The N.C. Court of Appeals has beat lawmakers to the punch in getting the state Division of Employment Security off the hook with the U.S. Department of Labor.
On Thursday, the appellate court issued a stay of a Wake County Superior Court order, issued in March, that required the state agency to continue to make hearing notices available to employment law attorneys who pay a monthly fee.
The court order created a dilemma for Employment Security because the federal Labor Department contended that making those notices available violates federal regulations regarding dissemination of confidential information that were enacted in 2006. A Labor Department official warned the state that continuing to make the notices available would jeopardize the agency’s federal funding – the only source of funding for the agency’s $60 million-plus budget.
“Our agency always tries to respect authority and now the N.C. Court of Appeals removes DES from between a legal rock and a hard place,” Dale Folwell, who heads DES, said in a news release.
At the Labor Department’s urging, a bill that would have required the agency to halt dissemination of the notices has been wending its way through the state legislature.
The House has passed the bill and it also won tentative approval in the Senate by a 39-5 margin this week. The Senate is expected to vote on it again next week and then return it to the House for concurrence on changes.
In the wake of the appellate court’s order, beginning Monday, Employment Security will no longer provide the hearing notices on a daily basis to employment law attorneys. These attorneys, who pay $300 a month for copies of the notices, rely on them to send solicitation letters to potential clients – that is, unemployed workers whose benefits claims are contested by their former employer.
Without those solicitation letters, lawyers say, many jobless workers won’t realize they can be represented by legal counsel at their hearings. That could put them at a disadvantage because they’re likely to face an attorney or unemployment specialist hired by their former employer at the hearing.
Employment Security’s new no-notices policy will continue indefinitely “unless ordered otherwise by appropriate court order,” according to the agency.
A lawsuit filed by a Durham employment lawyer, Monica Wilson, led to the preliminary injunction that had forced Employment Security to continue making the notices available. Wilson filed her lawsuit after the agency doubled the monthly cost to attorneys and made the hearing notices available less frequently.
Wilson on Friday lamented that the appellate court’s order creates an “unbalanced system” that favors employers.
She added that she plans to continue the legal battle but acknowledged that effort could prove fruitless – regardless of the outcome – considering the bill moving through the legislature.
“That would be their endgame,” she said.
The appellate court’s stay remains in effect pending the outcome of Employment Security’s appeal of the preliminary injunction.