Jessica Hagen, on behalf of herself and others similarly situated, Appellant, vs. Steven Scott Management, Inc., Respondent.
A19-1224
STATE OF MINNESOTA IN SUPREME COURT
Filed: August 11, 2021
963 N.W.2d 503
Hudson, J.
Court of Appeals. Office of Appellate Courts
Andrew E. Tanick, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Minneapolis, Minnesota, for respondent.
Charles H. Thomas, Thomas Godfrey, Saint Paul, Minnesota, for amicus curiae Southern Minnesota Regional Legal Services, Inc.
S Y L L A B U S
- Under the Minnesota Fair Labor Standards Act,
Minn. Stat. §§ 177.21–.35 (2020), rent credits qualify as wages so long as the employer complies with the applicable rule adopted by the Minnesota Department of Labor and Industry, specificallyMinnesota Rule 5200.0070 (2019). Under Minn. Stat. § 181.79 (2020), the term “wages” is defined by the Equal Pay for Equal Work Law,Minn. Stat. § 181.66, subd. 4 (2020), and rent credits qualify as “wages” under that definition.- The issue of whether the on-call employee was “performing any duties of employment” in this case cannot be resolved at the summary judgment stage by looking solely at the plain language of
Minn. Stat. § 177.23, subd. 10 (2020). - Under
Minnesota Rule 5200.0120, subp. 2 (2019), the time when an on-call employee is required to remain on the employer‘s premises, or so close to it that they cannot use their time effectively for their own purposes, is compensable “hours worked” under the Minnesota Fair Labor Standards Act. Because the employee presented specific facts showing that she could not use her time effectively for her own purposes while on call, the district court erred in granting summary judgment to the employer.
Affirmed in part, reversed in part, and remanded.
O P I N I O N
HUDSON, Justice.
Appellant Jessica Hagen sued her former employer, respondent Steven Scott Management, Inc. (“Scott Management“), alleging that it failed to pay her wages in accordance with Minnesota law. Hagen worked as an on-site property caretaker at an apartment complex owned by Scott Management. She also lived in an apartment on the property. She was compensated primarily with credits toward her monthly rent. Hagen alleges that Scott Management‘s use of rent credits to pay her wages violated the Minnesota Fair Labor Standards Act (“MFLSA“),
We conclude that rent credits qualify as wages under both the MFLSA and section 181.79 and therefore affirm the grant of summary judgment to Scott Management on the first two issues. We further conclude that, for the purposes of calculating hours worked, Hagen presented specific facts that could lead reasonable persons to reach different conclusions as to whether she could use her time effectively for her own purposes while on call. Accordingly, we hold that district court erred in granting summary judgment to Scott Management on the third issue. We therefore affirm in part, reverse in part, and remand to the district court for further proceedings consistent with this opinion.
FACTS
In 2015, Scott Management hired Hagen to work part-time as an on-site property caretaker at one of its apartment complexes. Hagen signed an offer of employment outlining her compensation schedule and job responsibilities. The employment offer provided that Hagen would be compensated, in part, in the form of rent credits.
The rent credit arrangement worked as follows. For each hour Hagen worked, her monthly rent owed to Scott Management would be reduced by $8.50. Hagen was assigned to work 99.75 hours each month for a maximum rent credit value of $845 per month. If she worked more than 99.75 hours in a month, Scott Management issued her a check for the excess hours worked at her hourly rate of $8.50. The record shows that Hagen received
Payment of wages in the form of rent credit was an express condition of Hagen‘s employment. She signed an employment offer which provided that “[t]he employee must be a resident of the property where he/she works and must be in a position that requires the employee to live on site in order to qualify for rent credit.” She also signed a separate rent-credit agreement stating the same. Hagen did, in fact, live in an apartment on the property where she worked.
According to Hagen‘s job description, one of her essential job duties and responsibilities was that she “may be required to work on an on call basis.” Hagen was required to work an on-call shift at least once per week, every fifth weekend, and two holidays each year. While on call, Hagen was required to carry a cellphone owned by Scott Management and to stay within a 20-minute radius of the apartment complex to respond promptly to calls from tenants.
Hagen was not paid for every hour she spent on call. Instead, in accordance with Scott Management‘s Property Employee Policy Statement, Hagen was compensated “only for the hours actually worked during that time.” Hagen‘s on-call tasks were wide-ranging, and included responding to calls from tenants, shoveling snow, maintaining the community pool, inspecting recently-vacated apartments, and preparing unoccupied apartments for new tenants. Although Hagen was paid for her time spent actually performing these
While on call, Hagen was subject to certain restrictions. She was required to stay within a 20-minute radius of the apartment complex. As a result, she was unable to visit her family members, all of whom lived at least 30 to 45 minutes away. She was prohibited from drinking alcohol. And, at times, Hagen‘s daily activities, such as grocery shopping, were interrupted by calls from tenants on the cellphone that she was required to carry with her at all times while on call.
Hagen worked as an on-site property caretaker under this arrangement for three years. In November 2018, Hagen sued Scott Management, alleging (1) failure to pay her the minimum wage in violation of the MFLSA; (2) improper deductions from her wages in violation of section 181.79; and (3) failure to pay for all time worked, including her time spent on call and time spent on site waiting to work, in violation of the MFLSA rules promulgated by the Department of Labor and Industry (“Department“). Scott Management filed a motion for summary judgment. The district court granted the motion and dismissed Hagen‘s complaint with prejudice. Hagen appealed.
The court of appeals affirmed. Hagen v. Steven Scott Mgmt., Inc., 947 N.W.2d 847 (Minn. App. 2020). On the MFSLA wages claim, the court held that an employer may pay the wages of an on-site property caretaker with rent credits so long as the employer complies with the administrative rules adopted by the Department. Id. at 852. On the improper deductions claim, the court held that Scott Management did not violate section 181.79 by paying Hagen with rent credits because it concluded that “section 181.79
ANALYSIS
This case presents three related wage-and-hour issues. First, Hagen alleges that she was not paid the minimum wage as defined in the MFLSA,
These issues require us to interpret various statutes and administrative regulations governing the calculation and payment of wages. We review issues of statutory interpretation de novo. Christianson v. Henke, 831 N.W.2d 532, 535 (Minn. 2013). The objective of statutory interpretation is to “effectuate the intention of the legislature,” reading the statute as a whole. Id. at 536; see also
I.
We first turn to whether rent credits qualify as “wages” under the Minnesota Fair Labor Standards Act,
“Wage” means compensation due to an employee by reason of employment, payable in:
- legal tender of the United States;
- checks on banks convertible into cash on demand at full face value;
- except for instances of written objection to the employer by the employee, direct deposit to the employee‘s choice of demand deposit account; or
- an electronic fund transfer to a payroll card account that meets all of the requirements of section 177.255, subject to the allowances permitted by the rules of the department under section 177.28.
Section 177.28 is a rules enabling statute. It provides, in part, that the Department “shall adopt rules under sections 177.21 to 177.35 defining and governing: . . . allowances
We begin our analysis by determining whether the definition of “wage” in
When interpreting statutes, the whole-statute canon provides that “language in dispute is not examined in isolation; rather, all provisions in the statute must be read and interpreted as a whole.” Pakhnyuk, 926 N.W.2d at 920. “We interpret each section in light of surrounding sections to avoid conflicting interpretations.” State v. Struzyk, 869 N.W.2d 280, 287 (Minn. 2015).
Hagen focuses primarily on the text and structure of
Scott Management contends that reading the statute as a whole reveals that the Legislature did not intend to limit the definition of “wage” only to the forms of payment listed in
We agree with Scott Management that the term “wage” includes rent credits. Reading the MFLSA as a whole, it is significant that two other sections endorse the use of rent credits to pay an employee‘s wages. First, the MFLSA defines the term “hours worked” as it relates to “a caretaker . . . who receives a principal place of residence as full
We therefore conclude that the statute is unambiguous because Scott Management has presented the only reasonable interpretation: rent credits qualify as wages under the MFLSA. Yet, in reaching this conclusion, we emphasize that the definition of “wage” in the MFLSA is a limited one. The language “subject to the allowances permitted by the commissioner” in
The lodging allowance rule authorizes an employer to “credit toward the minimum wage the cost of lodging” if “the employee must accept that lodging as a condition of employment.” See
Summary judgment is proper when the record before the district court “shows that there is no genuine issue as to any material fact and the movant is entitled to a judgment as a matter of law.”
Hagen argues that she showed genuine issues of fact as to whether Scott Management complied with the lodging allowance rule. In particular, Hagen contends that the district court failed to credit the statements from her affidavit in which she claims that she and other caretakers were not required to reside at a Scott Management property as a condition of their employment. She also claims Scott Management failed to present
We disagree with Hagen on both counts. As noted above, the lodging allowance rule requires that lodging be a condition of the employment offer accepted by the employee. See
Thus, because rent credits paid in accordance with the lodging allowance rule qualify as wages under the MFLSA and the undisputed facts show that Scott Management complied with that rule, we conclude that the district court did not err in granting summary judgment to Scott Management. We therefore affirm the decision of the court of appeals on that issue.
II.
Next, we must determine whether rent credits are improper deductions from an employee‘s wages that violate
Section 181.79, subdivision 1(a) prohibits employers from making deductions from an employee‘s wages except under specific circumstances. The statute makes it illegal for an employer to “make any deduction from the wages due or earned by any employee . . . for lost or stolen property, damage to property, or to recover any other claimed indebtedness running from employee to employer.”
Hagen argues that section 181.79 applies because rent credits are deductions; that is, she earned her wages as a property caretaker and then Scott Management applied rent credits to subtract or take away from her wages due or owed. In contrast, Scott Management argues that rent credits are themselves wages; therefore no deductions occurred that would implicate section 181.79. Thus, at its core, the key inquiry is whether rent credits qualify as wages under section 181.79.
We have been down a similar road before. See Karl v. Uptown Drink, LLC, 835 N.W.2d 14, 17 (Minn. 2013). In Karl, we addressed the question of “whether gratuities satisfy the definition of ‘wages’ under section 181.79.” Id. at 17. There, a group of servers, bartenders, and security guards brought a class action against their employers, alleging violations of the MFLSA and unlawful deductions from their wages in violation of section 181.79. Id. at 15. The employees argued that we should define wages as we had done in a prior decision, Brekke v. THM Biomedical, Inc., 683 N.W.2d 771, 775 (Minn. 2004). Karl, 835 N.W.2d at 16. In Brekke, we applied the definition of “wages” from the Equal Pay for Equal Work Law,
Once we have interpreted a statute, that prior interpretation “guides us in reviewing subsequent disputes over the meaning of the statute.” Caldas, 820 N.W.2d at 836. Our interpretation “becomes part of the statute as though written therein.” Id. Just as in Brekke and Karl, we apply the definition of “wages” from the Equal Pay for Equal Work Law,
Under this definition, rent credits clearly qualify as wages. Hagen‘s signed employment offer describes the rent credit arrangement using almost identical language to the definition of “wages” in section 181.79. Hagen‘s employment offer provided that “[y]our compensation will be paid to you in the form of Rent Credit.” This language parallels the definition of “wage” used in section 181.79 as “all compensation . . . paid by the employer.”
III.
Finally, we must determine whether Scott Management paid Hagen for every hour she worked in accordance with the MFLSA. The MFLSA provides that, for on-site employees who reside on their employer‘s premises, “the term ‘hours worked’ includes time when the caretaker, manager, or other on-site employee is performing any duties of employment, but does not mean time when [the employee] is on the premises and available to perform duties of employment and is not performing duties of employment.”
An employee who is required to remain on the employer‘s premises or so close to the premises that the employee cannot use the time effectively for the employee‘s own purposes is working while on call. An employee who is not required to remain on or near the employer‘s premises, but is merely required to leave word at the employee‘s home or with company officials where the employee may be reached is not working while on call.
Hagen argues that Scott Management was required to pay her for every hour she was on call, even if she was not actively responding to a tenant‘s call for assistance or performing other work-related tasks. She broadly interprets the phrase “performing any duties of employment” in
Scott Management maintains that it paid Hagen for every hour she worked as required by the MFLSA. Focusing on the last clause of
The court of appeals agreed with Scott Management, concluding that “[u]nder the plain language of section 177.23, subdivision 10, the time during which an on-site employee of a residential building who receives a principal place of residence as full or partial compensation is ‘available to perform duties’ but is not actually ‘performing duties of employment’ is not compensable time.” Hagen, 947 N.W.2d at 855.
We disagree. Unlike the court of appeals, we are not convinced that the issue of whether Hagen was performing “any duties of [her] employment” can be resolved based solely on the plain language of
Moreover, the definition in
For this reason, we conclude that the phrase “performing any duties of employment” and “available to perform duties of employment” creates ambiguity in the statute. When interpreting ambiguous statutes, “we will go beyond the plain language of the statute to determine the intent of the legislature.” Rohmiller, 811 N.W.2d at 589. In doing so, we look to the rule promulgated by the Department for calculating hours worked for further guidance. See
When interpreting the hours–worked rule, the court of appeals acknowledged that there is “no precedential Minnesota case law address[ing] the distinction between being able to use one‘s time effectively or not.” Hagen, 947 N.W.2d at 854. The court, however, found persuasive the decisions from federal courts applying the analogous federal rule5 promulgated under the federal Fair Labor Standards Act of 1938,
Yet, the determination of whether Scott Management‘s particular on-call restrictions made it so that Hagen could not use her time effectively for her own purposes is a factual one that cannot be resolved by a court at the summary judgment stage. As we have explained before, “summary judgment is inappropriate when reasonable persons
Viewing the evidence in the light most favorable to Hagen, we conclude that she has presented sufficient evidence to survive summary judgment. Hagen submitted an affidavit outlining how Scott Management‘s on-call restrictions limited the extent of the activities she could do while on call. She claimed that certain activities, such as grocery shopping, were occasionally interrupted by calls from tenants seeking assistance. She could not drink alcohol. Nor was she able to visit any of her family members, all of whom lived outside a 20-minute radius of the apartment complex. Reasonable persons considering these types of on-call restrictions could reach different conclusions as to whether Hagen could use her time effectively for her own purposes.
We recognize that a distinction between being able to use one‘s time effectively or not, while working on call, is an issue that has not been addressed by Minnesota courts. But, under the facts and circumstances of this case, we conclude that such a determination is for a jury, not a judge, to make. By relying on federal cases with similar, but distinct, fact patterns to resolve a genuine material issue of fact (i.e., whether Hagen could use her time effectively for her own purposes), the district court erred when it granted summary judgment to Scott Management. We therefore reverse the court of appeals’ decision upholding the grant of summary judgment and remand for trial on whether Scott Management paid Hagen for every hour worked in accordance with the MFLSA.
CONCLUSION
For the foregoing reasons, we affirm in part and reverse in part the decision of the court of appeals and remand to the district court for further proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded.
