Proposed Unemployment Rule Would Hurt Employers and Workers
The state Employment Security Department (ESD) is considering a seemingly innocuous change to a rule governing the appeals process for unemployment tax and benefit decisions. However, the rule change would give the state agency an unfair advantage when its decisions are challenged by employers or claimants and seriously undermine confidence in ESD to make unbiased decisions.
Currently, the system allows an employer or claimant who is unhappy with a decision from ESD to appeal. For example, employers may contest an ESD decision allowing a former worker unemployment benefits or increasing the businesses’ tax rate, while claimants may protest the denial of benefits.
The appeal is heard by an independent state agency that is separate from ESD, the Office of Administrative Hearings (OAH). The OAH hearing is presided over by an administrative law judge who hears the case and makes an independent decision based on facts and testimony. ESD is usually represented in these hearings by a lawyer from it’s own department or a lawyer from the Attorney General’s Office. The employer or claimant may have an attorney represent them, but retaining legal representation is cost prohibitive for many employers and claimants and they often must represent themselves.
The employer or claimant may appeal an unfavorable OAH decision in a Petition for Review with the Commissioner of the ESD. The agency does not have the right to appeal an OAH decision, which makes sense given ESD would be asking someone from ESD to review and affirm a decision made by ESD that had just been overturned by an independent judge.
So if ESD loses, it is the end of the road for the agency on that particular case. However, as a fail safe, the ESD Commissioner may reconsider a OAH ruling through “advisement authority,” in order to ensure a case that may have extraordinary legal repercussions or precedent has been handled and reviewed properly.
It seems ESD isn’t happy about the idea of not having the final say.
In a proposed change to the current rule, ESD wants to give itself the same rights as employers and claimants to appeal OAH decisions it loses. Currently the statute says, “Any interested party other than the department who is aggrieved by a decision of the office of administrative hearings…may file a written petition for review.” ESD wants to remove that exception from the statute and give itself unlimited authority to challenge and reconsider independent OAH rulings that overturn ESD decisions.
This means employers and claimants would face the full-force of a state agency that not only has unlimited resources to make its case, but would also have the ability to drag cases out by appealing decisions not in its favor. Not to mention the glaring fact that any OAH decision ESD appealed would go right back to ESD, the very agency that issued the decision being challenged, for the final say. Clearly the deck would be stacked against employers and claimants.
The current statute is in place for several reasons. First, to prevent the inherent unfairness of allowing ESD to have the final say on decisions it made and lost after review by an independent party. Second, to prevent ESD from using the agency’s considerable resources to overwhelm and intimidate employers and claimants who challenge ESD decisions by appealing those decisions when the agency loses. And finally, to help keep the agency’s costs and workload under control; imagine the increase in both if agency bureaucrats were able to send every case they lose back to their own agency for yet another review and ruling.
Adopting the proposed rule would be detrimental to employers and claimants and harm the credibility of ESD. A change of this magnitude should not be made by unelected bureaucrats in a state agency via obscure agency rule-making. If ESD truly believes this is an issue meriting change, it should make its case before the Legislature.