Business

August 21, 2014

Legislature passes NC bill making jobless benefit appeal notices confidential

The state Senate has passed a bill that ensures the state Division of Employment Security won’t run afoul of federal regulations due to circumstances beyond its control.

The state Senate has passed a bill that ensures the state Division of Employment Security won’t run afoul of federal regulations due to circumstances beyond its control.

The Senate’s approval of the bill by a unanimous vote Wednesday evening was the final step necessary before sending it to the desk of Gov. Pat McCrory, who is expected to sign it into law.

The law would prohibit Employment Security from making hearing notices of contested unemployment cases available to employment law attorneys who pay a monthly fee.

The U.S. Labor Department contends that making the notices available would violate federal regulations regarding dissemination of confidential information. The Labor Department had cautioned the agency that doing so would jeopardize its federal dollars, the sole funding source for Employment Security’s $60 million-plus budget.

Employment Security’s efforts to comply with Labor Department regulations were thwarted temporarily in March when a Wake County Superior Court judge ordered the agency to continue to make the notices available, as it had for the past decade. But on June 12 the N.C. Court of Appeals issued a stay of that order.

As a result, said agency head Dale Folwell, “we have been in compliance since that time.”

Folwell praised the legislature for passing the law.

“As I have stated before, as we tried to respect authority, we have been between a rock and a hard place,” he said.

Durham employment law attorney Monica Wilson was dismayed, but not surprised, by the Senate’s action.

“It will lead to fewer clients being represented (by an attorney), or recognizing they have a right to representation, during these appeal hearings,” Wilson said.

Prior to the Court of Appeal’s ruling, employment law attorneys relied on the hearing notices to send solicitation letters to potential clients – unemployed workers whose benefits claims are being contested by their former employers. Employers, whose state unemployment taxes are pegged to the number of ex-employees who collect unemployment checks, typically are represented by a lawyer or an unemployment specialist at the hearings.

The legal brouhaha that led to the soon-to-be new law erupted in late February when Folwell decided to make the hearing notices available to employment law attorneys less frequently and for a higher monthly fee. That prompted Wilson to file a lawsuit.

Ironically, headlines generated by that lawsuit brought the situation to the attention of the Labor Department, which then notified the state it was violating federal regulations.

Meanwhile, Wilson’s lawsuit is pending. A hearing on the state’s motion for a summary judgment in the case is scheduled for Monday.

Folwell said the soon-to-be new law would be among the evidence that the state introduces in support of its motion.

Durham attorney Jim White, who represents Wilson, countered that despite the new law he remains convinced that the hearing notices are public documents.

“We’ll make our arguments, … and (Wake County Superior Court Judge Paul) Ridgeway will either accept them or not accept them,” White said.

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