North Carolina Overhauls Unemployment Insurance Laws
North Carolina’s sweeping rewrite of its unemployment insurance (UI) laws takes effect on July 1, 2013.
Although additional legislation is pending to make technical corrections to the impending reforms, state UI leaders have recently provided details of the changes as follows:
- The maximum unemployment weekly benefit amount (WBA) decreases from $535 to $350.
- The WBA will be calculated using the average of the last 2 completed calendar quarters in the base period (currently the total wages in the highest quarter of the base period is used.)
- The maximum duration of unemployment benefits decreased from 26 weeks to 20 weeks.
- A non-compensable “waiting week” will be required for each claim filed during a benefit year (currently a claimant serves only one waiting week per benefit year.)
- A job offer paying 120% of the claimant’s WBA will be considered suitable work, after benefits have been paid for 10 weeks.
- A claimant may qualify for UI if he or she leaves work solely due to work hours being reduced more than 50% (currently 20%) as part of a unilateral and permanent reduction in work hours.
- There will no longer be a provision for school registration to waive severance pay. It will now be a week-for-week delay in the payment of benefits.
- All but two of the specific “good cause” reasons to quit employment will be eliminated. The reasons are domestic violence and military spouse relocation. A claimant may qualify for UI benefits, but the employer’s account will not be charged.
- “Substantial fault” will be eliminated, which means employers must only prove misconduct where the separation issue in the unemployment claim is a discharge, i.e. conduct evincing a willful or wanton disregard of the employer’s interest…or conduct evincing carelessness or negligence…
- The response deadline on form NCUI 500AB, Request for Separation Information from Employer, increases from 10 days to 14 days.
- Restrictions and requirements may eliminate the ability of employers to file “Attached Claims” on behalf of workers temporarily unemployed or working reduced hours – e.g., an employer must have at least a zero account balance (or bring a negative balance to zero) and must prepay the full amount of UI benefits to be paid “Attached Workers” to the agency.
- Effective October 21, 2013, relief of charges will be prohibited if an employer or the employer’s agent demonstrates a pattern of failing to respond timely and adequately to a written request for separation information. A pattern will be determined if the number of untimely or inadequate responses is two or more or equal to or greater than 2% of the total requests sent to the employer during the prior year, whichever is less. In determining adequacy of a response, the UI agency will consider what information was specifically requested, as well as provided copies of any warnings, policies, handbooks, documents, etc., pertinent to the adjudication of the claim.
- Employers with 25 or more workers (previously 100 or more) will be required to file quarterly reports electronically in a format prescribed by the UI agency, or be subject to penalties.
- All government reimbursing employers will be required to maintain an account balance reserve of 1% of annual reported taxable wages. In order to build reserves, these employers must make a 1% payment for the following four quarters: Q3/2013, Q4/2013, Q1/2014, and Q2/2014.
- Non-charge provisions for government reimbursing employers a.k.a. “120% reimbursable accounts” will be eliminated. These employers will be issued new UI tax account numbers by the agency. Because this change is occurring mid-year, claims, benefit charges and billings may be issued under both the old and new account numbers.
- Non-profit reimbursing employers will no longer be able to secure their reimbursable election status by posting a surety bond or a line of credit. They must also maintain an account balance reserve of 1% of reported annual taxable wages. However, non-profit reimbursers with a bond or line of credit currently in effect will remain in effect until its expiration date. Therefore, employers with bonds or lines of credit that expire 12/31/2013 must submit a payment of 1% of taxable wages on their quarterly reports for Q1-Q4/2014; and, for those that expire 12/31/2014, payments must be submitted with their quarterly reports for Q1-Q4/2015.
- Revised tax rates, calculated under a new statutory formula, will go into effect in 2014.
Although not directly part of the new law reforms, federal Emergency Unemployment Compensation (EUC) payments will end June 30, 2013, because the maximum WBA is set to decrease from $535 to $350. A federal “non-reduction rule” exists which basically says EUC must stop if a state reduces benefits.
North Carolina has activated the following email address for employers to submit questions regarding the law changes: HB4questions@nccommerce.com. Details can be found on the UI agency’s website at https://www.ncesc1.com/business/default.asp (scroll down to the section entitled “Employment Security Law Changes – House Bill 4.)
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