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Kentucky companies must be represented by counsel at unemployment hearings

| May 24, 2019 | Firm News |

In an opinion published on April 26, 2019, the Kentucky Court of Appeals ruled that KRS 341.470(3), the statute allowing corporate or partnership employers to appear pro se through non-attorney representatives at unemployment insurance benefit proceedings, violates the Kentucky Constitution. Nichols v. Kentucky Unemployment Insurance Commission, No. 2017-CA-001156-MR. While most people reading this post probably don’t have a keen interest in the separation-of-powers doctrine and its application to the UI statutory framework, this ruling will substantially impact the way many businesses in Kentucky handle UI claims.

The most important takeaway is that Kentucky companies, unless they are a sole proprietorship, are required to have attorneys represent them in UI proceedings.

In the case at issue, a clinical engineering specialist was fired from Norton Healthcare for allegedly failing to comply with instructions, falsification of records, and misfeasance of company resources. The terminated employee submitted an online application for unemployment benefits, which Norton contested. The UI Commission initially determined that the former employee had been terminated for misconduct, and that he was therefore disqualified from UI benefits. The former-employee appealed and an evidentiary hearing took place.

This is the important part. As its corporate representative at the hearing, Norton sent the systems director who had terminated the former employee. Norton won the appeal. The former employee sought review of the decision from the Jefferson Circuit Court, which he lost. He then took the matter up to the Kentucky Court of Appeals.

The Kentucky Court of Appeals held that the systems director, as a non-attorney, “was not authorized to represent Norton during the proceedings before the referee and the Commission.” The Court went on to explain that “it is well-established that representation of a corporate or non-natural entity by a non-attorney implicates the unauthorized practice of law.” Therefore, the Court concluded, the statute allowing companies to represent themselves in a UI proceeding “encroached on the exclusive power of the judiciary to establish rules relating to the practice of law,” and thus violated the separation-of-powers provisions of the Kentucky Constitution.

So, if you are a business, the Court of Appeals has ruled that you must be represented by an attorney in UI proceedings (unless you are a sole proprietorship). As Norton found out, failing to have an attorney representative could mean that an otherwise favorable ruling in a UI matter gets overturned, meaning the whole procedure has to be rehashed, this time with an attorney.

If you or your company have questions about UI proceedings, we handle those! Give us a call or send us an inquiry through the website and we’ll get you taken care of. Thanks for reading.