Nina Wilson, Relator v. Mortgage Resource Center, Inc., Department of Employment and Economic Development

• Court: Court of Appeals of Minnesota
• Decided: December 21, 2015
• Docket: A15-435
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A15-0435

Nina Wilson, Relator,

vs.

Mortgage Resource Center, Inc., Respondent,

Department of Employment and Economic Development, Respondent.

Filed December 21, 2015 Reversed Cleary, Chief Judge Dissenting, Johnson, Judge

Department of Employment and Economic Development File No. 32872120-4

Thomas H. Boyd, Kyle R. Kroll (certified student attorney), Winthrop & Weinstine, P.A., Minneapolis, Minnesota (for relator)

Richard W. Pins, Amy B. Conway, Stinson Leonard Street LLP, Minneapolis, Minnesota (for respondent Mortgage Resource Center, Inc.)

Lee B. Nelson, Tim Schepers, Department of Employment and Economic Development, St. Paul, Minnesota (for respondent department)

Considered and decided by Cleary, Chief Judge; Connolly, Judge; and Johnson,

Judge. UNPUBLISHED OPINION

CLEARY, Chief Judge

In this unemployment-compensation appeal, relator Nina Wilson challenges a

determination by an unemployment-law judge (ULJ) that Wilson is ineligible for

unemployment benefits because she provided false information regarding her level of

education on her employment application. Because the misrepresentation was not

material to the employment and therefore does not constitute employment misconduct,

we reverse.

FACTS

On June 6, 2014, Wilson submitted an employment application to Mortgage

Resource Center (MRC), stating that she had completed a general education development

test (GED). MRC offered Wilson the job on June 9 and on June 10 requested her

background check report from a company providing that service. On June 17, the

company returned a report stating it could not verify that Wilson had received a GED.

Wilson began employment on June 21.

The ULJ found that sometime in August 2014, MRC president Jeffrey Hoerster

learned that the background check performed when Wilson was hired could not confirm

she had a GED. On September 10, MRC sent a letter to Wilson stating that they were

unable to verify her GED and asking her to provide documentation by September 17.

Wilson never responded to this request and she was formally dismissed in a letter sent by

MRC on September 19.

2 After an evidentiary hearing, the ULJ found that the misrepresentation regarding

the GED constituted employee misconduct. The ULJ held that “Wilson intentionally

falsified her application” and the “conduct was a serious violation of the employer’s

reasonable expectations.” The ULJ concluded, “Wilson was discharged because of

employment misconduct and is ineligible for unemployment benefits.” After a request

for reconsideration, the ULJ affirmed this decision. This appeal followed.

DECISION

An employee discharged because of employment misconduct is disqualified from

receiving unemployment benefits. Minn. Stat. § 268.095, subd. 4(1) (2014).

Employment misconduct is “any intentional, negligent, or indifferent conduct, on the job

or off the job that displays clearly: (1) a serious violation of the standards of behavior the

employer has the right to reasonably expect of the employee; or (2) a substantial lack of

concern for the employment.” Minn. Stat. § 268.095, subd. 6(a) (2014). “[W]hether the

act committed by the employee constitutes employment misconduct is a question of law,

which we review de novo.” Skarhus v. Davanni’s Inc., 721 N.W.2d at 340, 344 (Minn.

App. 2006).

Misconduct committed during the hiring process is analyzed differently than

misconduct committed during employment. Icenhower v. Total Auto., Inc., 845 N.W.2d

849, 856 (Minn. App. 2014), review denied (July 15, 2014). When an employee makes a

misrepresentation on an employment application, this constitutes employment

misconduct only where the misrepresentation is material to the position sought. Indep.

3 Sch. Dist. No. 709 v. Hansen, 412 N.W.2d 320, 323 (Minn. App. 1987). “The employer

has the burden of proving that the misrepresentation constituted misconduct.” Id.

A misrepresentation during the hiring process is material if an employer would not

have hired the relator had the application been truthful. Id. This court has held that,

an employer may have good cause to discharge an employee because he falsified information on his employment application, yet may not be allowed to prevent that employee from receiving unemployment compensation benefits if the falsification is immaterial to the position obtained.

We find the reasoning requiring materiality of misrepresentation to comport with the spirit and purposes of the unemployment compensation laws, which are humanitarian in nature and whose disqualification provisions should be liberally construed in favor of allowing benefits.

Heitman v. Cronstroms Mfg., Inc., 401 N.W.2d 425, 428 (Minn. App. 1987). Thus, the

fact that the applicant made a misrepresentation is not sufficient to make it material.

Employers are reasonably entitled to expect honesty from their employees. However, a

denial of benefits requires that the underlying substance of the misrepresentation was

material. The mere existence of an application misrepresentation, even where the

employer values honesty, is not sufficient to make it material.

On appeal, the department of employment and economic development argues for a

bright-line rule, that “any misrepresentation of educational achievement is material to the

employment because an applicant’s level of education is a fundamental consideration for

employers as they weigh the credentials of each applicant.” We decline to adopt such a

rule. Whether a misrepresentation of an applicant’s education is material to the hiring

4 decision depends on the facts of each case. The Heitman court distinguished

misrepresentations sufficient to provide “good cause to discharge” with those that are

material to the position and therefore sufficient to make a relator ineligible for benefits.

Although a misrepresentation of education may justify discharge of an employee, it is not

employee misconduct per se.

It is not at all clear that, had MRC been aware Wilson did not have a GED, she

would not have been hired. The job description did not mention a requirement of a high

school degree or GED. It stated the position required a “2 or 4 year undergraduate degree

or equivalent experience” (emphasis added). Wilson was hired despite the fact that MRC

was aware that she did not have, nor claim to have, a two- or four-year undergraduate

degree. She did have, however, over two decades of experience in the financial field. At

no point during the ULJ hearing did a representative of MRC state that Wilson would not

have been hired had she truthfully reported she did not have a GED. Nor did a

representative of MRC ever state specifically why a GED would be necessary for the

position, or what role this qualification might play in fulfilling the obligations of the

position.

Based on the record, it appears that MRC discharged Wilson because she falsified

her application. The party opposing the provision of benefits has the burden of

demonstrating that the misrepresentation was material, and the respondents have not

carried this burden. Because the record is insufficient to establish that Wilson committed

material employee misconduct, the ULJ erred in ruling that Wilson was ineligible for

5 unemployment benefits. The misrepresentation for which Wilson was discharged on

September 19, 2014 did not make her ineligible for unemployment benefits.

Reversed.

6 JOHNSON, Judge (dissenting)

I respectfully dissent from the opinion of the court. The ULJ’s decision is

supported by the evidence in the agency record and is consistent with this court’s caselaw

concerning employees who are terminated for dishonesty.

The ULJ found that Wilson engaged in misconduct because her misrepresentation

on her job application, which “compromised MRC’s trust” in her, was a serious violation

of the standards of behavior that an employer has a right to reasonably expect of an

employee. See Minn. Stat. § 268.095, subd. 6(a)(1) (2014). The ULJ’s decision is

consistent with this court’s caselaw. Wilson’s conduct is similar to the misconduct of the

employee in Skarhus v. Davanni’s Inc., 721 N.W.2d 340 (Minn. App. 2006), who was

terminated because she stole four dollars’ worth of food products from her employer. See

id. at 342-44. Wilson’s conduct also is similar to the misconduct of the employee in

Frank v. Heartland Auto. Servs., Inc., 743 N.W.2d 626 (Minn. App. 2008), who was

terminated because he prepared a false invoice that charged a customer for services that

were not performed. See id. at 629. In Skarhus, we noted that the employer “could no

longer entrust” the employee with her assigned responsibilities, regardless of “the

minimal value of the stolen food.” 721 N.W.2d at 344. In Frank, we similarly noted

that, “[r]egardless of the amount or frequency of the employee’s fiduciary failing, this

sort of integrity-measuring conduct will always constitute an act that has a significant

adverse impact on the employer.” 743 N.W.2d at 631. Skarhus and Frank provide a

solid legal basis for the ULJ’s decision.

D-1 The opinion of the court does not apply Skarhus or Frank. Instead, the opinion of

the court applies caselaw that asks whether a misrepresentation on a job application is a

material misrepresentation. See Independent Sch. Dist. No. 709 v. Hansen, 412 N.W.2d

320 (Minn. App. 1987); Heitman v. Cronstroms Mfg., Inc., 401 N.W.2d 425 (Minn. App.

1987); see also Santillana v. Central Minnesota Council on Aging, 791 N.W.2d 303

(Minn. App. 2010). In none of those cases, however, did the employer express concern

about the employee’s honesty or integrity. See Santillana, 791 N.W.2d at 305-08;

Hansen, 412 N.W.2d at 321-23; Heitman, 401 N.W.2d at 426-28. Rather, in each case,

the sole question was whether the fact that was misrepresented was important to the

employee’s qualifications for the job from which the employee was terminated. See

Santillana, 791 N.W.2d at 308 (affirming finding that non-profit grant manager’s

suspected criminal conduct in prior job was material); Hansen, 412 N.W.2d at 322-23

(affirming finding that school chef’s drinking problem was not material); Heitman, 401

N.W.2d at 427-28 (reversing and remanding for finding whether welder’s prior back

injury was material). MRC, however, terminated Wilson because the company believed

that her untruthfulness on her job application revealed a lack of integrity and character.

Thus, Skarhus and Frank apply, and Heitman and Hansen do not apply.

If Heitman and Hansen were to apply, they would need to be applied in harmony

with Skarhus and Frank. Given the facts of this case, it would be necessary to recognize

that an employee’s demonstrated lack of honesty, integrity, and/or character could be

material, even if the underlying fact that was misrepresented was immaterial. In this

case, there is abundant evidence that integrity and character were material to Wilson’s

D-2 employment. MRC’s job-application form has a clear warning on the first page that

“[f]alse or misleading statements . . . on this form are grounds for . . . terminating

employment.” MRC’s offer letter expressly stated that the job offer was “contingent

upon the successful result of [a] background search.” MRC’s background-check vendor

tried to confirm that Wilson had received a GED but was unable to do so. MRC followed

up by asking Wilson to provide proof of her GED. Wilson did not provide proof of her

GED, which led to her termination. MRC’s president testified that MRC terminated

Wilson because her misrepresentation on her job application revealed “an integrity and

character issue.” MRC’s president also testified that MRC has terminated other

employees who made misrepresentations on their job applications. This evidence leads

to the conclusion that MRC genuinely and reasonably believed that Wilson’s

untruthfulness on her job application demonstrated a lack of integrity and character and

that the company considered that shortcoming to be material to her employment.

The opinion of the court implies that Heitman and Hansen apply to the exclusion

of Skarhus and Frank. If I were to accept that premise, I would conclude that the most

appropriate remedy is a remand to the agency. A remand would allow the ULJ to

consider whether the record should be reopened, make relevant findings of fact, and

make a determination that considers the issue of materiality. The pertinent question

would be whether MRC would have hired Wilson if she had truthfully represented that

she does not have either a high-school diploma or a GED. The ULJ has not yet

considered that question because Wilson (who was unrepresented in agency proceedings)

did not raise the issue, because the ULJ did not identify the issue on his own initiative,

D-3 and because MRC relied on the theory that Wilson’s demonstrated lack of integrity and

character is sufficient evidence of misconduct. The ULJ also may wish to consider the

widely held, common-sense view that a high-school education is essential to many jobs in

the modern economy, especially a job that involves frequent communications with

corporate clients in a service-oriented business. In light of the circumstances, it is

inappropriate to decide the issue of materiality in the first instance on appeal, without

evidence relevant to that issue. See Heitman, 401 N.W.2d at 428 (remanding to agency

for determination whether the fact that employee had failed to disclose on job application

was material).

For these reasons, I would affirm the decision of the ULJ.

D-4