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Lawmakers may make unemployment appeals information private

Posted April 2, 2014

Division of Employment Security

— 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.

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  • hillthelma Apr 2, 2014

    Contrary to its March 7, 2014 letter, in 2006 USDOL advocated open appeal hearings and records: "Although the Department recognizes that these are strong arguments for closing appeals hearings and keeping all appeals records confidential, there are also arguments for open hearings and records. The Department has historically held that the public interest in proper administration of the UC program, specifically in payments of benefits only to eligible individuals, and in open governmental adjudicatory proceedings is served by open hearings and hearing records. Further, public access to hearings ensures fair treatment by the appeals tribunal. Thus, in recognition of these competing views, the Department continues to believe that any determination of whether to close appellate hearings and keep records confidential should be left to the States. As a result, the final rule maintains the position that appeals records and decisions are not subject to the confidentiality requirement."

  • hillthelma Apr 2, 2014

    USDOL first proposed to include appeals records & decisions in the public domain See Federal Register, Vol. 69, No. 155, pp. 50024, 50026 & 50035 (8/12/2004). Feedback from states about what was covered in their public records law, the final regulation, published by USDOL on 9/27/2006, excluded the records & decisions from the confidentiality requirement and left it up to the individual state to determine if such items should be in the public domain.

    "Although the Department recognizes that these are strong arguments for closing appeals hearings and keeping all
    appeals records confidential, there are also arguments for open hearings and records. The Department has
    historically held that the public interest in proper administration of the UC program, specifically in payments of
    benefits only to eligible individuals, and in open governmental adjudicatory proceedings is served by open hearings
    and hearing records." See, Federal Register, Vol. 71, No. 187, pg. 56834 (9/27/2006).

  • cushioncritter Apr 2, 2014

    "The world won't really miss a Justin Bieber record," said Paz.

    +1,000,000,000

  • hillthelma Apr 2, 2014

    "20 CFR § 603.5 What are the exceptions to the confidentiality requirement?The following are exceptions to the confidentiality requirement. Disclosure of confidential UC information is permissible under the exceptions in paragraphs (a) through (g) of this section only if authorized by State law and if such disclosure does not interfere with the efficient administration of the State UC law. . .

    (a) Public domain information. The confidentiality requirement of § 603.4 does not apply to public domain information, as defined at § 603.2(c).

    (b) UC appeals records. Disclosure of appeals records and decisions, and precedential determinations on coverage of employers, employment, and wages, is permissible provided all social security account numbers have been removed and such disclosure is otherwise consistent with Federal and State law."

    Why except appeal records and decisions from confidentiality requirement?

  • veryfrustrated1 Apr 2, 2014

    I was at a Raleigh ESC office about 5 years ago and heard an employee explain to an applicant that walked in that they did not even have to have been actually employed to collect a check. They told them to lie on the application and say that they had been laid off from their job and that it would be weeks before it was caught and that the state would never try to get the erroneously paid money back!

  • Matt Wood Apr 2, 2014
    user avatar

    Oh, and to add to my previous comment, they should also create a database of lawyers able to assist with appeals and include that information with the denial notice.

  • Matt Wood Apr 2, 2014
    user avatar

    "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."

    I would say your goal should be to protect and aide the citizens first, not the agency. I'm not sure where I stand on this issue, yet, but the whole reason for the information being available was that many people weren't receiving their denial notices until well after the window to appeal had closed. If you can ensure that the appeal window is lengthened and/or denial notices are sent in a timely manner, then I would support making the information private.

  • Danny22 Apr 2, 2014

    I didn't know lawyers got special rights to that info.