Kollross v. REC, Inc., No. A05-1898 (Minn. App. 9/19/2006)

• Decision Date: 19 September 2006
• Docket Number: No. A05-1972.,No. A05-1898.,No. A05-1943.,No. A05-1944.,A05-1898.,A05-1972.,A05-1943.,A05-1944.
• Citation: Kollross v. REC, Inc., No. A05-1898 (Minn. App. 9/19/2006), No. A05-1898., No. A05-1943., No. A05-1944. (Minn. App. Sep 19, 2006)
• Parties: Vicki L. Kollross, Relator (A05-1898, A05-1972), Respondent (A05-1943, A05-1944), v. REC, Inc., Respondent (A05-1898), Relator (A05-1943), Minnstar Builders, Inc., Relator (A05-1944), Respondent (A05-1972), Department of Employment and Economic Development, Respondent.
• Court: Minnesota Court of Appeals

Page 1

Unpublished Opinion

Vicki L. Kollross, Relator (A05-1898, A05-1972), Respondent (A05-1943, A05-1944), v. REC, Inc., Respondent (A05-1898), Relator (A05-1943) Minnstar Builders, Inc., Relator (A05-1944), Respondent (A05-1972) Department of Employment and Economic Development, Respondent.

No. A05-1898.

No. A05-1972.

No. A05-1943.

No. A05-1944.

Court of Appeals of Minnesota.

Filed September 19, 2006.

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).

Appeal from the Department of Employment and Economic Development, File Nos. 5307 05; 5308 05; 6863 05; 6864 05.

Vicki L. Kollross, (pro se relator)

Thomas A. Harder, Rebecka A. VanderWerf, Foley & Mansfield, (for respondents REC, Inc. and Minnstar)

Linda A. Holmes, Department of Employment and Economic Development, (for respondent Department of Employment and Economic Development)

Considered and decided by Dietzen, Presiding Judge; Peterson, Judge; and Klaphake, Judge.

UNPUBLISHED OPINION

PETERSON, Judge

In these consolidated appeals, REC, Inc. and Minnstar Builders, Inc. challenge a senior unemployment review judge's (SURJ) decision that services performed for them by Vicki Kollross were in covered employment for unemployment tax and benefit purposes, and Kollross challenges the SURJ's decision that she quit her employment at REC, Inc. and Minnstar Builders, Inc. We affirm.

FACTS

In 1975, Vicki Kollross began working for her brother-in-law, Ron Clark (Clark). Clark is married to Kollross's sister, Sandy Clark (Sandy). Clark testified that in 1978, Sandy started an interior-decorating business and registered its name, Image Interiors, with the state. Sandy also opened a checking account for Image Interiors. After a few transactions, Sandy lost interest in decorating. Clark testified that Sandy asked Kollross if she would be interested in doing interior decorating, and from 1978 until December 2003, Kollross worked as a decorator for REC, Inc. and Minnstar Builders, Inc. (collectively "RCC").¹ About seven months after opening the checking account for Image Interiors, Sandy gave the checkbook to Kollross. By 1980, Sandy was not involved with Image Interiors.² Kollross testified that she was the primary person operating Image Interiors, she had authority to take money from the Image Interiors account, she did not have an ownership interest in Image Interiors, and the Clarks were the owners. Kollross also testified that she realized from day one that the Clarks considered her to be an independent contractor.

Kollross testified that although she had authority to take money from the Image Interiors account, she routinely signed Sandy's name on checks. Kollross stated that she would sometimes sign her own name on Image Interiors checks "by accident" or when she was signing in front of someone who knew her, and when she signed her own name, the bank would call Sandy, and Sandy would tell her not to sign her own name.³ Sandy testified that she was aware that Kollross was signing Sandy's name on Image Interiors checks and that Kollross had been doing so "forever." A bank employee testified that Kollross's name was added to the Image Interiors checking account in 1988, but Kollross denied knowing that her name had been added to the account, and neither of the Clarks testified that Kollross's name was added to the account.

The address on Image Interiors letterhead was the Clarks' home address, and the telephone number was Kollross's home number. RCC provided Kollross with a desk and a telephone in its office. Kollross also conducted business from her home and at suppliers' showrooms. Kollross did not advertise her services and had no business-telephone listing of her own.

Kollross was paid when she submitted invoices to RCC. A $25-per-hour pay rate was established early during her relationship with RCC. A letter to RCC's vice president, Cindy Volkart, states that Kollross did not add a profit to carpets, pads, labor, or furnishings provided to RCC.

In early 2002, the professional relationship between Kollross and Volkart deteriorated to the point where they would not talk to each other. The personal relationships among the Clarks and Kollross and her husband also deteriorated. In 2002, Kollross stopped providing services to RCC through Image Interiors and began personally providing services to RCC. Kollross testified that Clark requested that she stop providing services through Image Interiors for tax reasons. Clark testified that Kollross wanted to shutdown Image Interiors so that she could start a company in Wisconsin called Image Interior Lines and that she informed him that she would use her own name on invoices to RCC.

In April 2002, Kollross's husband sent Sandy a letter stating that Kollross was going to quit and that they were going to move to their house in Wisconsin and try another venture. But Kollross continued to work at RCC, and the strained relationship between Kollross and RCC management, especially Volkart, continued until December 9, 2003, when Kollross and Volkart met for lunch. The original purpose of the meeting was for Kollross and Volkart to discuss the scope of Kollross's work. Kollross and Volkart gave very different accounts of the meeting,⁴ but both agreed that nothing was accomplished and Volkart ended up leaving the meeting early.

The next day, Volkart left on Kollross's desk a document that described the scope of Kollross's work for RCC. The document listed addresses of five model homes that needed decorating and contained details regarding model furnishings, payment terms, and future projects. Kollross testified that the document she received was very different from the document that was introduced at the hearing before the unemployment law judge (ULJ). Kollross claimed that the document she received listed only one job duty, moving furniture. Kollross's husband testified that he saw the document limiting Kollross's duties to moving furniture, but he threw it away.

Along with the scope-of-work document, Volkart left a note stating: "If you are interested in doing this, please let me know. Would you also please confirm your hourly rate to do this type of work. I do need to know by Friday, December 12. If I do not hear by then we'll pursue other resources." Kollross did not contact Volkart or the Clarks about any further work.

Kollross applied for unemployment benefits, and the Department of Employment and Economic Development (DEED) determined that she was an employee of RCC and had quit her employment without good cause. RCC appealed the determination that Kollross was an employee, and Kollross appealed the determination that she quit without good cause. A hearing was held before a ULJ, and on May 31, 2005, the ULJ affirmed the initial determinations. Both RCC and Kollross sought further review, and a SURJ affirmed the ULJ's determinations. This certiorari appeal from the SURJ's decision followed.

DECISION

On certiorari appeal, a reviewing court examines the decision of the SURJ, rather than the decision of the ULJ.⁵ Kalberg v. Park & Recreation Bd., 563 N.W.2d 275, 276 (Minn. App. 1997). Review of the SURJ's decision is very narrow. Whitehead v. Moonlight Nursing Care, Inc., 529 N.W.2d 350, 352 (Minn. App. 1995). An appellate court reviews the SURJ's factual findings in the light most favorable to the SURJ's decision and "will not disturb them as long as there is evidence that reasonably tends to sustain those findings." Schmidgall v. FilmTec Corp., 644 N.W.2d 801, 804 (Minn. 2002). "When the parties have presented conflicting evidence on the record, this court must defer to the [SURJ's] ability to weigh the evidence; we may not weigh that evidence on review." Whitehead, 529 N.W.2d at 352. A reviewing court exercises its independent judgment with respect to questions of law. Ress v. Abbott Nw. Hosp., Inc., 448 N.W.2d 519, 523 (Minn. 1989).

1. Employment Status

RCC argues that the SURJ's conclusion that Kollross was an employee is seriously flawed because the decision does not address the ownership and control of Image Interiors. RCC contends that if Kollross ran Image Interiors in an independent manner as her own business, she was an independent contractor and not an employee. But the primary issue before the SURJ was not, as RCC contends, who owned and controlled Image Interiors. Even if Kollross owned and completely controlled Image Interiors, that fact does not demonstrate that she was an independent contractor. Image Interiors was simply a business name; it was not a separate legal entity. Providing services and receiving payment under a business name does not, by itself, establish an independent-contractor status.

Whether a worker is an independent contractor or an employee is a mixed question of law and fact. Blue & White Taxi v. Carlson, 496 N.W.2d 826, 828 (Minn. App. 1993). We apply a two-step analysis when reviewing an agency's determination of a worker's employment status. Neve v. Austin Daily Herald, 552 N.W.2d 45, 47 (Minn. App. 1996). First, if the facts are disputed, we determine whether the evidence reasonably tends to support the SURJ's findings of fact. Id. Although our deference is not without limit, appellate courts view the findings in the light most favorable to the SURJ's decision. Id. Next, we apply the law to the facts to determine whether an employment relationship existed. Id. at 48. Whether an employment relationship exists is a legal issue. Id. at 47 (quoting Hunter v. Crawford Door Sales, 501 N.W.2d 623, 624 (Minn. 1993)). We are not bound by the SURJ's conclusions of law. Ress, 448 N.W.2d at 523.

The five essential factors used to determine whether an individual is an employee or an independent contractor are: (1) the right to control the means and manner of performance; (2) the right to discharge the worker without incurring liability; (3) the mode of payment; (4) the furnishing of materials and tools; and (5) the...