Raleigh, N.C. — Lawmakers say they may draft a bill to close off access to some public records related to unemployment claims in an effort to resolve a conflict between federal rules and state law.
The conflict involves when and how members of the public – frequently lawyers looking for clients – can find out when an unemployment claim has been rejected.
"If we were to treat that like tax information ... which is supposed to be kept secret, that may be a simple fix," said Sen. Bob Rucho, R-Mecklenburg.
Rucho and other members of the Joint Legislative Oversight Committee on Unemployment Insurance discussed making the change Wednesday after hearing about a recent lawsuit over the records.
When an unemployment claim is rejected by the Division of Employment Security, it can be appealed to a separate quasi-judicial unit within that agency. Dozens, if not hundreds, of notices of potential appeals are generated every day.
For years, the division has made information in those appeals notices available to the public. That information has allowed lawyers to advertise their services to potential clients. Sometimes, notices from lawyers would reach those who had filed unemployment insurance claims before official denial notices from the state.
In February, Dale Folwell, the assistant Department of Commerce secretary in charge of the division, moved to slow the flow of those notices out of the agency. Instead of daily pickup, Folwell proposed sending them out in three monthly bundles.
That prompted Monica Wilson, a Durham lawyer, to sue, saying the agency was unlawfully changing established practice in violation of the state's open records laws. She said that, by slowing the flow of notices, the state would hurt her business and deprive low-income individuals of legal counsel when they go before an appeal.
A state Superior Court judge issued an injunction ordering the state to continue providing the records until the case could be tried.
But at about the same time, officials with the U.S. Department of Labor said that the state may be violating federal privacy rules by providing the information to members of the public, putting federal grant dollars at risk.
"It left the agency between a legal rock and a hard place," said Jan Paul, a staffer with the General Assembly's research division.
Since the preliminary injunction hearing, legislative staff has talked with federal officials about how to resolve the conflict, Paul told the committee Wednesday.
"It is the staff's opinion that there are legislative changes that the General Assembly can make specially with regard to what the agency is directed and not directed to do that may solve the conflict," Paul said.
She did not specifically outline those steps, but during discussion among themselves, lawmakers indicated the simplest fix would to be pare access to those records.
"My thought, Mr. Chairman, is this court case is going to drag out, it's going to be slow. If we can find a legislative fix that will satisfy (the U.S. Department of Labor) then we should proceed," said House Majority Leader Edgar Starnes, R-Caldwell.
"I concur," Rucho replied. "We need to fix it because our goal should be to protect (the Division of Employment Security) from any administrative problems with the Department of Labor."
Rucho said the committee planned to review a draft of the legislative fix at its May meeting.