Opinion
A19-0606
12-09-2019
Donald Hall, Appellant, v. City of Plainview, Respondent.
David L. Liebow, James A. Godwin, Rick A. Dold, Godwin Dold, Rochester, Minnesota (for appellant) Jana O'Leary Sullivan, League of Minnesota Cities, St. Paul, Minnesota (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn . Stat. § 480A.08, subd. 3 (2018). Affirmed
Reilly, Judge Wabasha County District Court
File No. 79-CV-18-79 David L. Liebow, James A. Godwin, Rick A. Dold, Godwin Dold, Rochester, Minnesota (for appellant) Jana O'Leary Sullivan, League of Minnesota Cities, St. Paul, Minnesota (for respondent) Considered and decided by Reilly, Presiding Judge; Bjorkman, Judge; and Cochran, Judge.
UNPUBLISHED OPINION
REILLY, Judge
This appeal arises from the dismissal of appellant Donald Hall's claims against respondent City of Plainview (Plainview) for breach of contract and violation of Minn. Stat. § 181.13(a) (2018), related to Plainview's refusal to pay Hall his accrued paid time off (PTO) following the termination of his employment. Hall argues that the district court erred by: (1) concluding that an employee handbook, which provided for payout of PTO upon separation from employment, did not create a contract; and (2) dismissing his claim for an alleged violation of Minn. Stat. § 181.13(a). We affirm.
DECISION
Under Minn. R. Civ. P. 12.02(e), a pleading may be dismissed for "failure to state a claim upon which relief can be granted." "A claim is sufficient against a motion to dismiss for failure to state a claim if it is possible on any evidence which might be produced, consistent with the pleader's theory, to grant the relief demanded." Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 603 (Minn. 2014). Whether a complaint sets forth a legally sufficient claim for relief is reviewed de novo, and the reviewing court must accept the facts alleged in the complaint as true and construe all reasonable inferences in favor of the nonmoving party. Hansen v. U.S. Bank, N.A., 934 N.W.2d 319, 325 (Minn. 2019).
I. Breach-of-contract claim
Hall challenges the district court's determination that Plainview's employee handbook is not a contract. Whether an employment handbook creates a contract is a question of law, which is reviewed de novo. Martens v. Minn. Mining & Mfg. Co., 616 N.W.2d 732, 740 (Minn. 2000).
A unilateral contract of employment may be based on provisions in an employee handbook. Pine River State Bank v. Mettille, 333 N.W.2d 622, 627 (Minn. 1983). "[A]n employee handbook may constitute terms of an employment contract if (1) the terms are definite in form; (2) the terms are communicated to the employee; (3) the offer is accepted by the employee; and (4) consideration is given." Feges v. Perkins Rests., Inc., 483 N.W.2d 701, 707 (Minn. 1992). "Whether a proposal is meant to be an offer for a unilateral contract is determined by the outward manifestations of the parties, not by their subjective intentions." Pine River, 333 N.W.2d at 626.
Here, Plainview's employee handbook provides that "[w]hen an employee ends their employment with the City, for any reason, 100% of the accrued unused personal leave time will be paid up to 500 hours, unless the employee did not give sufficient notice as required by the policy." At the time of the termination of his employment, Hall had been employed by Plainview for "nearly three decades" and accrued 1,778.73 hours of PTO. Plainview, however, refused to pay Hall his accrued PTO, claiming that Hall "was an 'at-will' employee and had no contract with the City."
Hall argues that although "the employee handbook did not alter the at-will employment relationship," this court should hold that the employee handbook constituted a unilateral contract "because the handbook is quite clear about PTO accrual and payout upon an employee's departure." We disagree. The language contained in an employee handbook "can demonstrate that an employer does not intend to create an enforceable contract." Roberts v. Brunswick Corp., 783 N.W.2d 226, 231 (Minn. App. 2010), review denied (Minn. Aug. 24, 2010). For example, "[a] disclaimer in an employment handbook that clearly expresses an employer's intent will prevent the formation of a contractual right." Id.; see Michaelson v. Minn. Mining & Mfg. Co., 474 N.W.2d 174, 180 (Minn. App. 1991) (holding that disclaimer in handbook was valid expression of employer's intentions), aff'd mem., 479 N.W.2d 58 (Minn. 1992); see also Audette v. Northeast State Bank, 436 N.W.2d 125, 127 (Minn. App. 1989) (holding that language stating that handbook "is not intended to create a contract" was "understandable" and enforceable).
In Roberts, employees filed a class action against their employer alleging that the employer's vacation policy in the company handbook created a unilateral contract and that employer breached the contract by refusing to credit employees with earned vacation pay. 783 N.W.2d at 228-29. In rejecting the employees' argument, this court referenced specific language in the employer's handbook stating that "[n]othing in this employee handbook should be construed as a contract." Id. at 231. This court concluded that because "an understandable disclaimer in a handbook that the handbook is not intended to create a contract is enforceable," the employer's "disclaimer effectively prevented the formation of a contract." Id. at 232.
Here, the introduction to Plainview's handbook provides that the "purpose of these policies is to establish a uniform and equitable system of personnel administration for employees of the City of Plainview," and that the policies "should not be construed as contract terms." And later in the introduction, the handbook states that it "is not intended to create an express or implied contract of employment between the City of Plainview and an employee." Finally, the handbook provides that its provisions "are not intended to alter the relationship between the City as an employer, and an individual employee, as being one which is 'at will', terminable by either at any time for any reason." The language contained in Plainview's employee handbook is substantially similar to disclaimer language in other cases, including Roberts, in which this court has concluded that an enforceable contract did not arise. See Roberts, 783 N.W.2d at 232, 234; see also Audette, 436 N.W.2d at 127 (holding a disclaimer contained in an employment manual sufficient to refute a claim that handbook language created a contract).
Hall argues that Roberts is distinguishable from this case because (1) Roberts "addressed an employer's vacation policy . . . rather than wages in the form of PTO," and (2) unlike in Roberts, Plainview initially "relied on the handbook as a contract" when it denied Hall's request for payment of unused PTO. But these distinctions are immaterial because the issue in Roberts, which is the same issue presented here, is whether the handbook contained a disclaimer sufficient to refute a claim that the handbook created a contract. And although Plainview initially relied on the handbook in denying Hall payment of his unused PTO, Plainview's reliance on handbook language did not transform the manual into a contract; rather, Plainview merely relied on handbook language in concluding that Hall was not eligible for payment of his unused PTO because he did not meet the required conditions.
Hall also contends that even "[i]f Roberts applies to the facts in the case at bar, it should be overruled." But we are bound by the published decisions of the court of appeals. Landmark Cmty. Bank, N.A. v. Klingelhutz, 927 N.W.2d 748, 761 (Minn. App. 2019); see State v. M.L.A., 785 N.W.2d 763, 767 (Minn. App. 2010) (stating that this court "is bound by supreme court precedent and the published opinions of the court of appeals"), review denied (Minn. Sept. 21, 2010). Like the handbook at issue in Roberts, Plainview's handbook contained a disclaimer that is sufficient to refute Hall's claim that the handbook language created a contract. The district court, therefore, did not err by dismissing Hall's breach-of-contract claim.
II. Claim for violation of Minn. Stat. § 181.13(a)
Hall also contends that the district court erred by dismissing his claim for violation of Minn. Stat. § 181.13(a). This argument raises an issue of statutory interpretation, which is a question of law that is reviewed de novo. Getz v. Peace, 934 N.W.2d 347, 353 (Minn. 2019).
This court interprets statutory language to "ascertain and effectuate" the legislature's intent. Minn. Stat. § 645.16 (2018). "If the meaning of a statute is unambiguous, the plain language of the statute controls." Wilson v. Mortg. Res. Ctr., Inc., 888 N.W.2d 452, 458 (Minn. 2016). "[A]bsent ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit." Getz, 934 N.W.2d at 354 (quotation omitted).
Minn. Stat. § 181.13(a) provides in relevant part:
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. Wages are actually earned and unpaid if the employee was not paid for all time worked at the employee's regular rate of pay or at the rate required by law, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay is greater. 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 supreme court has recognized that section 181.13(a) is "a timing statute, mandating not what an employer must pay a discharged employee, but when an employer must pay a discharged employee." Lee v. Fresenius Med. Care, Inc., 741 N.W.2d 117, 125 (Minn. 2007). "[W]ages that an employee has actually earned are defined by the employment contract between the employer and employee." Id. at 127. "To recover under the statute the employee must establish an independent, substantive legal right . . . to the particular wage claimed." Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 837 (Minn. 2012); Karlen v. Jones Lang LaSalle Americas, Inc., 766 F.3d 863, 867 (8th Cir. 2014) ("Section 181.13 only applies if an employer owes an employee unpaid wages or commissions under the employment contract."). Because Minn. Stat. § 181.13(a) provides for a civil penalty, it must be strictly construed. Lee, 741 N.W.2d at 125.
The district court determined that because "a contract does not exist, then Mr. Hall's claim for violation of Minn. Stat. § 181.13 also fails." Hall contends that this determination is erroneous because section 181.13 "does not rely on the existence of an employment contract." We disagree. Lee specifically states that "vacation wages that an employee has actually earned are defined by the employment contract between the employer and the employee and cannot be determined through a claim brought under section 181.13(a)." 741 N.W.2d at 127-28. As addressed above, the employee handbook is not an employment contract between Hall and Plainview. Because there is no employment contract between Hall and Plainview, Hall is not entitled to recover under Minn. Stat. § 181.13(a). See Lee, 741 N.W.2d at 126 (stating that earnings for unpaid PTO are "subject to the conditions specified in the employment contract"); see also Karlen, 766 F.3d at 867 ("The employment contract, not [section 181.13], determines what commissions have been earned" (quotation omitted)).
Hall also contends that Lee has been abrogated because a 2013 amendment to section 181.13(a) "[e]liminated the requirement that a contract exist." Indeed, in 2013, the legislature amended section 181.13(a) to add the following sentence:
Wages are actually earned and unpaid if the employee was not paid for all time worked at the employee's regular rate of pay or at the rate required by law, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay is greater.2013 Minn. Laws ch. 27, § 1, at 122. But as Plainview points out, Hall's argument that Lee has been abrogated was not raised below. We generally "consider only those issues that the record shows were presented and considered by the [district] court in deciding the matter before it." Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (quotation omitted). Because Hall's argument was neither presented to, nor decided by the district court, the argument is not properly before us.
Moreover, even if Hall's argument was properly before us, we would conclude that it fails on the merits. The amended language of the statute specifically states "[w]ages are actually earned and unpaid if the employee was not paid for all time worked at the employee's regular rate of pay or at the rate required by . . . contract." Minn. Stat. § 181.13(a) (emphasis added). This language is consistent with Lee and Caldas, which specifically state that "[t]o recover under [section 181.13] the employee must establish an independent, substantive legal right . . . to the particular wage claimed." Caldas, 820 N.W.2d at 837; see Lee, 741 N.W.2d at 127-28 (stating that "vacation wages that an employee has actually earned are defined by the employment contract between the employer and the employee and cannot be determined through a claim brought under section 181.13(a)"). And since the 2013 amendment to section 181.13(a), courts have continued to cite Lee and Caldas for the rule that an employee must establish an independent substantive legal right to a particular wage claimed in order to recover under section 181.13. See e.g., Karlen, 766 F.3d at 867 (citing Lee and recognizing that section 181.13 "only applies if an employer owes an employee unpaid wages or commissions under the employment contract").
Hall further argues that the legislative history related to the 2013 amendment of section 181.13 indicates that the amended version of the statute eliminated the requirement of a contract. But, at oral argument, the parties agreed that the language of section 181.13(a) is unambiguous. As such, there is no need to refer to the legislative history. See Risdall v. Brown-Wilbert, Inc., 753 N.W.2d 723, 730 (Minn. 2008) (stating that appellate courts generally do not consider legislative history when a statute is "clearly worded" (quotation omitted)).
In sum, because the handbook policy did not create a contract between Hall and Plainview, Hall is not entitled to recover accrued PTO under Minn. Stat. § 181.13(a). Accordingly, the district court did not err by granting Plainview's motion to dismiss Hall's claim for violation of section 181.13(a).
Affirmed.