On his second day as North Carolina Governor, Pat McCrory signed into law House Bill 4, a comprehensive reform of North Carolina’s unemployment insurance system. The law applies to new claims for unemployment benefits filed on or after July 1, 2013.
One of the most significant provisions of the law is the reduction in the maximum weekly benefit amount paid to the unemployed from $535 to $350 per week. House Bill 4 also reduces the maximum duration of unemployment benefits from 26 weeks to 20 weeks. In addition, for new claims filed on or after July 1, 2013, the duration of benefits will be based on a sliding scale of 5 weeks to 20 weeks, tied to the North Carolina’s seasonal adjustable statewide unemployment rate.
The new law eliminates the health exclusion that currently allows a claimant to avoid disqualification from benefits if the claimant can prove he or she left work due to a disability or other health condition. The health exclusion also applies if the claimant proves that he or she left work due to a disability or health condition of the claimant’s minor child, parent, or immediate family member.
The law also makes significant changes to “attached claims” for employees to receive unemployment benefits during periods of work slowdowns or temporary layoffs. One change limits North Carolina employers to filing only one attached claim per employee per a calendar year and limiting the period of partial unemployment for which an attached claim is filed to 6 weeks.
The unemployment measure also redefines North Carolina’s statutory definition of “suitable work,” which governs a claimant’s continued eligibility for unemployment benefits. The law provides that after receiving 10 weeks of unemployment benefit payments a claimant must accept any “suitable work,” now defined as any offer of employment paying at least 120% of the claimant’s weekly benefit amount.
Finally, the law eliminates “substantial fault” as a means by which North Carolina employers could at least partially disqualify a claimant from obtaining unemployment benefits. The elimination of substantial fault as a defense likely will result in an even greater emphasis on workplace “misconduct” as the principal basis by which North Carolina employers can defend against claims for unemployment benefits where the employee is separated by termination.
Best practices for North Carolina employers to defend against unemployment benefit claims include:
- documenting employees’ acknowledgement of receipt of written workplace policies, and
- enforcing and documenting progressive discipline.
In addition, North Carolina employers should consider reviewing closely their Form NCUI 104, which is issued by the Division of Employment Security each November. The Form NCUI 104 details the employers’ unemployment insurance tax rate calculation for the succeeding calendar year. A North Carolina employer can file a protest with the Division of Employment Security if an error occurred in the preparation of the Form NCUI 104.
In addition, because North Carolina unemployment insurance tax rates are determined under an experience rating system, in some instances an experience rating employer can make a voluntary contribution to reduce its unemployment insurance tax liability. The contribution must be made to the Division of Employment Security within 30 days of the mailing of the Form NCUI 104.