North Carolina Department of Justice
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Reply to: ALEXANDER MCC. PETERS SERVICE TO STATE AGENCIES 919.716.6800 FAX: 919.716.6755 E-MAIL: apeters@mail.jus.state.nc.us

November 30, 1999

Mr. Ronald Penny State Personnel Director Office of State Personnel 116 West Jones Street Raleigh, North Carolina 27603-8004

Re: Advisory Opinion: N.C. GEN. STAT. § 126-22 Direct Deposit for Spending Account Participants of NC Flex by Aon Consulting as Agent of the State of North Carolina

Dear Mr. Penny:

You have asked for our opinion regarding NC Flex’s proposal to provide, through its thirdparty administrator, for the direct deposit of payments to spending accountparticipants. Specifically, you have asked whether the contractual arrangement with Aon Consulting, which acts as third-party administrator for the spending accounts, legally allows for the release of participant’s bank account information to Aon Consulting, and also whether any confidentiality or privacy laws will be violated by such a release of direct deposit information to Aon Consulting. For reasons set out below, it is our opinion that NC Flex may release direct deposit information to Aon Consulting as proposed.

N.C. GEN. STAT. § 126-22 provides, in pertinent part:

Personnel files of State employees, former State employees, or applicants for State employment shall not be subject to inspection and examination as authorized by G.S. 132-6. For purposes of this Article, a personnel file consists of any information gathered by the department, division, bureau, commission, council, or other agency subject to Article 7 of this Chapter which employs an individual, previously employed an individual, or considered an individual’s application for employment, or by the office of State Personnel, and which information relates to the individual’s application, selection or nonselection, promotions, demotions, transfers,leave, salary, suspension, performance evaluation forms, disciplinary actions, and termination of employment wherever located and in whatever form.

Mr. Ronald Penny November 30, 1999 Page 2

Aon Consulting acts as the agent of the State of North Carolina and of NC Flex in administering the spending accounts of participants of NC Flex. Since Aon Consulting acts as NC Flex’s agent in this regard, NC Flex may appropriately provide Aon Consulting with the information necessary to carry out this agency on behalf of NC Flex and of the State. Indeed, because Aon Consulting acts as NC Flex’s agent, it is our opinion that there is no disclosure of information involved in NC Flex’s proposal, because Aon Consulting acts in the place of and on behalf of NC Flex rather than functioning as a outside entity. See, e.g., Branch Banking & Trust Co. v. Creasy, 301 N.C. 44, 56, 269 S.E.2d 117, 124 (1980) (“[a]n agent is one who acts for or in the place of another by authority from him”).

We would stress that, inasmuch as Aon Consulting will be acting as the agent of NC Flex, Aon Consulting will have the duty to strictly maintain the confidentiality of any information that it receives pursuant to that agency. Furthermore, employees of Aon Consulting should be aware of the provisions of N.C. GEN. STAT. § 126-27, which makes it a Class 3 misdemeanor, punishable by a fine of up to $500.00, to provide any unauthorized person access to confidential information regarding State employees. It is our understanding that NC Flex’s contract with Aon Consulting specifically address the duty to keep this information confidential.

For the foregoing reasons, it is our opinion that NC Flex may release direct deposit information to Aon Consulting as proposed.

Very truly yours,

Ann Reed Senior Deputy Attorney General

Alexander McC. Peters Special Deputy Attorney General

AMP/hs