Lee v. Fresenius Medical Care, Inc., A05-1887.
| Decision Date | 08 August 2006 |
| Docket Number | No. A05-1887.,A05-1887. |
| Citation | 719 N.W.2d 222 |
| Parties | Susan LEE, Appellant, v. FRESENIUS MEDICAL CARE, INC., Respondent. |
| Court | Minnesota Court of Appeals |
Don L. Bye, Duluth, MN, for appellant.
Sandro M. Garofalo, Marko Mrkonich, Littler Mendolson, P.C., Minneapolis, MN, for respondent.
Considered and decided by TOUSSAINT, Chief Judge; PETERSON, Judge; and MINGE, Judge.
This appeal is from a summary judgment that appellant Susan Lee is not entitled to be paid for unused vacation time that she had earned at the time she was discharged because Lee's employment contract included a provision that an employee who is terminated for misconduct is not eligible for payment of earned but unused vacation time, and Lee was discharged for misconduct. We reverse and remand.
Appellant Susan Lee began working at the Miller-Dwan dialysis center in Duluth in 1991 and became an employee of respondent Fresenius Medical Care, Inc. in August 2000 when Miller-Dwan sold its dialysis center to Fresenius. On August 31, 2000, Lee signed an acknowledgement stating that she received a copy of the Fresenius employee handbook. The handbook states the company policy that an employee who leaves employment is eligible to be paid for earned but unused vacation time,1 if the employee gives proper notice. The handbook also states, "In addition, if your employment is terminated for misconduct, you will not be eligible for . . . payment of earned but unused [paid time off] unless required by state law."
In 2002, Fresenius terminated Lee's employment.2 Fresenius paid Lee her accumulated wages, but it did not pay her for earned but unused vacation time. Lee brought an action in conciliation court seeking compensation for 181.86 hours of vacation time that she claimed she had earned but had not used when Fresenius terminated her employment. The conciliation court awarded Lee vacation pay, and Fresenius removed the case to the district court. Fresenius moved for summary judgment, and the district court determined that under her employment contract, Lee was not entitled to be paid for her earned but unused vacation time. Based on this determination, the district court granted the motion for summary judgment. This appeal followed.
Is Lee entitled to be paid for vacation time that she had earned and had not used at the time she was discharged?
On appeal from a summary judgment, we determine whether there are any genuine issues of material fact and whether the district court erred in its application of law. Funchess v. Cecil Newman Corp., 632 N.W.2d 666, 672 (Minn.2001). We view the evidence "in the light most favorable to the party against whom summary judgment was granted and any doubts about the existence of a material fact are resolved in that party's favor." Id. Application of a statute to the undisputed facts of a case involves a question of law, and the district court's decision is not binding on this court. O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn.1996).
In Minnesota, an employer who discharges an employee is required by statute to pay the discharged employee any wages that the employee has earned. The statute provides:
When any employer employing labor within this state discharges an employee, the wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon demand of the employee. If the employee's earned wages and commissions are not paid within 24 hours after demand, whether the employment was by the day, hour, week, month, or piece or by commissions, the employer is in default. The discharged employee may charge and collect the amount of the employee's average daily earnings at the rate agreed upon in the contract of employment, for each day up to 15 days, that the employer is in default, until full payment or other settlement, satisfactory to the discharged employee, is made.
Minn.Stat. § 181.13(a) (2004).
The statute does not define "wages." But this court applied the statute in an action seeking compensation for accrued vacation time brought by employees whose employer closed its Minnesota operations and terminated their employment. Brown v. Tonka Corp., 519 N.W.2d 474, 475 (Minn.App.1994). In Brown, this court recognized that an employer's liability for employees' vacation pay is wholly contractual and determined that having received the benefit of the discharged employees' work product, the employer was obligated to pay the employees for the accrued vacation time that they had accumulated while working for the employer. Id. at 477. Based on this court's reasoning in Brown, we conclude that when used in Minn.Stat. § 181.13(a), the term "wages" includes compensation for accrued vacation time accumulated under the terms of an employment contract and that under Minn.Stat. § 181.13(a), compensation for accrued vacation time actually earned and unpaid at the time an employee is discharged must be paid in the same manner as other wages and commissions.
The district court determined that when an employer discharges an employee, the employer is obligated under Minn. Stat. § 181.13(a) to pay the employee for accrued vacation time. But the district court determined further that Fresenius was not obligated to pay Lee for accrued vacation time because an employer's liability for an employee's vacation pay is wholly contractual, and under the policy stated in the Fresenius employee handbook, an employee who is terminated for misconduct is not eligible for payment of earned but unused vacation time. The district court determined that the policy stated in the employee handbook was a part of the employment contract between Fresenius and Lee, and, therefore, because Lee was discharged for misconduct, she was not entitled to be paid for her unused vacation time under the terms of her contract.
Although it is generally true that an employer's liability for an employee's vacation pay is wholly contractual, the district court's conclusion that Lee was not entitled to be paid for her unused vacation time under the terms of her contract fails to recognize the principle that "[a] party cannot provide by contract what is prohibited by statute." Winnetka Partners Ltd. P'ship v. County of Hennepin, 538 N.W.2d 912, 914 (Minn.1995). In Winnetka Partners, the owner of an apartment complex, in exchange for tax-increment financing, entered into a minimum-assessment agreement with a local housing and redevelopment authority (HRA). Id. at 913. The agreement set the minimum market value of the apartment complex at $6,000,000 and provided that this amount would increase by a specified annual percentage rate. Id. The county assessor certified this value, as required by state statute. Id. Several years later, the owner and the HRA entered into an addendum to the original minimum-assessment agreement, which reduced the minimum market value of the property and stated in paragraph 2 that "`[t]his agreement shall be effective as of January 1, 1991 for taxes payable calendar year 1992 and thereafter.'" Id. (alteration in original). The county assessor signed a certification statement for the addendum on June 1, 1993, which stated, "`[n]otwithstanding the language contained in paragraph 2 of the Addendum to Assessment Agreement, this Addendum shall be effective as of the date this Certificate is signed by the County Assessor for the purposes of determining the subject...
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Lee v. Fresenius Medical Care, Inc., A05-1887.
...Lee appealed the district court's order to the court of appeals, which reversed the district court. Lee v. Fresenius Med. Care, Inc., 719 N.W.2d 222, 223 (Minn. App.2006). The court of appeals noted that under section 181.13(a), an employer must compensate a terminated employee for wages ea......