Amy Stevens, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1165

Amy Stevens,
Respondent,

vs.

Smart Parts Automotive, Inc.,
Relator,

Department of Employment and Economic Development,
Respondent.

Filed March 27, 2017
Affirmed
Rodenberg, Judge

Department of Employment and Economic Development
File No. 34358019-3

Amy Stevens, Rosemount, Minnesota (pro se respondent)

Brandon M. Schwartz, Michael D. Schwartz, Schwartz Law Firm, Oakdale, Minnesota (for
relator)

Keri A. Phillips, Lee B. Nelson, Department of Employment and Economic Development,
St. Paul, Minnesota (for respondent department)

Considered and decided by Cleary, Ch ief Judge; Ross, Judge; and Rodenberg,
Judge.

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U N P U B L I S H E D O P I N I O N
RODENBERG, Judge
Relator challenges a determination by an unemployment law judge (ULJ) that
respondent sales representative was an empl oyee, and not an independent contractor.
Relator also challenges the ULJ’s decisi on not to order an a dditional hearing on
reconsideration. We affirm.
FACTS
Relator Smart Parts Automotive, Inc., is an auto-parts distribution company, owned
by Dillon Saxhaug, and operated from Saxhaug’s home. Relator adve rtises parts on a
website, and customers call relator’s telephone number to place orders and make purchases.
Pro se respondent Amy Stevens was hired by relator in September 2014 to answer calls
concerning sales, customer service, and warranty issues.
In December 2015, relator terminated Stevens’s employment. Stevens applied for
unemployment-insurance benefits. Resp ondent Department of Employment and
Economic Development (DEED) determined that Stevens wa s eligible for benefits.
Relator appealed, and an evid entiary hearing was held befo re a ULJ. Following the
hearing, the record was left open for additional written submissions, and both Stevens and
relator submitted additional documents.
The ULJ found that Stevens initially worked at Saxhaug’s home, where she was
trained by Saxhaug about the merchandise, how she should answer the phones, and how
she should conduct sale s calls. The parties had no writ ten contract. Stevens’s pay was
entirely commission-based. Stevens used her own cellular phone to take calls. She was

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required to purchase a new cellular phone in order to accommodate relator’s call-
forwarding system. Relator did not provide any materials or tools except for the use of the
company’s call-forwarding sy stem. In the spring of 201 5, Stevens and a second
salesperson created a schedule for when each would be primarily responsible to take sales
calls. If the first person did not answer, the call would be forwarded to the second
salesperson. Saxhaug expected the calls to be answered at all times. Stevens was
terminated when she was unava ilable to go to Saxhaug’s hom e to help with a business-
related project. The ULJ concluded that St evens had been relator’s employee and was
eligible for benefits.
Relator requested reconsideration of the determination of employment, and
submitted additional affidavits supporting its contention that Stevens was an independent
contractor and that she had testified falsely during the hearing. The ULJ affirmed the initial
decision without ordering an additional evidentiary hearing.
This certiorari appeal followed.
D E C I S I O N
I. Employee or independent contractor
“Whether an individual is an employee or an independent contractor is a mixed
question of law and fact.” St. Croix Sensory Inc. v. Dep’t of Emp’t & Econ. Dev. , 785
N.W.2d 796, 799 (Minn. App. 2010). We review a ULJ’s factual findings in the light most
favorable to the decision, and we will not disturb those findings if there is “evidence in the
record that reasonably tends to sustain them.” Wilson v. Mortg. Res. Ctr., Inc., 888 N.W.2d
452, 460 (Minn. 2016) (quotation omitted). Whether an employment relationship exists is

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a legal question. Neve v. Austin Daily Herald, 552 N.W.2d 45, 48 (Minn. App. 1996). We
therefore review the legal question de novo. Stagg v. Vintage Place Inc., 796 N.W.2d 312,
315 (Minn. 2011). On review, we may reve rse or modify the ULJ’s decision if the
substantial rights of the relator have been prejudiced by findings or conclusions that are
unsupported by substantial evidence in the re cord. Minn. Stat. § 26 8.105, subd. 7(d)(5)
(2016).
We consider five factors to decide whet her an individual is an employee or an
independent contractor: (A) which party has the right (or lack of right) to control the means
and manner of performance; (B) the right of the employer to discharge the worker without
incurring liability for damages;1 (C) the mode of payment; (D) the furnishing of materials
or tools; and (E) the control of the premises where the services are completed. Minn. R.
3315.0555, subp. 1 (2015 & Supp. 2016); St. Croix Sensory Inc. , 785 N.W.2d at 800.
While we consider the totality of the circum stances, the right to control the means and
manner of performance and the right to disc harge without incurring liability are the two
most important factors. Moore Assocs., LLC v. Comm’r of Econ. Sec. , 545 N.W.2d 389,
393 (Minn. App. 1996); Minn. R. 3315.0555, subp. 1.

1 After relator petitioned for a writ of certiora ri, Minnesota Rule 3315.055, subpart 1(B),
was modified to state: “the right to di scharge the worker with out incurring liability for
damages.” Minn. R. 3315.055, subp. 1(B) (Supp. 2016) (emphasis added); see 2016 Minn.
Laws ch. 189, art. 10, § 7(a) at 1040. The ULJ us ed the 2015 standard : “the right to
discharge the worker with out incurring liability.” See Minn. R. 3315.0 555 subp. 1(B)
(2015).

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Relator argues that the five factors weigh in favor of a finding that Stevens was an
independent contractor of relator. The ULJ made express findings concerning all five
factors.
Right to control the means and manner of performance
Control is defined as the “power to instru ct, direct, or regulate the activities of an
individual whether or not the power is exerci sed.” Minn. R. 3315.0501, subp. 2 (2015).
“The determinative right of control is not merely over what is to be done, but primarily
over how it is to be done.” St. Croix Sensory Inc., 785 N.W.2d at 800 (quotation omitted).
Stevens testified and provided written statements that relator trained her concerning
merchandise being sold and how to conduct calls. The ULJ found her testimony credible.
Stevens testified that she was not free to pr ovide certain services to customers without
receiving relator’s permission. While Stevens may have been able to complete some of
her duties independently, the degree of relator’s involvement with how and when Stevens
should take calls, as well as relator’s requirement that Stevens receive permission in order
to take certain actions, indicates a right to control. We agree with the ULJ’s determination
that this factor favors a finding of employment.
Right to discharge without incurring liability
Generally, “an employer may terminate an employee for any reason or for no
reason.” Kratzer v. Welsh Cos., 771 N.W.2d 14, 18 n.7 (Minn. 2009). An agreement with
an independent contractor typically cannot be terminated without liability if the contractor
is fulfilling the terms of the contract. St. Croix Sensory Inc., 785 N.W.2d at 803.

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The ULJ found that, af ter termination, relator would only be liable to Stevens for
commission on sales already completed. The re cord supports this fi nding. Relator cites
St. Croix Sensory Inc. for the proposition that, because re lator was still obligated to pay
Stevens for commissions owed, this factor favors a findi ng of independent-contractor
status. Relator misreads St. Croix Sensory Inc. , which involved an obligation to pay for
work not completed at the time of termination. Id. at 804. Here, relator only owed Stevens
for sales actually completed at the time of termination. Stevens makes no claim that relator
owes her more than commissions already earned. We agree with the ULJ’s determination
that this factor favors a finding of employment.
Mode of payment
Relator argues that this factor favors an independent-contract or status because
Stevens was paid straight commissions and payments were not characterized as wages for
tax-reporting purposes. Worker responsibility for ta x obligations may be indicative of
independent-contractor status. See id. (examining tax-liability obligations). But payment
based solely on commission is also present in employer-employee relationships. See State
by Spannaus v. Mecca Enters., Inc. , 262 N.W.2d 152, 154-55 (M inn. 1977) (recognizing
an employer-employee relationship where em ployees were paid solely on commission);
Boland v. Morrill , 270 Minn. 86, 93, 132 N.W.2d 7 11, 716 (1965) (recognizing an
employer-employee relationship where salesman was paid on commission). We agree with
the ULJ that this factor is neutral.

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Furnishing of materials or tools
On appeal, respondent DEED concedes that the furnishing of tools or materials does
not favor a finding of employment in this ca se, because it is undisputed that Stevens
provided her own phone, computer, and printer without reimbursement from relator. We
agree. This factor suggests independent-contractor status.
Control of premises
As to the control of the premises wher e work was to be performed, the business
operated from Saxhaug’s home. Stevens was expected to be physically present “at work”
on some occasions, as indicated by her termina tion for declining to meet with Saxhaug at
his home. There is evidence in the record that respondent spent the early months of her
employment working from Saxhaug’s home, but wa s later able to take phone calls from
various locations. Weighing the conflicti ng evidence concerning the amount of work
Stevens was required to perform from Saxha ug’s home against the finding that Stevens
was terminated because she was not physically present for a work-related project, the ULJ
concluded that this factor weighed in favor a finding of employment. The record supports
the ULJ’s conclusion.
Balance of the factors
The two most important factors favor a fi nding of employment. Only one factor
favors a finding of independent-contractor status. On balance, the factors favor a finding
of an employer-employee relationship.
To the extent that relator argues that the ULJ’s conclu sion to the contrary was not
based on substantial evidence, we disagree. Our review of the reco rd reveals support for

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the ULJ’s findings of fact a nd legal conclusions. The ULJ specifically found Stevens’s
testimony to be more “plausible” than Saxhaug’s testimony, and found that it more credibly
corresponded with the written submissions. Of course, had the ULJ made different factual
findings, a different conclusion might foll ow. But we give deference to the ULJ’s
credibility decisions. Skarhus v. Davanni’s Inc., 721 N.W.2d 340, 344 (Minn. App. 2006);
see also Minn. Stat. § 268.105 subd. 1a(a) (2016 ) (requiring a ULJ to explain findings
concerning witness credibility if it has a significant effect on the outcome of a decision).
II. Additional hearing
Relator argues that the ULJ should have held an additional evidentiary hearing after
relator presented affidavits contending that Stevens’s testimony was likely false. We give
deference to the ULJ’s decisi on not to hold an additional h earing, and will reverse that
decision only for an abuse of discretion. Skarhus, 721 N.W.2d at 345.
An additional evidentiary hearing is appr opriate if the rela tor shows that the
evidence submitted at the initial hearing was “likely false” and had an effect on the outcome
of the hearing. Minn. Stat. § 268.105, subd. 2(c)(2) (2016). Although Stevens’s testimony
was contradicted by some of the information presented in the affidavits, the ULJ concluded
that the new information failed to establish that the evidence relied upon by the ULJ was
“likely false.” The ULJ had heard and considered the testimony at the initial hearing along
with the parties’ earlier written submissi ons and was best pos itioned to gauge the
significance of the new evidence. We see no abuse of the ULJ’s discretion in denying an
additional hearing.
Affirmed.