It has long been a standard practice for most Kentucky employers to have a non-attorney employee, such as a supervisor or HR representative, appear on behalf of the company at unemployment insurance (UI) benefits hearings. It came as quite a shock to the business community when, in April 2019, the Kentucky Court of Appeals held that non-attorney employees, by doing so, engaged in the unauthorized practice of law. The upshot, of course, was that employers would need to retain legal counsel to defend against UI benefits claims—at a cost that, in select cases, could exceed an employee’s benefit entitlement.
On October 28, however, the Supreme Court of Kentucky reversed the Court of Appeals. The Supreme Court, unfortunately, stopped short of determining that non-attorney employees aren’t engaging in the unauthorized practice of law when representing the employer in UI hearings. Instead, the Court found that the employee in question didn’t have standing to claim that the employer’s non-attorney representative engaged in the unauthorized practice of law.
Michael Nichols worked for Norton Healthcare from 2014 to 2015 performing after-hours equipment maintenance and repairs on an on-call basis. It was discovered that Nichols, who was unhappy with his schedule, falsified documents related to annual maintenance and even submitted a purchase order for an outside vendor to perform maintenance work. Nichols was terminated.
He filed a claim for UI benefits, reporting on the application that he was laid off due to a lack of work. Nichols’ claim was denied, but he appealed. During two referee hearings on appeal, a non-attorney supervisor appeared on behalf of Norton, who answered questions posed by the referee. The referee determined that Nichols was not entitled to benefits because he was terminated for misconduct and that, separately, Nichols misrepresented the basis for his separation from the company.
Courts can only rule on actual cases or controversies, a critical component of which is standing. That is, a plaintiff only has standing to assert a claim if the alleged injury is fairly traceable to the defendant’s conduct. Because of a variety of other issues relating to the UI benefits proceeding—most notably, Nichols’ misrepresentation on his UI benefits application—Nichols couldn’t establish that a non-attorney employee’s appearance on behalf of Norton actually harmed him in any way. There being no injury or harm stemming directly from the non-attorney employee’s appearance, Nichols did not have standing.
The Final Take-Away
For now, employers may continue to have non-attorney representatives appear in UI hearings. While the Supreme Court signaled that this long-standing practice isn’t likely to be overturned—“[i]f no legal advice is being given or legal rights are being adjudicated, it is unlikely this Court would find that the non-attorney is engaging in the practice of law”—our view is that this issue will be litigated again in the near future, potentially placing this cost-saving custom in doubt once again.
Regardless, whether it is advisable for employers to handle UI hearings in this manner is another question altogether. During referee hearings, employers can provide opening statements, can cross-examine the employee, take testimony from other witnesses, introduce exhibits, and give closing arguments. The testimony elicited during these hearings can make or break a benefits determination and resulting charges to an employer’s reserve account. In addition, a competent attorney can create a complete record for any further appeals and for any companion civil litigation resulting from an employee’s separation, such as claims for discrimination, retaliation, or harassment. Indeed, in many cases, it makes sense for a number of reasons to involve legal counsel during the UI proceeding.
Does your organization need assistance with defending UI benefits claims? Do you need advice on how you can streamline the handling of these claims to comply with the quick associated deadlines? Let’s connect. We can help.