Federal government becomes player in dispute with NC unemployment agency

dranii@newsobserver.comMarch 7, 2014 

— The head of the state Division of Employment Security says that the federal government has thrown a monkey wrench into the agency’s legal battle with a Durham attorney over public records.

Agency chief Dale Folwell said that, after a phone conversation with federal Department of Labor officials Friday morning, he finds himself uncomfortably situated “between a rock and a hard place.”

On Monday, Durham attorney Monica Wilson obtained a temporary restraining order that prevents Employment Security from discontinuing a decade-old policy that allows lawyers to find out on a daily basis which unemployment claims are scheduled for appeals hearings.

The order stopped the agency from following a new policy that made the records available as few as three times a month, rather than daily, until a court hearing is held. That hearing is expected next week.

However, Folwell said Friday that federal Labor officials informed him that releasing the information violated federal regulations.

Folwell said Friday afternoon that he was awaiting official notification to that effect from the Labor Department. When that happens, he said, the agency plans to halt the daily release of the notices to avoid jeopardizing its federal funding, its sole source of funding for operations.

Federal funding for the current fiscal year totals $57.7 million.

Folwell said the agency will notify the judge as soon as it receives the Labor Department’s notification.

“We’re not trying to disrespect his order,” Folwell said.

The Friday morning conference call between the state and federal agency was requested by Gay Gilbert, administrator of the federal Office of Unemployment Insurance, in the wake of news reports about the legal battle with Wilson.

Gilbert said in an email to Folwell, which Folwell supplied to The News & Observer, that she was requesting the call “since it sounds like you are disclosing confidential ... data.”

“Would it be possible for us to have a call on this issue as soon as feasible so we can hear from you and your team what you are actually doing,” Gilbert wrote.

Folwell said Labor Department officials told him that releasing any information about the hearings wasn’t permitted under federal regulations, let alone sensitive information that the notices can contain – such as the reasons for an employee’s dismissal from a job.

Durham attorney Jim White, who filed the lawsuit against Employment Security on Wilson’s behalf, declined to comment on the situation until he knows more about the Labor Department’s position.

New policy raises concerns

That lawsuit isn’t about whether the state can or should release the hearing notices. Instead, it focuses on how often the notices would be released and the fee that attorneys pay for the information.

For more than a decade, Employment Security has made these notices available daily to attorneys, who use them to contact potential clients. But last week, Folwell instituted a new policy of releasing them in batches, at least three times a month, and made them available only by mail.

The lawsuit contends that Employment Security’s new policy violates the state’s public records law and appears to be “a deliberate effort to deprive unemployed individuals of legal counsel by setting arbitrary road blocks that separate attorneys and potential clients.”

Earlier this week, White said many of the notices are only issued 14 days in advance, and the lawsuit contends that the new policy would “necessarily reduce the number of individuals who are represented by counsel” at the appeals hearings.

The lawsuit also argues that the impact would be devastating to the law firms that represent unemployed workers, “possibly putting some out of business.”

Folwell said he wanted to “level the playing field” among lawyers, given that some out-of-town law firms obtain the notices through the mail while others pick them up at the agency’s offices on Wade Avenue.

He also said the new policy was instituted because of security concerns; some lawyers and couriers who pick up the documents gain access through the back door of the building by ringing a doorbell, circumventing security guards at the front entrance.

“I understand the process of allowing attorneys to pick up appeals hearing notices was established by a former DES General Counsel years ago,” Folwell wrote in a letter sent to attorneys, “but for the safety of our employees and constituents, this will end.”

‘Completely unprepared’

Wilson said in an interview Thursday that she was sensitive to the security concerns expressed by Folwell and suggested that he permit law firms to pick up the notices at the security guards’ desk, but that suggestion was rebuffed.

Wilson, a former appeals referee at Employment Security, left the agency in 2004 to form her own law firm. The agency previously hadn’t given attorneys access to hearing notices but did so after her firm requested them, according to her lawsuit.

Wilson said her experience at the agency taught her that unemployed workers often weren’t represented by lawyers and were “completely unprepared” for their hearings.

Employment Security generates anywhere from two to 200 appeals hearing notices daily, according to the lawsuit.

The appeals at issue are filed both by jobless workers whose claims have been denied and employers who contend that the worker isn’t entitled to an unemployment check.

The lawsuit also complains that the agency “arbitrarily” increased the cost of obtaining the hearing notices from $300 a month to $600 a month.

“They can’t turn public records into a profit center,” White said.

Folwell told state legislators at a committee meeting Wednesday that the fee had never been raised and “the postage and all the handling that goes into producing this every night has gone up that much in over 10 years.”

Ranii: 919-829-4877

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