Business Organizations Must Be Represented By Attorneys In Unemployment Compensation Hearings

Business Organizations Must Be Represented By Attorneys
In Unemployment Compensation Hearings

      In a recent decision from Kentucky Court of Appeals, it struck down as unconstitutional a  statute allowing business organizations (corporations, partnerships, LLCs, etc.) to appear at hearings on unemployment compensation through persons who are not attorneys. Rather, it was held that the employer must be represented by an attorney. Nichols v. Kentucky Unemployment Insurance Commission, No. 2017-CA-001156-MR, 2019 WL 1868589 (Ky. Ap. April 26, 2019).

       In this dispute, Norton Healthcare, the employer of Nichols, appeared before an Unemployment Insurance Commission hearing through Skinner, the Director of Clinical Engineering at Norton (and not an attorney). Nichols’ application for unemployment benefits was denied. Before the Court of Appeals the question was whether that determination was valid because of the employer’s representation by a non-attorney. Ultimately, the denial of benefit would be struck down because of Norton’s improper representation by a non-attorney.

      There was a statute, KRS § 341.470(3), that permitted a partnership or corporate employer to appear through non-lawyers at unemployment hearings. In this ruling, the Court of Appeals would strike down that statute is unconstitutional, finding that:

The statutory provision allowing corporate or partnership employers to appear pro se through non-lawyer representatives in unemployment proceedings, violates the separation-of-powers provisions of the Kentucky Constitution. Since Norton was represented by a non-attorney in the administrative proceedings before the Commission, we must vacate the circuit court’s order with directions to remand this matter to the Commission for a new administrative hearing.

      This decision is consistent with other rulings of the Kentucky Supreme Court with respect to representation by a non-attorney of a business organization. Applying that prior law, this panel of the Kentucky Court of Appeals wrote:

However, in Turner v. Kentucky Bar Association, 980 S.W.2d 560 (Ky. 1998), our Supreme Court held that a similar statute authorizing non-attorneys to represent and advise workers’ compensation claimants encroached on the exclusive power of the judiciary to establish rules relating to the practice of law. Id. at 562-63. See also KY. CONST. § 116. “Legal representation by a lay person before an adjudicatory tribunal, however informal, ... as such representation involves advocacy that would constitute the practice of law.” Turner, 980 S.W.2d at 564. Furthermore, the Court expressly declined to extend comity to the statute at issue in Turner. Id. at 563.

 

We emphasize that individual employers, such as a sole proprietorship, have the right to represent themselves in any administrative or legal proceeding. We also recognize that KRS 341.470(3) has a laudable goal of trying to simplify proceedings before the Commission. However, it is well-established that representation of a corporate or non-natural entity by a non-attorney implicates the unauthorized practice of law. See SCR 3.020. See also Statewide Environmental Services, Inc. v. Fifth Third Bank, 352 S.W.3d 927, 929 n.4 (Ky. App. 2011). Based on Turner, we are compelled to conclude that this restriction also applies to proceedings before administrative agencies. Therefore, to the extent that KRS 341.470(3) provides otherwise, the statute violates the separation-of-powers provisions of the Kentucky Constitution.