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In Kentucky, employers generally defend against applications for unemployment insurance benefits from former employees not by hiring outside counsel, but by appointing an individual, usually someone in the HR department, to represent and defend the company in the administrative proceeding. The statutory scheme governing unemployment benefits even allowed employers to appoint a member of management to do so. See KRS 341.470(3)(a), (b).

This long-standing practice is now illegal. On Friday, April 29, 2019, the Kentucky Court of Appeals held that, as a constitutional matter, non-lawyer corporate representatives in unemployment benefits proceedings are engaged in the unauthorized practice of law. Nichols v. Norton Healthcare, Inc., No. 2017-CA-001156 (Ky. Ct. App. April 29, 2019).

In Nichols, the employee was fired for various misconduct during employment, and he immediately filed for unemployment benefits. The Kentucky Unemployment Insurance Commission denied his benefits application, which a referee, on appeal, affirmed. The Commission later affirmed the employee’s second appeal, during the evidentiary hearings for which the employer was represented by a non-lawyer.

The employee then challenged the Commission’s rulings in court. The Jefferson Circuit Court affirmed the Commission, rejecting the employee’s argument that the employer’s non-lawyer representative engaged in the unauthorized practice of law.

The Court of Appeals, however, reversed on this latter issue, remanding the proceeding back to the Commission for a new hearing at which the employer must be represented by legal counsel. The act of representing a corporation “before an adjudicatory tribunal,” such as the Kentucky Unemployment Insurance Commission necessarily “involves advocacy that would constitute the practice of law.” Such representation by a non-attorney is thus the unauthorized practice of law.

Sole proprietors and individual employers are exempted

The Court of Appeals was careful to note that its decision did not apply to all employers. Specifically, individual employers, like sole proprietorships, may defend and represent themselves in these administrative proceedings. But the representation of any non-lawyer on behalf of a corporation or non-natural entity in an unemployment benefits proceeding, or similar administrative proceeding, will otherwise constitute the unauthorized practice of law.