New chapter unfolds in dispute between NC employment agency and lawyer

dranii@newsobserver.comMarch 10, 2014 

NC Primary Lt Gov

Dale Folwell


— The state Division of Employment Security spent Monday attempting to navigate between a court order and a U.S. Department of Labor directive.

On Monday morning, the division refused to release hearing notices of contested unemployment claims to lawyers, citing a warning from the Labor Department that the information should be kept confidential.

Late Monday afternoon, it changed course and made them available.

In the interim, an attorney had complained in Wake County Superior Court that the state was violating a temporary restraining order issued last week by withholding the notices.

Dale Folwell, who heads the Division of Employment Security, said the state initially expected to have its day in court Monday and have the issue resolved. When that didn’t happen the agency decided to release the disputed documents.

The court hearing is now scheduled for Tuesday morning. Folwell said the state is withholding a decision on whether to release the notices Tuesday pending the outcome of that hearing.

“We’re always trying to be respectful of all authority,” Folwell said. “That was true yesterday, that is true today, and it is going to be true tomorrow.”

New policy led to suit

The issue first emerged when Durham attorney Monica Wilson sued the agency after it inaugurated a new policy under which it released the notices as few as three times a month rather than daily.

Last week Wilson’s lawyer, Durham attorney Jim White, obtained a temporary restraining order that required the agency to continue daily dissemination of the notices of appeals hearings on contested claims.

Attorneys such as Wilson who represent unemployed people have been paying a $300 monthly fee to receive the notices daily so that they can contact potential clients.

Employment Security had complied with the temporary restraining order until Monday morning.

“If we continue to let this information out, we are in danger of losing our federal ... funding,” Employment Security attorney Tom Hodges told Wake County Superior Court Judge Paul Ridgeway at a scheduling session Monday morning. Federal funding for the current fiscal year totals $57.7 million.


Confidentiality violated

Employment Security hasn’t released to the media the letter it received late Friday from the Department of Labor. But The News & Observer obtained a copy that the agency handed out to law firms on Monday as it informed them that it was halting release of the hearing notices.

The letter notified Folwell that releasing the notices “constitutes a failure to comply substantially with federal law, and could ultimately result in a discontinuation of payments” of federal funds “if not corrected.”

Gay Gilbert, administrator of the Office of Unemployment Insurance, also wrote Folwell that state laws must include a provision “maintaining the confidentiality of any UC (unemployment compensation) information which reveals the name or any identifying particular about any individual or any past or presently employing unit ...”

Consequently, the state agency “must immediately cease the practice of selling or providing notices of appeals hearings to attorneys who do not already represent a claimant or an employer,” Gilbert wrote.

However, in urging Ridgeway to schedule a hearing soon, White argued, “We disagree the federal government has done anything.”

Outside the courtroom, he declined to elaborate on that statement in advance of a court hearing.

Folwell said he was eager for the agency to have an opportunity to explain its position.

“We would hope the judge will listen to what the federal government says,” he said.

Employment Security spokeswoman Chris Farr stressed the agency didn’t contact the Department of Labor. Rather, federal officials contacted the agency after reading a news article about Wilson’s lawsuit.

Wilson’s lawsuit contends that releasing the hearing notices to attorneys, which Employment Security has been doing for the past decade, has boosted the number of jobless workers who are represented by attorneys at appeals hearings. 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.

Ranii: 919-829-4877

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