (k) (directing revisor to change the term "disqualified from" to "ineligible for" only in Minn. Stat. § 268.095, subd. 12, and then to renumber to Minn. Stat. § 268.085, subd. 13b).
Although an employer cannot expect perfection from its employees, an employer has the right to expect that its employees will abide by reasonable instructions and directions. McGowan v. Executive Express Transp. Enters., Inc., 420 N.W.2d 592, 596 (Minn. 1988); Vargas v. Northwest Area Found, 673 N.W.2d 200, 206 (Minn.App. 2004), review denied (Minn. Mar. 30, 2004). When an employer makes a reasonable request that does not impose an unreasonable burden on the employee, an employee's refusal to comply with the request constitutes employment misconduct. Vargas, 673 N.W.2d at 206; Sandstrom v. Douglas Mach. Corp., 372 N.W.2d 89, 91 (Minn.App. 1985).
A knowing violation of an employer's directives, policies, or procedures also constitutes employment misconduct because it demonstrates a substantial lack of concern for the employer's interests. See, e.g., Schmidgall, 644 N.W.2d at 804; Gilkeson v. Indus. Parts Serv., Inc., 383 N.W.2d 448, 452 (Minn.App. 1986) (finding misconduct when employee engaged in pattern of failing to follow policies and procedures and ignoring directions and requests). An employer has the right to expect scrupulous adherence to its directives and procedures when an employee is handling the employer's money. McDonald v. PDQ, 341 N.W.2d 892, 893 (Minn.App. 1984).
I.
We first consider Raskin's withdrawal of $1,042.38 from the S P account. Raskin argues that the record does not support the conclusion that he committed employment misconduct because he withdrew only money that belonged to him. Raskin's argument is unavailing for several reasons. First, the record demonstrates that Raskin withdrew funds without his employer's authorization from an account either owned or used by North Prairie for conducting business transactions. Simply because Raskin had the authority to write checks from the S P account did not permit him to write a check to himself for nonbusiness purposes. North Prairie deposited money received from customers and paid its employees out of this account. North Prairie had the right to expect that an employee with signatory authority on its business accounts would not abuse such access by withdrawing funds for personal use without notice, an accounting of the funds, and preauthorization by North Prairie.
Even if Raskin genuinely believed that he was lawfully entitled to funds in the S P account, North Prairie had the right to reasonably expect Raskin to consult with the owners and reach an agreement as to which funds in the account belonged to him. Although Raskin testified that he had access to financial records and, therefore, was able to distinguish between the amount in the account that was his and that which belonged to North Prairie, a reasonable employer has the right to expect that its employee would not take the initiative to make this determination and withdraw funds without any prior discussion. See Minn. Stat. § 268.095, subd. 6(a)(1) (defining employment misconduct as "any intentional, negligent, or indifferent conduct . . . that evinces a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee").
Secondly, the record demonstrates that Raskin wrote himself a check on the S P account in violation of North Prairie's specific directive. North Prairie directed Raskin to consolidate the two business accounts by transferring the balance from the S P account to the North Prairie account. Instead, Raskin wrote a check to himself and transferred only the remaining balance to the second account. Demonstrating a substantial lack of concern for the employment, Raskin's failure to follow North Prairie's instructions constitutes employment misconduct. See id., subd. 6(a)(2) (defining employment misconduct as conduct demonstrating" a substantial lack of concern for the employment"); Vargas, 673 N.W.2d 200, 206.
Moreover, Raskin's claim that he was entitled to the $1,042.38 because that amount was not transferred to the new owners with the sale of the business is not compelled by the record. Although Raskin now advances this contention on appeal, he originally told North Prairie that the funds were withdrawn to reimburse himself for business expenses. These contradictory explanations support the conclusion that Raskin was not acting in good faith. Rather, he was appropriating North Prairie's funds.
In sum, Raskin's unauthorized withdrawal of $1,042.38 constitutes a serious violation of the standards of behavior that an employer has the right to expect from an employee and demonstrates a substantial lack of concern for his employment. Accordingly, the commissioner's representative did not err in concluding that Raskin engaged in employment misconduct.
II.
We next consider Raskin's withdrawal of $403.40. Raskin argues that this alleged reimbursement for business expenses did not constitute employment misconduct because North Prairie did not have a specific policy in place for reimbursement of business expenses and North Prairie's president admitted that Raskin's expenses were reimbursable. We disagree.
Although North Prairie did not have a written policy for reimbursement, the record demonstrates that it had set procedures for handling payables. The president, treasurer, Raskin, and the secretary of the corporation met weekly to discuss payables, including reimbursements. In order for the company to compute the payables accurately, Raskin was required to document his business expenses with receipts describing the nature of the expenditure rather than a credit-card statement, which states only when expenses were incurred. Because a credit-card statement typically lacks sufficient detail to determine whether an expense constitutes a business expenditure, the receipt requirement was a reasonable request.
After his credit-card statement was rejected as inadequate documentation, Raskin failed to provide receipts documenting his business expenses. Raskin's e-mail to the board of directors, in which he threatened to stop attending trade shows if North Prairie refused to reimburse him, establishes his knowledge that the company's authorization was necessary for reimbursement. Raskin, however, circumvented company procedure and, on his own initiative, reimbursed himself by transferring money from North Prairie's account to pay his credit-card debt. Raskin's actions demonstrated a substantial lack of concern for his employment, thereby constituting employment misconduct.
As the commissioner's representative noted, North Prairie had a right to expect "scrupulous adherence to procedure" by an employee when dealing with an employer's money. See McDonald, 341 N.W.2d at 893. The willingness of North Prairie's president to reimburse Raskin for properly documented business expenses does not suggest that Raskin was justified in reimbursing himself under the circumstances present here. When viewed in the light most favorable to the decision, Raskin's choice to reimburse himself without notifying and receiving authorization from North Prairie demonstrates a disregard for his employment and constitutes a serious violation of the standards of behavior that an employer has a right to expect. See Schmidgall, 644 N.W.2d at 804 (noting that a knowing violation of employer's procedures constitutes misconduct because it demonstrates substantial lack of concern for employer's interests).
Relying on an unpublished opinion, Zeno v. Turning Point, Inc., No. A03-1246, 2004 WL 1152751 (Minn.App. May 25, 2004), Raskin argues that, because he returned $1,045 to North Prairie, his actions cannot constitute employment misconduct. But Zeno is plainly inapposite. In Zeno, an employee accepted $2 from his clients for gas money when the employee handbook clearly prohibited employees from accepting client gifts. Because the employee returned the money as soon as he learned that he had violated his employer's policies, we determined that this "isolated incident" was not employment misconduct, but rather an unintentional and careless error. Id. at *4.
Unpublished opinions lack precedential authority in deciding appeals. Minn. Stat. § 480A.08, subd. 3(c) (2004); Dynamic Air, Inc. v. Bloch, 502 N.W.2d 796, 800-01 (Minn.App. 1993) (addressing dangers of miscitation and unfairness associated with use of unpublished opinions and stating that "[t]he legislature has unequivocally provided that unpublished opinions are not precedential").
In contrast, Raskin's unauthorized payments to himself of nearly $1,500 were neither isolated, minimal, nor unintentional failures to follow his employer's directives. Accordingly, the commissioner's representative did not err in concluding that Raskin committed employment misconduct.