RALEIGH — Lawmakers could seek a legislative solution to the quandary faced by the state Division of Employment Security, which is caught between opposing mandates from a Wake County judge and the U.S. Department of Labor.
The ultimate goal is to preserve the state agency’s $57.7 million in federal funding, its sole source of operating funds.
Last month, the U.S. Department of Labor notified the state agency that its federal funding was jeopardized because it makes hearing notices of contested unemployment cases available to employment law attorneys who pay a monthly fee. The Labor Department contends that practice, which dates back to 2004, violates federal regulations enacted in 2006 regarding dissemination of confidential information.
However, the state is under court order to continue to make those documents available to attorneys daily. The preliminary injunction issued March 13 by Wake County Superior Court Judge Paul Ridgeway remains in effect until a lawsuit filed by Durham employment law attorney Monica Wilson goes to trial.
The agency is complying with the court order, which has raised concerns that its federal funding is in jeopardy.
“This is a very precarious situation,” said Rep. Julia Howard, a Davie County Republican and co-chair of a committee that oversees the state’s unemployment benefits system, which is run by Employment Security.
Wilson filed her lawsuit after the head of Employment Security, Dale Folwell, instituted a policy that made the hearing notices available less frequently and also doubled the monthly cost to $600. Wilson and other lawyers rely on the notices to send solicitation letters to potential clients.
The possibility of revamping state law, possibly by changing the public records statute, was broached at a committee meeting Wednesday.
Sen. Bob Rucho, R-Mecklenburg and co-chair of the committee, said after the session that lawmakers could change state law to somehow bar the agency from disseminating the hearing notices to attorneys.
Taking such a step, he noted, wouldn’t preclude Wilson from going back to court to challenge the law.
“All we are trying to do is protect DES, which is our responsibility,” Rucho said.
Jan Paul, a staff attorney with the legislature’s Research Division, told committee members that she and other staff members are conferring with federal Labor Department officials about steps the state could take to comply with federal regulations.
“It is staff’s opinion that there are legislative changes that the General Assembly can make, specifically with regard to what the agency is directed and not directed to do,” that would resolve the agency’s problem, Paul said.