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PERSPECTIVES

Quitting time: What's a 'good reason' to resign?

"Work spares us from three great evils: boredom, vice, and need."
-Voltaire, Candide (1759), p. 30

The term "Take this job and shove it," derived from a 1977 song by the recently deceased Johnny Paycheck, and the title of a forgettable 1981 movie starring Robert Hays of "Airplane" and "Airplane II" fame - has become the anthem of disgruntled employees.

Many employees feel justified in quitting their jobs. But for those who do not find other work swiftly, unemployment compensation becomes an important feature. To qualify for unemployment benefits under Minn. Stat. § 208.095 subd. 1(1), a resigning employee must have "good reason" to quit.

Unemployment compensation takes up about one-fifth of the docket of the Court of Appeals, which hears about 100 appeals per year from the Department of Economic Security. The cases rarely rise to the level of the Supreme Court and when they do they usually only involve claims of disqualifying "misconduct." (See "Misconduct matters but what does it mean?" in the February 4, 2002, edition of Minnesota Lawyer.)

Employees who quit their jobs and lost their claims for unemployment benefits usually see little reason to pursue the matter beyond the Court of Appeals level and, if they do, the Supreme Court usually sees no good reason to hear their appeals. Thus, the Court of Appeals is almost invariably the court of last resort for resigning employees who seek unemployment benefits on grounds that they had "good reason" to quit.

The "good reason" threshold is a high one, as reflected in a quartet of hotly contested recent rulings of the Minnesota Court of Appeals. In all four cases, the Court found "good reason" lacking and upheld denial of unemployment benefits to the departing employees.

Acknowledgment Angst

An employee who suffered angst from having to acknowledge, as a notary public, signatures that she did not personally observe, was denied unemployment compensation benefits after she quit her job in Kruger v. New Era Financial Group, Inc., 2003 WL 287473 (Minn. App. Feb. 11, 2003) (unpublished).

An office manager of a brokerage business, who was the only notary public in the office, regularly notarized signatures without having personally witnessed them. Those acknowledgments violated Minn. Stat. § 359.085 subd. 3, which requires that a notary public must determine "from personal knowledge or from satisfactory evidence" the legitimacy of a signature.

The notary received a number of performance-related criticisms from her boss. She then refused to acknowledge any more signatures as a notary, pointing out the illegality to her boss, who thought it was "common practice" in the brokerage industry to do so.

Due to concerns about her clerical skills, she was given a 90-day period during which she would need to improve her skills, accept a new position that would require less clerical work, or be terminated. The woman then complained that she had been sexually harassed by a co-worker, which occurred about the time that she refused to notarize a document that had not been signed in her presence. The boss later changed the company's notarization procedure, no longer requiring the office manager to notarize documents.

Three weeks later, the employee quit and sought unemployment compensation benefits on the grounds that she had "good reason" to resign. She lost at all three levels. Her application was denied on the grounds that she voluntarily quit; an unemployment compensation judge affirmed the denial and the commissioner of the Department of Economic Security agreed, upholding the denial of benefits.

The Court of Appeals affirmed, holding that the employee lacked "good reason" to quit. The company's change in its notarization policy after being informed of its illegality negated any "good reason" for the employee to quit.

While there is a "public interest in the validity of notarized documents," the record did not reflect that the office manager quit because she was "under pressure" from her employer to "notarize documents illegally." Once she informed management of her objection, she was no longer requested to notarize documents that had not been signed in her presence. Therefore, her resignation was not attributable to her "adhering to her legal and ethical obligations as a notary public."

The employee's harassment claims also were rejected because she did not assert that inappropriate conduct of coworkers and sexual comments "constituted a separate basis" for her to quit.

Salary Slashed

An employee whose salary and benefits were reduced by 15 percent was not entitled to unemployment benefits when she quit her job in DeNio v. Interchange, Inc., 2003 WL 289420 (Minn. App. Feb. 11, 2003) (unpublished).

The employee was given a large boost in pay and enhanced fringe benefits to induce her and three other employees to purchase the company. When they made an offer to do so, the owner, an elderly 83-year-old man, deemed the proposal too low and withdrew the offer to sell. The owner then slashed the employee's salary by about 10 percent and, due to economic problems; instituted an across-the-board policy requiring employees to contribute about 25 percent of the cost of some fringe benefits, and suspended paid time-off (PTO).

The employee quit, claiming a "hostile work environment," which included the pay cut, change in benefits, and "repeated inappropriate touching" by the boss. She was granted unemployment compensation benefits and later prevailed before an employment judge in an appeal by the employer. However, in a rare reversal, the commissioner overturned that decision and ruled that the employee was ineligible for benefits.

The Court of Appeals concurred, upholding the Commissioner's determination that the employee did not qualify for benefits under the "good reason" for quitting statute. While the 15 percent reduction in salary and benefits constituted sufficient grounds to qualify for unemployment benefits after quitting, the employee did not quit for that reason. The evidence reflected that the pay cut was not the basis for the employee's decision to resign.

The company-wide suspension of PTO and increase of employee contribution to fringe benefits did not constitute "good reason" to quit because those policies "were applicable to all employees," not solely the claimant. Since none of the other employees resigned because of the changes in PTO and increased fringe benefit contributions, her quitting did not satisfy the "average reasonable worker" standard to warrant a justifiable reason to cease working.

The alleged sex harassment also did not constitute "good reason" to quit. While an employer is obligated to investigate claims of sexual harassment if an employee complains, the claimant never indicated that she was offended by "physical contact" such as periodic handholding, hugging and other contact by the elderly owner. Because she did not object, the employer had no duty to investigate and, therefore, the employee lacked "good reason" to quit.

Compensation Changes

Another reduction in compensation was insufficient to constitute "good reason" to resign in Morse v. Cleary Building Corp., 2003 WL 449985 (Minn. App. Feb. 25, 2003) (unpublished).

A sales representative, whose employment agreement allowed a salary reduction for not meeting quotas, quit after his base salary was cut in half because of high expenses and low sales. As in the DeNio case, the commissioner reversed an unemployment judge's ruling in favor of the employee.

The Court of Appeals affirmed, holding that the employer was justified in reducing the salary "in accord with the unambiguous format" in the contract. The employee had been given a warning and allowed three months to meet his quota, which warranted the decrease in salary.

The Court rejected the contention that the agreement had been orally modified by a supervisor's statement that the salesman's salary would not be cut if "you're making some sales," which was too vague "to indicate an intent to modify the agreement." Because the employer "did not modify the employment agreement," the employee lacked "good reason" to quit and, thus, was ineligible for unemployment benefits.

Another employee who quit because of dissatisfaction with compensation also was denied unemployment benefits in Remstrom v. Kieger Enterprises, 2003 WL 943593 (Minn. App. March 11, 2003) (unpublished). A commercial driver, who expressed unhappiness with his compensation, resigned and then sought unemployment benefits, claiming harassment by being forced to work excessive hours.

The Department of Economic Security denied his claim, and the Court of Appeals affirmed. It reasoned that he quit because he was dissatisfied with his "rate of pay" and not excessive work hours. The driver told his boss he had another job lined up and would stay only if he was paid more. He rejected a raise and then quit without ever complaining too many hours, although he had refused "to work more hours." Therefore, his displeasure with his compensation "did not constitute good cause to quit."

These cases show the difficulty that employees have in convincing adjudicators that they have "good reason" to quit their jobs and still be entitled to receive unemployment compensation benefits. The motto of "take this job and shove it" may sound good and work in the reel world, but it does not often translate into favorable disposition of claims by employees in the real world.

Marshall H. Tanick is an attorney with the law firm of MANSFIELD, TANICK & COHEN, P.A., in Minneapolis and St. Paul. He is certified as a Civil Trial Specialist by the Minnesota State Bar Association (MSBA) and represents employers and employees in a variety of workplace related matters.