GSNC

Article 1. Definitions and Funds.

§ 96-1. Title and definitions.

Title. — This Chapter shall be known and may be cited as the “Employment Security Law.”
Definitions. — The following definitions apply in this Chapter:
1. Agricultural labor. — Defined in section 3306 of the Code.
2. Average weekly insured wage. — The weekly rate obtained by dividing the total wages reported by all insured employers for a calendar year by the average monthly number of individuals in insured employment during that year and then dividing that quotient by 52.
3. Base period. — The first four of the last five completed calendar quarters immediately preceding the first day of an individual’s benefit year.
4. Benefit. — Compensation payable to an individual with respect to the individual’s unemployment.
5. Benefit year. — The fifty-two-week period beginning with the first day of a week with respect to which an individual first files a valid claim for benefits and registers for work. If the individual is payroll attached, the benefit year begins on the Sunday preceding the payroll week ending date. If the individual is not payroll attached, the benefit year begins on the Sunday of the calendar week with respect to which the individual filed a valid claim for benefits and registered for work.
6. Code. — Defined in G.S. 105-228.90 .
7. Computation date. — August 1 of each year.
8. Department. — The North Carolina Department of Commerce.
9. Division. — The Department’s Division of Employment Security.
10. Employee. — Defined in section 3306 of the Code.
11. Employer or employing unit. — Any of the following:
  1. An employer as defined in section 3306 of the Code.
  2. A State or local governmental unit required to provide unemployment compensation coverage to its employees under section 3309 of the Code.
  3. A nonprofit organization required to provide unemployment compensation coverage to its employees under section 3309 of the Code.
  4. An Indian tribe required to provide unemployment compensation coverage to its employees under section 3309 of the Code.
12. Employment. — Defined in section 3306 of the Code, with the following additions and exclusions:
  1. Additions. — The term includes service to a governmental unit, a nonprofit organization, or an Indian tribe as described in sections 3306(c)(7) and 3306(c)(8) of the Code.
  2. Exclusions. — The term excludes all of the following:
    1. Service performed by an independent contractor.
    2. Service performed for a governmental entity or nonprofit organization under sections 3309(b) and 3309(c) of the Code.
    3. Service by one or more of the following individuals if the individual is authorized to exercise independent judgment and control over the performance of the work and is compensated solely by way of commission:
    4. Service performed by a direct seller, as defined in section 3508(b)(2) of the Code. The term does not include a person defined in section 3508(b)(2)(A)(iii) of the Code.
    5. Service performed by a nonresident employee for a nonresident business performing disaster-related work in this State during a disaster response period at the request of a critical infrastructure company. The definitions and provisions of G.S. 166A-19.70 A apply to this exclusion.
13. Employment security law. — A law enacted by this State or any other state or territory or by the federal government providing for the payment of unemployment insurance benefits.
14. Employment service company. — A person that contracts with a client or customer to supply an individual to perform employment services for the client or customer and that both under contract and in fact meets all of the following conditions:
15. Federal Unemployment Tax Act (FUTA). — Chapter 23 of the Code.
16. Full-time student. — Defined in section 3306 of the Code.
17. Governmental unit. — The term includes all of the following:
18. Immediate family. — An individual’s spouse, child, grandchild, parent, and grandparent, whether the relationship is a biological, step-, half-, or in-law relationship.
19. Independent contractor. — An individual who contracts to do work for a person and is not subject to that person’s control or direction with respect to the manner in which the details of the work are to be performed or what the individual must do as the work progresses.
20. Indian tribe. — Defined in section 3306 of the Code.
21. Nonprofit organization. — A religious, charitable, educational, or other organization that is exempt from federal income tax and described in section 501(c)(3) of the Code.
22. Person. — An individual, a firm, a partnership, an association, a corporation, whether foreign or domestic, a limited liability company, or any other organization or group acting as a unit.
23. Secretary. — The Secretary of the Department of Commerce or the Secretary’s designee.
24. Taxable wages. — The amount determined under G.S. 96-9.3 .
25. Unemployed. — Defined in G.S. 96-15.01 .
26. Unemployment Trust Fund. — The federal fund established pursuant to section 904 of the Social Security Act, as amended.
27. United States. — Defined in section 3306 of the Code.
28. Wages. — Defined in section 3306 of the Code, except that no amount is excluded as provided under subdivision (b)(1) of that section.

A real estate broker, as defined in G.S. 93A-2 .
A securities salesman, as defined in G.S. 78A-2 .
1. Negotiates with the client or customer on such matters as time, place, and type of work, working conditions, quality, and price of the employment services.
2. Determines the assignment of an individual to the client or customer, even if the individual retains the right to refuse a specific assignment.
3. Hires and terminates an individual supplied.
4. Sets the rate of pay for the individual supplied.
5. Pays the individual supplied. (14a) Federal disaster declaration. — Declaration of a major natural disaster by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, provided that the declaration allows disaster unemployment assistance under the federal act.
  1. The State, a county, or a municipality, or any department, agency, or other instrumentality of one of these entities.
  2. The State Board of Education, the Board of Trustees of The University of North Carolina, the board of trustees of other institutions and agencies supported and under the control of the State, a local board of education, or another entity that pays a teacher at a public school or educational institution.
  3. A special district, an authority, or another entity exercising governmental authority.
  4. An alcoholic beverage control board, an airport authority, a housing authority, a regional authority, or another governmental authority created pursuant to an act of the General Assembly.

History. Ex. Sess., 1936, c. 1, s. 1; 1947, c. 598, s. 1; 1977, c. 727, s. 1; 2011-401, s. 2.1; 2013-2, s. 1(b); 2013-224, s. 19; 2017-8, s. 1(a); 2018-94, s. 1(a); 2019-187, s. 1(d).

Cross References.

As to the inapplicability of this chapter to prisoners working pursuant to G.S. 162-58 , see G.S. 162-61 .

As to suspension of public assistance benefits for probation violations, see G.S. 15A-1345(a1).

Editor’s Note.

Session Laws 2011-145, s. 14.5(a), provides: “The statutory authority, powers, duties, functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the Employment Security Commission are transferred to the Department of Commerce with all of the elements of a Type I transfer as defined by G.S. 143A-6 .”

Session Laws 2013-2, s. 1(b), effective July 1, 2013, rewrote the Article heading, which formerly read “Division of Employment Security.”

Session Laws 2015-238, s. 3.2(a), applicable to decisions rendered on or after November 1, 2011, provides: “The following decisions in an appeal by a party to a decision of an appeals referee or hearing officer under Chapter 96 of the General Statutes are hereby validated and given the same legal effect as if those decisions had been issued by the Board of Review (BOR):

“(1) Decisions issued by the Assistant Secretary of Commerce for the Division of Employment Security or by the Secretary of Commerce’s designee.

“(2) Decisions issued by the three individuals appointed by the Governor in December 2013 to serve as members of the BOR.”

Session Laws 2018-94, s. 1(b), made the amendment of subdivision (b)(12) of this section by Session Laws 2018-94, s. 1(a), effective July 1, 2018, applicable to claims for benefits filed on or after that date, and applicable to tax calculations on or after that date.

Session Laws 2019-187, s. 3, made sub-sub-subdivision (b)(12)b.5., as added by Session Laws 2019-187, s. 1(d), effective August 1, 2019, and applicable to disaster declarations on or after that date.

Effect of Amendments.

Session Laws 2011-401, s. 2.1, effective November 1, 2011, rewrote the section.

Session Laws 2013-2, s. 1(b), added “and definitions” in the section heading; designated the former first sentence of the section as subsection (a), and therein added the subsection heading and deleted the former second sentence regarding the transfer of powers, duties, etc. of the Unemployment Compensation Commission to the Division of Employment Security; and added subsection (b). For effective date and applicability, see Editor’s note.

Session Laws 2017-8, s. 1(a), effective October 1, 2016, added subdivision (b)(14a).

Session Laws 2018-94, s. 1(a), in subdivision (b)(12), inserted “sections” preceding “3306(c)(7)” in subdivision (b)(12)a., inserted “sections” preceding “3309(b)” in subdivision (b)(12)b.2., and added subdivision (b)(12)b.4. For effective date and applicability, see editor’s note.

Session Laws 2019-187, s. 1(d), added sub-sub-subdivision (b)(12)b.5. For effective date and applicability, see editor’s note.

Legal Periodicals.

For article discussing unemployment compensation, see 15 N.C.L. Rev. 377 (1937).

For discussion of the 1939 and 1947 amendments to this Chapter, see 17 N.C.L. Rev. 415 (1939), and 25 N.C.L. Rev. 415 (1947).

For explanation of the purposes and effects of the 1957 amendments to this Chapter, see 36 N.C.L. Rev. 53 (1957).

For survey of 1979 administrative law, see 58 N.C.L. Rev. 1185 (1980).

For note on unemployment compensation and the labor dispute disqualification, see 16 Wake Forest L. Rev. 472 (1980).

For comment discussing unemployment compensation in light of Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357 (1982), see 18 Wake Forest L. Rev. 921 (1982).

For survey of 1982 administrative law, see 61 N.C.L. Rev. 961 (1983).

For note, “Employment Discrimination — The Supreme Court Liberates Title VII Mixed-Motive Cases from the Procrustean Bed of the McDonnell Douglas/Burdine Pretext Model — Price Waterhouse v. Hopkins,” see 25 Wake Forest L. Rev. 345 (1990).

CASE NOTES

Analysis

I. In General

Decisions under Former G.S. 96-8

I.In General

One of the major purposes of the Employment Security Act was to provide a fund by systematic accumulations during periods of employment to be retained and used for the benefit of persons furloughed from their jobs through no fault of their own. In re Abernathy, 259 N.C. 190 , 130 S.E.2d 292, 1963 N.C. LEXIS 521 , cert. denied, 375 U.S. 161, 84 S. Ct. 274, 11 L. Ed. 2d 261, 1963 U.S. LEXIS 134 (1963).

The General Assembly may determine the scope of this Chapter, and the definitions and tests prescribed will be applied by the courts in accordance with the legislative intent. Unemployment Comp. Comm'n v. City Ice & Coal Co., 216 N.C. 6 , 3 S.E.2d 290, 1939 N.C. LEXIS 92 (1939).

Construction in Favor of Applicants. —

The Employment Security Act is to be liberally construed in favor of applicants. Marlow v. North Carolina Emp. Sec. Comm'n, 127 N.C. App. 734, 493 S.E.2d 302, 1997 N.C. App. LEXIS 1182 (1997).

Construction in Favor of Validity. —

The intent of the legislature to provide a wide scope in the application of this Chapter to mitigate the economic evils of unemployment and to bring within its provisions employments therein defined beyond the scope of existing definitions or categories is apparent from the language used, and all doubts as to constitutionality should be resolved in favor of the validity of the Chapter and all its provisions. State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709 , 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

The “Employment Security Law” must be construed to promote and not to defeat the legislative policy as declared in this Chapter, and the courts will not construe the Chapter in such manner as to discourage parties from entering into contracts designed to lessen the hardships incident to termination of employment. In re Tyson, 253 N.C. 662 , 117 S.E.2d 854, 1961 N.C. LEXIS 359 (1961).

Weight to Be Given Federal Construction. —

Our State Unemployment Compensation Act (now Employment Security Law) was passed pursuant to a plan national in scope, and therefore serious consideration is to be given to the construction placed upon similar language of the federal statute by the Commissioner of Internal Revenue, but the interpretation of the Act is finally for our courts, and neither the ruling of the Commissioner nor that of the State Unemployment Compensation Commission (now Employment Security Commission) is conclusive. Unemployment Comp. Comm'n v. Wachovia Bank & Trust Co., 215 N.C. 491 , 2 S.E.2d 592, 1939 N.C. LEXIS 298 (1939).

Illustrative Cases. —

The Commission’s findings of fact, which were in conflict over when the discharge actually occurred, could not support the finding that the misconduct occurred after employee was discharged. Bagwell & Bagwell, Inc. v. Blanton, 124 N.C. App. 538, 478 S.E.2d 25, 1996 N.C. App. LEXIS 1154 (1996).

Decisions under Former G.S. 96-8

A.General Consideration

Editor’s Note. —

Most of the cases below were decided under former G.S. 96-8 , or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2. In addition, most of these cases were decided prior to the amendments made by Session Laws 2011-401, and references therein to the Employment Security Commission should be construed as references to the Division of Employment Security (DES) of the Department of Commerce.

Editor’s Note. —

The relevance of many of the decisions reported below may be affected by subsequent amendatory statutes.

This section provides the qualifications for benefits under the Employment Security Law. In re Shuler, 255 N.C. 559 , 122 S.E.2d 393, 1961 N.C. LEXIS 652 (1961).

Definitions and Tests Applied According to Legislative Intent. —

The General Assembly has power to determine scope of the Unemployment Compensation Act, and the definitions and tests therein prescribed will be applied by the courts in accordance with the legislative intent. Unemployment Comp. Comm'n v. City Ice & Coal Co., 216 N.C. 6 , 3 S.E.2d 290, 1939 N.C. LEXIS 92 (1939).

Common-Law Relationship of Master and Servant Extended. —

Employments taxable under this Chapter are not confined to the common-law relationship of master and servant, but the legislature, under its power to determine employments which shall be subject to the tax, has, by the definitions contained in the Chapter and the administrative procedure set up therein for determining whether an employment is subject to the Chapter, enlarged its coverage beyond the common-law definition of master and servant, and the scope of the Chapter must be determined upon the facts of each particular case. State ex rel. Unemployment Comp. Comm'n v. National Life Ins. Co., 219 N.C. 576 , 14 S.E.2d 689, 1941 N.C. LEXIS 106 (1941). See State ex rel. Unemployment Comp. Comm'n v. L. Harvey & Son Co., 227 N.C. 291 , 42 S.E.2d 86, 1947 N.C. LEXIS 409 (1947).

This section is not violative of constitutional provisions when properly interpreted and applied. State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709 , 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

Purpose. —

The General Assembly has stated the policy of this State is that the compulsory reserves required under the Employment Security Law be used for the benefit of persons unemployed through no fault of their own. In order to carry out the intent of the act its provisions should be liberally construed in favor of applicants. By contrast, our courts have said that sections of the act imposing disqualifications for its benefits should be strictly construed in favor of the claimant and should not be enlarged by implication. Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988).

Liberal Construction. —

The terms “employment,” “employer,” “employing unit,” “wages,” and “remuneration” as used in this Chapter must be liberally construed to effectuate its purpose to relieve the evils of unemployment, and the definition of the terms as contained in the Chapter are controlling and are broader than the common-law meaning of the terms, and the Chapter includes in its scope relationships which might be excluded by a strict common-law application of the definition of an independent contractor. Unemployment Comp. Comm'n v. Jefferson Std. Life Ins. Co., 215 N.C. 479 , 2 S.E.2d 584, 1939 N.C. LEXIS 297 (1939).

As to rules for determining whether an individual is an “employee” or an “independent contractor,” see State ex rel. Emp. Sec. Comm'n v. Faulk, 88 N.C. App. 369, 363 S.E.2d 225, 1988 N.C. App. LEXIS 3 , writ denied, 321 N.C. 480 , 364 S.E.2d 917, 1988 N.C. LEXIS 4 (1988).

Effect of Reinstatement of Liability After Prior Exemption. —

Where an employer, otherwise subject to the provisions of this Chapter, is exempted from those provisions by legislative action, and by legislative action that exemption is subsequently terminated, and, additionally, where there have been no changes in the circumstances or activities of the employer, upon reinstatement of liability under this Chapter that employer is entitled to credit for its prior account balance, and that employer’s contribution rate should be determined primarily by reference to its former experience rating at the time of its exemption. The burden will be upon the commission to show what, if any, changes in circumstances have come about which would justify an upward revision of that employer’s rate of contribution. State ex rel. Emp. Sec. Comm'n v. Blue Ridge Broadcasting Corp., 42 N.C. App. 702, 257 S.E.2d 640, 1979 N.C. App. LEXIS 2984 , cert. denied, 298 N.C. 805 , 262 S.E.2d 4, 1979 N.C. LEXIS 1462 (1979).

Former Subdivision (4) Construed. —

Former subdivision (4) merely determined who should be liable for the contributions to the Commission on wages paid to employees as between an employing unit and a contractor or subcontractor under certain specified circumstances. State ex rel. Unemployment Comp. Comm'n v. Nissen, 227 N.C. 216 , 41 S.E.2d 734, 1947 N.C. LEXIS 382 (1947).

Subdivision (5)b Construed. —

Subdivision (5)b of this section is a definitive statute by which it can be determined whether or not an employing unit which is the transferee of all, substantially all, or a part of an organization, trade, or business of another, is subject to the provisions of the Employment Security Law and required to make the contributions as provided therein. State ex rel. Emp. Sec. Comm’n v. News Publishing Co., 228 N.C. 332 , 45 S.E.2d 391 (1947). But see the 1949 amendment to G.S. 96-9(c)(4) .

In subdivision (5)b of this section, the employing unit that acquires only a part of the organization, trade, or business of another is expressly exempted from the lien imposed by G.S. 96-10(d) on the assets transferred, although the former owner may not have paid all the contributions due at the time of the transfer. If it had been the intent and purpose of the legislature, in enacting G.S. 96-9(c)(4) (now repealed), to authorize the transfer of such percentage of the reserve account as the transferred assets bear to the entire assets of the transferor, when only a part of the organization, trade, or business is transferred, then there would be no sound reason for exempting such assets from the provisions of G.S. 96-10(d). State ex rel. Emp. Sec. Comm’n v. News Publishing Co., 228 N.C. 332 , 45 S.E.2d 391 (1947). But see the 1949 amendment to § 96-9(c)(4) .

Read in context, subdivision (5)b of this section contemplates a transaction in which the purchaser, instead of buying physical assets as such, succeeds in some real sense to the organization, trade or business, or some part thereof, of a covered employer, ordinarily as a going concern. The underlying idea is that of continuity, the new employing unit succeeding to and continuing the business or some part thereof of the former employing unit. State ex rel. Emp. Sec. Comm'n v. Skyland Crafts, Inc., 240 N.C. 727 , 83 S.E.2d 893, 1954 N.C. LEXIS 517 (1954).

Where defendant company was composed of new persons, engaged in a new business, under a new name, and did not purchase the predecessor’s accounts receivable, customer lists, goodwill, right to use trade name, or any assets except the equipment and raw materials in the plant, there was no continuity of organization, trade or business such as is contemplated by subdivision (5)b of this section. State ex rel. Emp. Sec. Comm'n v. Skyland Crafts, Inc., 240 N.C. 727 , 83 S.E.2d 893, 1954 N.C. LEXIS 517 (1954).

Subdivision (5)d Construed. —

The provision that enterprises “controlled” by the same “interests” shall be considered a single employing unit, as contained in former subdivision (5)d of this section, was given the distinct, definite and commonly understood meaning of its wording. Unemployment Comp. Comm'n v. City Ice & Coal Co., 216 N.C. 6 , 3 S.E.2d 290, 1939 N.C. LEXIS 92 (1939).

Subdivision (6)a Construed. —

The employment contemplated by subdivision (6)a was to be one for personal services rendered for remuneration. State ex rel. Emp. Sec. Comm'n v. Tinnin, 234 N.C. 75 , 65 S.E.2d 884, 1951 N.C. LEXIS 401 (1951).

Subdivision (6)f Construed. —

Where services were rendered for remuneration, subdivision (6)f of this section formerly provided that the burden was on the party for whose benefit the services were rendered to prove that they were rendered free from his control or direction over the performance of such services, that they were outside the usual course of the business for which the services were performed, and that the person performing the service was customarily engaged in an independently established trade, occupation, profession, or business; and, since the matters of exemption were stated conjunctively, all three elements were required to be shown in order that exemption from the Chapter could be secured. Unemployment Comp. Comm'n v. Jefferson Std. Life Ins. Co., 215 N.C. 479 , 2 S.E.2d 584, 1939 N.C. LEXIS 297 (1939); State ex rel. Emp. Sec. Comm'n v. Coe, 239 N.C. 84 , 79 S.E.2d 177, 1953 N.C. LEXIS 623 (1953).

Subparagraph (6)k Construed. —

The enactment in 1977 of subdivisions (5)q and (6)j of this section, which deleted a previous exemption from unemployment tax liability for nonprofit elementary and secondary schools, did not change the effect of the exemption in subparagraph (6)k of this section for persons performing services in the employ of a church organization operated primarily for religious purposes. Begley v. Employment Sec. Comm'n, 50 N.C. App. 432, 274 S.E.2d 370, 1981 N.C. App. LEXIS 2137 (1981).

Before the 1949 amendment to subdivisions (6)(a) and (f), it was held that the provisions of the Employment Security Law classifying and designating those persons who are subject to the provisions of this Chapter, rather than the common-law definition of the relationship of master and servant, were controlling, when not capricious or unreasonable. And the burden was upon the employer to show to the satisfaction of the Employment Security Commission that persons performing services came within the exceptions enumerated in former paragraphs 1, 2 and 3 of subdivision (6)f. State ex rel. Emp. Sec. Comm'n v. Champion Distrib. Co., 230 N.C. 464 , 53 S.E.2d 674, 1949 N.C. LEXIS 380 (1949).

While subdivision (10)a of this section requires a claimant to be “unemployed” as statutorily defined before receiving benefits, neither this statute nor any other in the Employment Security Law requires one to be unemployed before filing a claim or makes filing a claim determinative of the fact of unemployment. Wright v. Bus Term. Restaurant, 71 N.C. App. 395, 322 S.E.2d 201, 1984 N.C. App. LEXIS 3855 (1984).

Under the law, facts such as unemployment and its cause are determined by evidence, rather than statutory implication. Wright v. Bus Term. Restaurant, 71 N.C. App. 395, 322 S.E.2d 201, 1984 N.C. App. LEXIS 3855 (1984).

One is not entitled to unemployment benefits merely because he meets the legislative definition of “totally unemployed.” In re Tyson, 253 N.C. 662 , 117 S.E.2d 854, 1961 N.C. LEXIS 359 (1961).

A unilateral, substantial reduction in one’s working hours by his employer may permit a finding of good cause attributable to the employer. Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988).

Deferment of Benefits Until Exhaustion of Severance and Vacation Pay. —

Discharged employees who are entitled under a contract to severance and vacation pay are not entitled to unemployment benefits until the moneys paid as severance and vacation pay have been exhausted by time elapsed at the employees’ weekly wage rate. In re Tyson, 253 N.C. 662 , 117 S.E.2d 854, 1961 N.C. LEXIS 359 (1961).

The fact that the legislature not only amended the definition of “wages” in 1953, but added, in 1955, a disqualifying provision, was clear evidence of its intent to prevent the collection of unemployment benefits so long as the employee had vacation or severance pay payable to him. It was a clear declaration that the legislature did not intend that an employer should be required to provide greater compensation to an unemployed individual than to the same individual when at work. In re Tyson, 253 N.C. 662 , 117 S.E.2d 854, 1961 N.C. LEXIS 359 (1961).

Employee Is Entitled to Benefits If He Does Not Work and Is Not Paid for Services. —

A laid-off employee is entitled to insurance benefits under the State law if he is totally unemployed; that is, if he does not work, and is not paid and not due pay for services. In re Shuler, 255 N.C. 559 , 122 S.E.2d 393, 1961 N.C. LEXIS 652 (1961).

Payments Under Supplemental Unemployment Benefit Plan. —

Under the wage and service test fixed by this section, payments to laid-off employees under a supplemental unemployment benefit plan do not constitute wages. In re Shuler, 255 N.C. 559 , 122 S.E.2d 393, 1961 N.C. LEXIS 652 (1961).

Benefits received by a laid-off employee from a trust fund set up pursuant to a collective bargaining agreement should not be deducted from unemployment insurance benefits due such employee under the Employment Security Act. In re Shuler, 255 N.C. 559 , 122 S.E.2d 393, 1961 N.C. LEXIS 652 (1961).

Recovery of Both Workers’ Compensation and Unemployment Benefits. —

Several states allow the recovery of both workers’ compensation and unemployment benefits for the same time period, in the absence of an express statutory prohibition. In North Carolina, there is no express prohibition of duplicate benefits, although a persuasive argument can be made that the General Assembly intended that there be no recovery of both workers’ compensation and unemployment benefits. Dolbow v. Holland Indus., Inc., 64 N.C. App. 695, 308 S.E.2d 335, 1983 N.C. App. LEXIS 3338 (1983).

The United States Secretary of Labor was not a necessary party to an action to determine whether the unemployment tax statutes applied to employees of schools operated by the Roman Catholic Church in North Carolina on the grounds that State unemployment laws must follow federal statutes in order for the State to gain a credit against the federal unemployment tax and thus obtain funds to operate State employment offices and that the United States Secretary of Labor has interpreted the federal statutes to include parochial and parish schools within the scope of the federal unemployment tax provisions, since that action in no way involved an interpretation of the Federal Unemployment Tax Act. Begley v. Employment Sec. Comm'n, 50 N.C. App. 432, 274 S.E.2d 370, 1981 N.C. App. LEXIS 2137 (1981).

B.“Employer”

Corporation Acting as Contractee and Not Mere Lessor. —

The corporate defendant operated a department store. Upon the discontinuance of its shoe department, it entered into a contract with the individual defendant under which he occupied space in the store at a rental of a fixed percentage of the gross and carried on the shoe business under the name of the corporation, with full authority to hire and fire employees and order stock, but under which the corporation required money from sales to be turned over to it immediately as received, controlled the extension of credit and owned all accounts, paid sales taxes and advertised in its own name with the individual defendant paying for the proportion of advertising devoted to shoes. It was held that the corporation was a contractee and not a mere landlord, and that the corporation was liable under former subdivision (4) for unemployment compensation tax on wages paid by the individual to his employees for the period of operation prior to the amendment of 1945. State ex rel. Unemployment Comp. Comm'n v. L. Harvey & Son Co., 227 N.C. 291 , 42 S.E.2d 86, 1947 N.C. LEXIS 409 (1947).

Employer Required to Pay Contributions. —

Where, prior to the purchase of the business by defendant, there had been employed therein more than eight individuals for 12 weeks during the calendar year, and defendant, after purchasing the business, employs more than eight employees for 16 weeks during the remainder of the year, defendant is an employer required to pay contributions upon the wages of his employees under the provisions of the Employment Security Act. State ex rel. Emp. Sec. Comm'n v. Whitehurst, 231 N.C. 497 , 57 S.E.2d 770, 1950 N.C. LEXIS 482 (1950).

This section requires employment security contributions from church-related schools, and they are obligated to pay the appropriate taxes. Ascension Lutheran Church v. Employment Sec. Comm'n, 501 F. Supp. 843, 1980 U.S. Dist. LEXIS 14638 (W.D.N.C. 1980), disapproved, St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 101 S. Ct. 2142, 68 L. Ed. 2d 612, 1981 U.S. LEXIS 105 (1981). But see Begley v. Employment Sec. Comm'n, 50 N.C. App. 432, 274 S.E.2d 370, 1981 N.C. App. LEXIS 2137 (1981).

Unemployment Taxes. —

An employer must pay state unemployment taxes on his alien farm workers with seasonal agricultural worker, “SAW” status. State ex rel. Emp. Sec. Comm'n v. Hopkins, 111 N.C. App. 437, 432 S.E.2d 703, 1993 N.C. App. LEXIS 791 (1993).

ESC to Be Treated as Employer. —

The reasoning of the Court of Appeals erroneously treated Employment Security Commission (ESC) as an agency appealing its own agency decision rather than as an “aggrieved party” where ESC appealed to Superior Court not as an agency decision-maker, but as an employer aggrieved by the agency action. ESC-employer was liable to pay for unemployment insurance benefits the same as any other employer and had the same rights of appeal as any other employer; thus, ESC-employer had the status of “aggrieved party” under ESC Regulation 21.18(D) and had appeal rights as such. Employment Sec. Comm'n v. Peace, 341 N.C. 716 , 462 S.E.2d 222, 1995 N.C. LEXIS 526 (1995).

C.“Employees”

Unemployment insurance benefits are not available to those who are not employees within the meaning of the unemployment insurance statute. State ex rel. Emp. Sec. Comm'n v. Paris, 101 N.C. App. 469, 400 S.E.2d 76, 1991 N.C. App. LEXIS 81 , aff'd, 330 N.C. 114 , 408 S.E.2d 852, 1991 N.C. LEXIS 650 (1991).

Employee Status Versus Independent Contractor Status. —

In determining whether someone is an independent contractor or an employee, the decisive test is the retention by the employer of the right to control and direct the manner in which the details of the work are to be executed and what the laborers shall do as the work progresses. State ex rel. Emp. Sec. Comm'n v. Huckabee, 120 N.C. App. 217, 461 S.E.2d 787, 1995 N.C. App. LEXIS 734 (1995), aff'd, 343 N.C. 297 , 469 S.E.2d 552, 1996 N.C. LEXIS 267 (1996).

Employees of schools operated by the Roman Catholic Church are exempt from the unemployment tax provisions of this Chapter pursuant to subparagraph (6)k 15 of this section. Begley v. Employment Sec. Comm'n, 50 N.C. App. 432, 274 S.E.2d 370, 1981 N.C. App. LEXIS 2137 (1981). But see Ascension Lutheran Church v. Employment Sec. Comm'n, 501 F. Supp. 843, 1980 U.S. Dist. LEXIS 14638 (W.D.N.C. 1980), disapproved, St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 101 S. Ct. 2142, 68 L. Ed. 2d 612, 1981 U.S. LEXIS 105 (1981).

Agreement of Purchaser to Perform Service in Connection with Purchase. —

Evidence that a municipal corporation sold certain standing timber to defendant at a stipulated price per thousand board feet, and that in connection with the purchase, defendant agreed to remove all sawdust, to keep the bushes down and to pile no brush on the premises of the corporation, supported the finding of the Employment Security Commission that the defendant was not in the employ of the municipal corporation, within the meaning of this section. State ex rel. Emp. Sec. Comm'n v. Simpson, 238 N.C. 296 , 77 S.E.2d 718, 1953 N.C. LEXIS 436 (1953).

A magistrate is a “member of the judiciary” within the meaning of subdivision (6) so as to be excluded from benefits under the Employment Security Law. Bradshaw v. Administrative Office of Courts, 320 N.C. 132 , 357 S.E.2d 370, 1987 N.C. LEXIS 2164 (1987).

Insurance Soliciting Agents. —

Soliciting agents and managers, in their capacity as soliciting agents, are subject to a high degree of control by the insurance company employing them under their written contract, and usually their services are rendered to the company in the offices of the company, and are directly related and contribute to the primary purpose for which the company is organized, and therefore their services constitute an “employment” within this Chapter. Unemployment Comp. Comm’n v. Jefferson Std. Life Ins. Co., 215 N.C. 479 , 2 S.E.2d 584 (1939). But see subdivision (6) of this section .

Research Assistant. —

The claimant’s services as a research assistant under a fellowship granted to students by The University of North Carolina were not “employment” within the meaning of the act. In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

Private nurse’s assistant was an independent contractor and not an employee and thus not entitled to unemployment compensation benefits when she was relieved of her duties, as the evidence shows that the parties did not intend for claimant to receive the agreed upon salary free from deductions and also be eligible for unemployment compensation benefits. State ex rel. Emp. Sec. Comm'n v. Paris, 101 N.C. App. 469, 400 S.E.2d 76, 1991 N.C. App. LEXIS 81 , aff'd, 330 N.C. 114 , 408 S.E.2d 852, 1991 N.C. LEXIS 650 (1991).

Salesmen. —

The evidence tended to show that the services performed by defendant’s salesmen were in the usual course of defendant’s business, that goods were loaded on the salesmen’s cars on defendant’s premises, and the unsold goods returned there, that the salesmen were bonded, were allotted territory by defendant, were not permitted to sell any competitor’s merchandise, paid no license or sales tax, were reported as employees in federal returns and their taxes deducted from the payroll, were required to turn in all money for goods sold and were paid weekly on a commission basis. Therefore, the evidence supports the finding of the Employment Security Commission that the salesmen were “employees” within the meaning of this section. State ex rel. Employment Sec. Comm’n v. Champion Distrib. Co., 230 N.C. 464 , 53 S.E.2d 674 (1949). But see the 1949 amendment to subdivision (6), paragraphs a and f.

Shoeshine Boy. —

Findings were held sufficient to support the conclusions of the Employment Security Commission that a shoeshine boy “engaged” by a barbershop was an employee and not an independent contractor, so as to bring the employer within the coverage of the Employment Security Law during the period in question. State ex rel. Emp. Sec. Comm'n v. Coe, 239 N.C. 84 , 79 S.E.2d 177, 1953 N.C. LEXIS 623 (1953).

Special School Employee. —

Project Headstart is a school within the ordinary meaning of the term, and the situation of an employee of Project Headstart is one of those addressed by the “secondary school provision” of this section, excluding from unemployment benefits those who are subject to school-related seasonal unemployment. In re Huntley, 42 N.C. App. 1, 255 S.E.2d 574, 1979 N.C. App. LEXIS 2758 , cert. denied, 298 N.C. 297 , 259 S.E.2d 913, 1979 N.C. LEXIS 1585 (1979).

Truck Driver. —

Where an interstate carrier leased a motor vehicle for a trip under its franchise by agreement stipulating that lessor should furnish the equipment and pay the driver’s salary and fully maintain and service the equipment, in consideration of a lump sum payment, the driver of such leased vehicle, whether he be the lessor owner or an employee of the lessor owner, was not an employee of the lessee within the meaning of this section. State ex rel. Emp. Sec. Comm'n v. Hennis Freight Lines, 248 N.C. 496 , 103 S.E.2d 829, 1958 N.C. LEXIS 527 (1958).

Findings of fact made by the Commission were not sufficient to support the conclusion of law that drivers hauling freight in a truck owned by company, other than owner-operators, were employees of the company for purposes of this Chapter. Reco Transp., Inc. v. Employment Sec. Comm'n, 81 N.C. App. 415, 344 S.E.2d 294, 1986 N.C. App. LEXIS 2320 (1986).

Truck Loaders. —

Company maintained control over the manner and method of the truck loaders’ work and the loaders did not retain that degree of independence necessary to require their classification as independent contractors where the loaders had no investment in the business, had to load the trucks at a particular plant within four set shifts under the direction and supervision of the plant, and the only discretion the loaders had was in choosing a load. State ex rel. Emp. Sec. Comm'n v. Huckabee, 120 N.C. App. 217, 461 S.E.2d 787, 1995 N.C. App. LEXIS 734 (1995), aff'd, 343 N.C. 297 , 469 S.E.2d 552, 1996 N.C. LEXIS 267 (1996).

Cab Drivers. —

For case upholding the Commission’s conclusion that taxicab drivers for cab company were “employees” within the meaning of subdivision (6)a of this section, see State ex rel. Emp. Sec. Comm'n v. Faulk, 88 N.C. App. 369, 363 S.E.2d 225, 1988 N.C. App. LEXIS 3 , writ denied, 321 N.C. 480 , 364 S.E.2d 917, 1988 N.C. LEXIS 4 (1988).

Evidence Showing Workers to Be Employees and Not Independent Contractors. —

See State ex rel. Emp. Sec. Comm'n v. Monsees, 234 N.C. 69 , 65 S.E.2d 887, 1951 N.C. LEXIS 402 (1951).

§§ 96-1.1 through 96-1.5. [Repealed]

Repealed by Session Laws 1977, c. 727, ss. 2-6.

§ 96-2. Declaration of State public policy.

As a guide to the interpretation and application of this Chapter, the public policy of this State is declared to be as follows: Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of this State. Involuntary unemployment is therefore a subject of general interest and concern which requires appropriate action by the legislature to prevent its spread and to lighten its burden which now so often falls with crushing force upon the unemployed worker and his family. The achievement of social security requires protection against this greatest hazard of our economic life. This can be provided by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The legislature, therefore, declares that in its considered judgment the public good and the general welfare of the citizens of this State require the enactment of this measure, under the police powers of the State, for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own.

History. Ex. Sess. 1936, c. 1, s. 2.

Legal Periodicals.

For survey of 1976 administrative law, see 55 N.C.L. Rev. 898 (1977).

For survey of 1979 administrative law, see 58 N.C.L. Rev. 1185 (1980).

For note on unemployment compensation and the labor dispute disqualification, see 16 Wake Forest L. Rev. 472 (1980).

CASE NOTES

Legislative Intent. —

The legislature has sought to provide aid to those out of work through no fault of their own. In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

The matter of policy is in the exclusive province of the legislature and the courts will not interfere therewith unless the provisions relating thereto have no reasonable relations to the end sought to be accomplished. In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941) (applying provisions seeking to make State neutral in labor disputes) .

Provisions of G.S. 96-14 Prevail over General Policy of this Section. —

A specific ground for disqualifying an employee from unemployment benefits in G.S. 96-14, “when applicable,” prevails over the general policy in this section of providing benefits to workers who are “unemployed through no fault of their own.” Lynch v. PPG Indus., 105 N.C. App. 223, 412 S.E.2d 163, 1992 N.C. App. LEXIS 37 (1992).

Construction in Favor of Granting Claims. —

Statutory provisions allowing disqualification from benefits must be strictly construed in favor of granting claims. Marlow v. North Carolina Emp. Sec. Comm'n, 127 N.C. App. 734, 493 S.E.2d 302, 1997 N.C. App. LEXIS 1182 (1997).

Design of Employment Security Law. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

The Employment Security Act was designed to provide protection against economic insecurity due to unemployment and should be liberally construed in favor of applicants. Eason v. Gould, Inc., 66 N.C. App. 260, 311 S.E.2d 372, 1984 N.C. App. LEXIS 2874 (1984), aff'd, 312 N.C. 618 , 324 S.E.2d 223, 1985 N.C. LEXIS 1484 (1985).

The Employment Security Act was not designed to provide the payment of benefits to a person who is physically unable to work or who, for any other personal reason, would at no time be in a position to accept any employment if it were tendered to him, however capable and industrious such person may be. Milliken & Co. v. Griffin, 65 N.C. App. 492, 309 S.E.2d 733, 1983 N.C. App. LEXIS 3566 (1983).

The section must be construed to provide benefits to one who becomes involuntarily unemployed, who is physically able to work, who is available for work at suitable employment, and who, although actively seeking work, is unable to find such employment through no fault of his or her own. Barnes v. Singer Co., 324 N.C. 213 , 376 S.E.2d 756, 1989 N.C. LEXIS 99 (1989).

This Act does not contemplate penalizing workers who choose in favor of their own health, safety or ethical standards and against an affirmative or de facto policy of the employer to the contrary. Ray v. Broyhill Furn. Indus., 81 N.C. App. 586, 344 S.E.2d 798, 1986 N.C. App. LEXIS 2334 (1986).

Strict Construction. —

Sections of this Chapter imposing disqualifications for its benefits should be strictly construed in favor of the claimant and should not be enlarged by implication or by adding to one disqualifying provision words found only in another. In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

Disqualification for benefits under the statute must be strictly construed in favor of the claimant and the employer has the burden to show that the claimant is disqualified from receiving benefits. Barnes v. Singer Co., 324 N.C. 213 , 376 S.E.2d 756, 1989 N.C. LEXIS 99 (1989).

“Through No Fault of Their Own”. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

For discussion of whether a person who loses his employment for health reasons has left involuntarily with good cause attributable to the employer, see Milliken & Co. v. Griffin, 65 N.C. App. 492, 309 S.E.2d 733, 1983 N.C. App. LEXIS 3566 (1983).

Nowhere in the act is the word “work” defined. In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

G.S. 96-14 Prevails over This Section. —

G.S. 96-14, which sets out the specific grounds for disqualification of benefits, will prevail over the general policy provisions of this section. In re Usery, 31 N.C. App. 703, 230 S.E.2d 585, 1976 N.C. App. LEXIS 2091 (1976), cert. denied, 292 N.C. 265 , 233 S.E.2d 396, 1977 N.C. LEXIS 1067 (1977).

§ 96-3. Division of Employment Security.

The Division of Employment Security (DES) is created within the Department of Commerce and shall administer the provisions of this Chapter under the supervision of the Assistant Secretary of Commerce.

History. Ex. Sess. 1936, c. 1, s. 10; 1941, c. 108, s. 10; c. 279, ss. 1-3; 1943, c. 377, s. 15; 1947, c. 598, s. 1; 1953, c. 401, s. 1; 1957, c. 541, s. 5; 1965, c. 795, s. 1; 1977, c. 727, s. 7; 1979, c. 660, s. 1; 1981, c. 354; 1983, c. 717, s. 19; 1983 (Reg. Sess., 1984), c. 1034, s. 164; 1987, c. 103, s. 1; 1996, 2nd Ex. Sess., c. 18, s. 28.2(c); 1997-443, s. 33.3; 2005-276, ss. 29.20A(a), 29.20A(b); 2011-401, s. 2.2; 2015-238, s. 2.4(a).

Editor’s Note.

Session Laws 2005-276, s. 29.20A(b) made amendments to subsection (c) that were in effect until appointment of the next Chairman of the Employment Security Commission of North Carolina. Session Laws 2005-276, s. 29-20A(a) made amendments to subsection (c) effective upon the appointment of the next Chairman. A new Chairman of the Employment Security Commission was appointed on January 12, 2009, and the amendments to subsection (c) made by Session Laws 2005-276, s. 29.20A(a) are now in effect.

Effect of Amendments.

Session Laws 2011-401, s. 2.2, effective November 1, 2011, rewrote the section.

Session Laws 2015-238, s. 2.4(a), effective September 10, 2015, rewrote the section.

CASE NOTES

Commission Is State Agency. —

The Commission is an agency created by statute for a public purpose and is an agency of the State. Prudential Ins. Co. of Am. v. Powell, 217 N.C. 495 , 8 S.E.2d 619, 1940 N.C. LEXIS 273 (1940).

§ 96-4. Administration; powers and duties of the Assistant Secretary; Board of Review.

Duties and Powers of the Secretary and Assistant Secretary. — It shall be the duty of the Secretary of the Department of Commerce to administer this Chapter. The Secretary shall appoint an Assistant Secretary to assist in the implementation of the Employment Security Laws and the oversight of the Division of Employment Security.
Repealed by Session Laws 2015-238, s. 3.3(a), effective September 10, 2015.
Procedures. — The Secretary of the Department of Commerce shall determine the organization and methods of procedure of the Division, in accordance with the provisions of this Chapter, and shall have an official seal which shall be judicially noticed. The Assistant Secretary shall, except as otherwise provided by the Secretary, be vested with all authority of the Secretary under this Chapter, including the authority to conduct hearings and make decisions and determinations, and shall execute all orders, rules and regulations established by the Secretary. Not later than November 20 preceding the meeting of the General Assembly, the Secretary shall submit to the Governor a report covering the administration and operation of this Chapter during the preceding biennium, and shall make such recommendation for amendments to this Chapter as the Secretary deems proper. The report shall include a balance sheet of the monies in the fund in which there shall be provided, if possible, a reserve against the liability in future years to pay benefits in excess of the then current contributions, which reserve shall be set up by the Secretary in accordance with accepted actuarial principles on the basis of statistics of employment, business activity, and other relevant factors for the longest possible period. Whenever the Secretary believes that a change in contribution or benefit rates will become necessary to protect the solvency of the fund, the Secretary shall promptly so inform the Governor and the legislature, and make recommendations with respect thereto.
Rule Making. — Rules adopted to implement the Employment Security Laws in accordance with this Chapter shall be made pursuant to Article 2A of Chapter 150B of the General Statutes, the Administrative Procedures Act.
Publication. — The Division shall cause to be printed for distribution to the public the text of this Chapter, the Division’s rules, and any other material the Division deems relevant and suitable, and shall furnish the same to any person upon application therefor. All publications printed shall comply with the requirements of G.S. 143-170.1 .
Personnel. — Subject to other provisions of this Chapter, the Assistant Secretary is authorized to appoint, fix the compensation, and prescribe the duties and powers of such officers, accountants, attorneys, experts, and other persons as may be necessary in the performance of the Division’s duties under this Chapter. The Assistant Secretary shall provide for the holding of examinations to determine the qualifications of applicants for the positions so classified, and except for temporary appointments not to exceed six months in duration, shall appoint its personnel on the basis of efficiency and fitness as determined in such examinations. All positions shall be filled by persons selected and appointed on a nonpartisan merit basis. The Secretary of Commerce may delegate to any such person so appointed such power and authority as the Secretary deems reasonable and proper for the effective administration of this Chapter, and may, in his or her discretion, bond any person handling monies or signing checks hereunder.
Repealed by Session Laws 2021-90, s. 12, effective July 22, 2021.
Employment Stabilization. — The Secretary of Commerce, in consultation with the Assistant Secretary, shall take all appropriate steps to reduce and prevent unemployment; to encourage and assist in the adoption of practical methods of vocational training, retraining and vocational guidance; to investigate, recommend, advise, and assist in the establishment and operation, by municipalities, counties, school districts, and the State, of reserves for public works to be used in times of business depression and unemployment; to promote the reemployment of unemployed workers throughout the State in every other way that may be feasible; and to these ends to carry on and publish the results of investigations and research studies.
Records and Reports. —
1. Each employer shall keep true and accurate employment records, containing such information as the Division may prescribe. The records shall be open to inspection and be subject to being copied by the Division or its authorized representatives at any reasonable time and as often as may be necessary. An employer doing business in North Carolina shall make available in this State to the Division, such information with respect to persons performing services for it which the Secretary deems necessary in connection with the administration of this Chapter. The Division may require from an employer any sworn or unsworn reports, with respect to persons employed by it, which the Secretary deems necessary for the effective administration of this Chapter, including the employer’s quarterly tax and wage report containing the name, social security number, and gross wages of persons employed during that quarter.
2. If the Division finds that any employer has failed to file any report or return required by this Chapter or any regulation made pursuant hereto, or has filed a report which the Division finds incorrect or insufficient, the Division may make an estimate of the information required from such employer on the basis of the best evidence reasonably available to it at the time, and make, upon the basis of such estimate, a report or return on behalf of such employer, and the report or return so made shall be deemed to be prima facie correct, and the Division may make an assessment based upon such report and proceed to collect contributions due thereon in the manner as set forth in G.S. 96-10(b) of this Chapter: Provided, however, that no such report or return shall be made until the employer has first been given at least 10 days’ notice by registered mail to the last known address of such employer: Provided further, that no such report or return shall be used as a basis in determining whether a person is an employer within the meaning of this Chapter.
Hearings. — The Assistant Secretary shall appoint hearing officers or appeals referees to hear contested matters arising from the Division of Employment Security. Appeals from the decisions of the hearing officers or appeals referees shall be heard by the Board of Review.
Oaths and Witnesses. — In the discharge of the duties imposed by this Chapter, the Assistant Secretary, the Chair of the Board of Review, and any duly authorized representative of the Division shall have power to administer oaths and affirmations, take depositions, certify to official acts, and issue subpoenas to compel the attendance of witnesses and the production of books, papers, correspondence, memoranda, and other records deemed necessary as evidence in connection with a disputed claim or the administration of this Chapter. Upon a motion, the Assistant Secretary, the Chair of the Board of Review, and any duly authorized representative of the Division may quash a subpoena if, after a hearing, any of the following findings are made:
1. The subpoena requires the production of evidence that does not relate to a matter in issue.
2. The subpoena fails to describe with sufficient particularity the evidence required to be produced.
3. The subpoena is subject to being quashed for any other reason sufficient in law.
Hearing on Motion to Quash Subpoena; Appeal. — A hearing on a motion to quash a subpoena pursuant to subsection (k) of this section shall be heard at least 20 days prior to the hearing for which the subpoena was issued. The denial of a motion to quash a subpoena is subject to immediate judicial review in the Superior Court of Wake County or in the superior court of the county where the person subject to the subpoena resides.
Subpoenas. — In case of contumacy by, or refusal to obey a subpoena issued to any person by the Secretary, the Assistant Secretary, the Board of Review, or the Division’s authorized representative, any clerk of a superior court of this State within the jurisdiction of which the inquiry is carried on or within the jurisdiction of which said person guilty of contumacy or refusal to obey is found or resides or transacts business, upon application by the Division, or its duly authorized representatives, shall have jurisdiction to issue to such person an order requiring such person to appear before the Division, or its duly authorized representatives, there to produce evidence if so ordered, or there to give testimony touching upon the matter under investigation or in question; and any failure to obey such order of the said clerk of superior court may be punished by any Superior Court judge as a contempt of said court. Any person who shall, without just cause, fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, or other records in obedience to a subpoena of the Division, shall be punished by a fine of not more than fifty dollars ($50.00).
Protection against Self-Incrimination. — No person shall be excused from attending and testifying or from producing books, papers, correspondence, memoranda, and other records before the Division, Board of Review, or in obedience to the subpoena of the Division, Board of Review, or any member thereof, or any duly authorized representative of the Division, or Board of Review in any cause or proceeding before the Division, on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty or forfeiture; but no individual shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that such individual so testifying shall not be exempt from prosecution and punishment for perjury committed in so testifying.
State-Federal Cooperation. — In the administration of this Chapter, the Board of Review or Division shall cooperate, to the fullest extent consistent with the provisions of this Chapter, with the federal agency, official, or bureau fully authorized and empowered to administer the provisions of the Social Security Act approved August 14, 1935, as amended, shall make such reports, in such form and containing such information as such federal agency, official, or bureau may from time to time require, and shall comply with such provisions as such federal agency, official, or bureau may from time to time find necessary to assure the correctness and verification of such reports; and shall comply with the regulations prescribed by such agency, official, or bureau governing the expenditures of such sums as may be allotted and paid to this State under Title III of the Social Security Act for the purpose of assisting in the administration of this Chapter. The Board of Review or Division shall further make its records available to the Railroad Retirement Board, created by the Railroad Retirement Act and the Railroad Unemployment Insurance Act, and shall furnish to the Railroad Retirement Board at the expense of the Railroad Retirement Board, such copies thereof as the Board shall deem necessary for its purposes in accordance with the provisions of section 303 (c) of the Social Security Act as amended.Upon request therefor, the Division shall furnish to any agency of the United States charged with the administration of public works or assistance through public employment, the name, address, ordinary occupation, and employment status of each recipient of benefits, and such recipient’s rights to further benefits under this Chapter.The Division is authorized to make such investigations, secure and transmit such information, make available such services and facilities and exercise such of the other powers provided herein with respect to the administration of this Chapter as it deems necessary or appropriate to facilitate the administration of any employment security or public employment service law, and in like manner, to accept and utilize information, services and facilities made available to this State by the agency charged with the administration of such other employment security or public employment service law.The Division shall fully cooperate with the agencies of other states and shall make every proper effort within its means to oppose and prevent any further action which would, in its judgment, tend to effect complete or substantial federalization of State unemployment insurance funds or State employment security programs.
Reciprocal Arrangements. —
1. The Secretary is hereby authorized to enter into reciprocal arrangements with appropriate and duly authorized agencies of other states or of the federal government, or both, whereby:
  1. Services performed by an individual for an employer for which services are customarily performed in more than one state shall be deemed to be services performed entirely within any one of the states
    1. In which any part of such individual’s service is performed or
    2. In which such individual has his residence or
    3. In which the employer maintains a place of business, provided there is in effect, as to such services, an election by the employer, approved by the agency charged with the administration of such state’s employment security law, pursuant to which the services performed by such individual for the employer are deemed to be performed entirely within such state.
  2. Combining wage credits. — The Division shall participate in any arrangements for the payment of compensation on the basis of combining an individual’s wages and employment covered under this Chapter with his wages and employment covered under one or more laws of the federal government and the unemployment compensation laws of other states which are approved by the United States Secretary of Labor in consultation with the state unemployment compensation agencies as reasonably calculated to assure the prompt and full payment of compensation in such situations and which include provisions for (1) applying the base period of a single state law to a claim involving the combining of an individual’s wages and employment covered under two or more state unemployment compensation laws, and (2) avoiding the duplicate use of wages and employment by reason of such combining.
  3. The services of the Division as agent may be made available to other states in taking interstate claims for such states.
  4. Contributions due under this Chapter with respect to wages for insured work shall for the purposes of G.S. 96-10 be deemed to have been paid to the fund as of the date payment was made as contributions therefor under another state or federal employment security law, but no such arrangement shall be entered into unless it contains provisions for such reimbursement to the fund of such contributions as the Division finds will be fair and reasonable as to all affected interests.
  5. The services of the Division may be made available to such other agencies to assist in the enforcement and collection of judgments of such other agencies.
  6. The services on vessels engaged in interstate or foreign commerce for a single employer, wherever performed, shall be deemed performed within this State or within such other state.
  7. Benefits paid by agencies of other states may be reimbursed to such agencies in cases where services of the claimant were “employment” under this Chapter and contributions have been paid by the employer to this agency on remuneration paid for such services; provided the amount of such reimbursement shall not exceed the amount of benefits such claimant would have been entitled to receive under the provisions of this Chapter.
2. Reimbursements paid from the fund pursuant to subparagraphs b and c of subdivision (1) of this subsection shall be deemed to be benefits. The Division is authorized to make to other states or federal agencies and to receive from such other state or federal agencies, reimbursements from or to the fund, in accordance with arrangements entered into pursuant to subdivision (1) of this subsection.
3. To the extent permissible under the laws and Constitution of the United States, the Division is authorized to enter into or cooperate in arrangements whereby facilities and services provided under this Chapter and facilities and services provided under the employment security law of any foreign government, may be utilized for the taking of claims and the payment of benefits under the Employment Security Law of this State or under a similar law of such government.
The Board of Review after due notice shall have the right and power to hold and conduct hearings for the purpose of determining the rights, status and liabilities of an employer. The Board of Review shall have the power and authority to determine any and all questions and issues of fact or questions of law that may arise under the Employment Security Law that may affect the rights, liabilities and status of an employer including the right to determine the amount of contributions, if any, which may be due the Division by any employer. Hearings may be before the Board of Review and shall be held in the central office of the Board of Review or at any other designated place within the State. They shall be open to the public and shall consist of a review of the evidence taken by a hearing officer designated by the Board of Review and a determination of the law applicable to that evidence. The Board of Review shall have the power to provide for the taking of evidence by a hearing officer employed in the capacity of an attorney by the Department. Such hearing officer shall have the same power to issue subpoenas, administer oaths, conduct hearings and take evidence as is possessed by the Board of Review and such hearings shall be recorded, and he shall transmit all testimony and records of such hearings to the Board for its determination. All such hearings conducted by such hearing officer shall be scheduled and held in any county in this State in which the employer resides, maintains a place of business, or conducts business; however, the Board of Review may require additional testimony at any hearings held by it at its office. From all decisions or determinations made by the Board of Review, any party affected thereby shall be entitled to an appeal to the superior court. Before a party shall be allowed to appeal, the party shall within 10 days after notice of such decision or determination, file with the Board of Review exceptions to the decision or the determination, which exceptions will state the grounds of objection to the decision or determination. If any one of the exceptions shall be overruled then the party may appeal from the order overruling the exceptions, and shall, within 10 days after the decision overruling the exceptions, give notice of his appeal. When an exception is made to the facts as found by the Board of Review, the appeal shall be to the superior court in term time but the decision or determination of the Board of Review upon such review in the superior court shall be conclusive and binding as to all questions of fact supported by any competent evidence. When an exception is made to any rulings of law, as determined by the Board of Review, the appeal shall be to the judge of the superior court at chambers. The party appealing shall, within 10 days after the notice of appeal has been served, file with the Board of Review exceptions to the decision or determination overruling the exception which statement shall assign the errors complained of and the grounds of the appeal. Upon the filing of such statement the Board of Review shall, within 30 days, transmit all the papers and evidence considered by it, together with the assignments of errors filed by the appellant to a judge of the superior court holding court or residing in some district in which such appellant either resides, maintains a place of business or conducts business, or, unless the appellant objects after being given reasonable opportunity to object, to a judge of the Superior Court of Wake County: Provided, however, the 30-day period specified herein may be extended by agreement of parties.
The cause shall be entitled “State of North Carolina on Relationship of the Board of Review, Department of Commerce, of North Carolina against (here insert name of appellant),” and if there are exceptions to any facts found by the Board of Review, it shall be placed on the civil issue docket of such court and shall have precedence over other civil actions except those described in G.S. 96-10(b), and such cause shall be tried under such rules and regulations as are prescribed for the trial of other civil causes. By consent of all parties the appeal may be held and determined at chambers before any judge of a district in which the appellant either resides, maintains a place of business or conducts business, or said appeal may be heard before any judge holding court therein, or in any district in which the appellant either resides, maintains a place of business or conducts business. Either party may appeal to the appellate division from the judgment of the superior court under the same rules and regulations as are prescribed by law for appeals, except that if an appeal shall be taken on behalf of the Department of Commerce, it shall not be required to give any undertaking or make any deposit to secure the cost of such appeal and such court may advance the cause on its docket so as to give the same a speedy hearing.
The decision or determination of the Board of Review when docketed in the office of the clerk of the superior court of any county and when properly indexed and cross-indexed shall have the same force and effect as a judgment rendered by the superior court, and if it shall be adjudged in the decision or determination of the Board of Review that any employer is indebted to the Division for contributions, penalties and interest or either of the same, then said judgment shall constitute a lien upon any realty owned by said employer in the county only from the date of docketing of such decision or determination in the office of the clerk of the superior court and upon personalty owned by said employer in said county only from the date of levy on such personalty, and upon the execution thereon no homestead or personal property exemptions shall be allowed; provided, that nothing herein shall affect any rights accruing to the Division under G.S. 96-10 . The provisions of this section, however, shall not have the effect of releasing any liens for contributions, penalties or interest, or either of the same, imposed by other law, nor shall they have the effect of postponing the payment of said contributions, penalties or interest, or depriving the Division of Employment Security of any priority in order of payment provided in any other statute under which payment of the said contributions, penalties and interest or either of the same may be required. The superior court or any appellate court shall have full power and authority to issue any and all executions, orders, decrees, or writs that may be necessary to carry out the terms of said decision or determination of the Division or to collect any amount of contribution, penalty or interest adjudged to be due the Division by said decision or determination. In case of an appeal from any decision or determination of the Division to the superior court or from any judgment of the superior court to the appellate division all proceedings to enforce said judgment, decision, or determination shall be stayed until final determination of such appeal but no proceedings for the collection of any amount of contribution, penalty or interest due on same shall be suspended or stayed unless the employer or party adjudged to pay the same shall file with the clerk of the superior court a bond in such amount not exceeding double the amount of contribution, penalty, interest or amount due and with such sureties as the clerk of the superior court deems necessary conditioned upon the payment of the contribution, penalty, interest or amount due when the appeal shall be finally decided or terminated.
The conduct of hearings shall be governed by suitable rules and regulations established by the Secretary of Commerce. The manner in which appeals and hearings shall be presented and conducted before the Division shall be governed by suitable rules and regulations established by the Secretary. The Division shall not be bound by common-law or statutory rules of evidence or by technical or formal rules of procedure but shall conduct hearings in such manner as to ascertain the substantial rights of the parties.
Notices of hearing shall be issued by the Board of Review or its authorized representative and sent by registered mail, return receipt requested, to the last known address of employer, employers, persons, or firms involved. The notice shall be sent at least 15 days prior to the hearing date and shall contain notification of the place, date, hour, and purpose of the hearing. Subpoenas for witnesses to appear at any hearing shall be issued by the Division or its authorized representative and shall order the witness to appear at the time, date and place shown thereon. Any bond or other undertaking required to be given in order to suspend or stay any execution shall be given payable to the Department of Commerce. Any such bond or other undertaking may be forfeited or sued upon as are any other undertakings payable to the State.
None of the provisions or sections herein set forth in subsections (q)-(u) shall have the force and effect nor shall the same be construed or interpreted as repealing any of the provisions of G.S. 96-15 which provide for the procedure and determination of all claims for benefits and such claims for benefits shall be prosecuted and determined as provided by said G.S. 96-15 .
Upon a finding of good cause, the Division shall have the power in its sole discretion to forgive, in whole or in part, any overpayment arising under G.S. 96-18(g)(2).
Confidentiality of Records, Reports, and Information Obtained from Claimants, Employers, and Units of Government. — For purposes of this Chapter, the term “confidential information” means any unemployment compensation information in the records of the Division of Employment Security that pertains to the administration of the Employment Security Law that is required to be kept confidential under 20 C.F.R. Part 603, including claim information and any information that reveals the name or any identifying particular about any individual or any past or present employer or employing unit, or that could foreseeably be combined with other publicly available information to reveal any such particulars.Confidential information is exempt from the public records disclosure requirements of Chapter 132 of the General Statutes. Confidential information may be disclosed only as permitted in this subsection. Any disclosure and redisclosure of confidential information must be consistent with 20 C.F.R. Part 603 and any written guidance promulgated and issued by the U.S. Department of Labor consistent with this regulation and any successor regulation. To the extent a disclosure or redisclosure of confidential information is permitted or required by this federal regulation, the Department’s authority to disclose or redisclose the information includes the following:
1. Confidentiality of Information Contained in Records and Reports. — (i) Except as hereinafter otherwise provided, it shall be unlawful for any person to obtain, disclose, or use, or to authorize or permit the use of any information which is obtained from an employer, individual, or unit of government pursuant to the administration of this Chapter or G.S. 108A-29 . (ii) Any claimant or employer or their legal representatives shall be supplied with information from the records of the Division to the extent necessary for the proper presentation of claims or defenses in any proceeding under this Chapter. Notwithstanding any other provision of law, any claimant may be supplied, subject to restrictions as the Division may by regulation prescribe, with any information contained in his payment record or on his most recent monetary determination, and any individual, as well as any interested employer, may be supplied with information as to the individual’s potential benefit rights from claim records. (iii) Subject to restrictions as the Secretary may by regulation provide, information from the records of the Division may be made available to any agency or public official for any purpose for which disclosure is required by statute or regulation. (iv) The Division may, in its sole discretion, permit the use of information in its possession by public officials in the performance of their public duties. (v) The Division shall release the payment and the amount of unemployment compensation benefits upon receipt of a subpoena in a proceeding involving child support. (vi) The Division shall furnish to the State Controller any information the State Controller needs to prepare and publish a comprehensive annual financial report of the State or to track debtors of the State. (vii) The Secretary may disclose or authorize redisclosure of any confidential information to an individual, agency, or entity, public or private, consistent with the requirements enumerated in 20 C.F.R. Part 603 or any successor regulation and any written guidance promulgated and issued by the U.S. Department of Labor consistent with 20 C.F.R. Part 603. (viii) The Division may disclose final decisions and the records of the hearings that led to those decisions only after the expiration of the appeal rights as provided under G.S. 96-15 .
2. Job Service Information. — (i) Except as hereinafter otherwise provided it is unlawful for any person to disclose any information obtained by the Division from workers, employers, applicants, or other persons or groups of persons in the course of administering the State Public Employment Service Program. Provided, however, that if all interested parties waive in writing the right to hold such information confidential, the information may be disclosed and used but only for those purposes that the parties and the Division have agreed upon in writing. (ii) The Division shall make public, through the newspapers and any other suitable media, information as to job openings and available applicants for the purpose of supplying the demand for workers and employment. (iii) The Labor Market Information Unit shall collect, collate, and publish statistical and other information relating to the work under the Division’s jurisdiction; investigate economic developments, and the extent and causes of unemployment and its remedies with the view of preparing for the information of the General Assembly such facts as in the Division’s opinion may make further legislation desirable. (iv) Except as provided by rules adopted by the Division, any information published pursuant to this subdivision shall not be published in any manner revealing the identity of the applicant or the employer.
3. Penalties for Disclosure or Improper Use. — Any person violating any provision of this section may be fined not less than twenty dollars ($20.00) nor more than two hundred dollars ($200.00).
4. Regulations. — The Division may provide by rule for procedures by which requests for information will be considered and the methods by which such information may be disclosed. The Division is authorized to provide by regulation for the assessment of fees for securing and copying information released under this section.
5. Privileged Status of Letters and Reports and Other Information Relating to Administration of this Chapter. — All letters, reports, communication, or any other matters, either oral or written, including any testimony at any hearing, from the employer or employee to each other or to the Division or any of its agents, representatives, or employees, which letters, reports, or other communication shall have been written, sent, delivered, or made in connection with the requirements of the administration of this Chapter, shall be absolutely privileged communication in any civil or criminal proceedings except proceedings pursuant to or involving the administration of this Chapter and except proceedings involving child support and only for the purpose of establishing the payment and amount of unemployment compensation benefits. Nothing in this subdivision shall be construed to prohibit the Division, upon written request and on a reimbursable basis only, from disclosing information from the records of a proceeding compiled for the purpose of resolving issues raised pursuant to the Employment Security Law.
6. Nothing in this subsection (x) shall operate to relieve any claimant or employer from disclosing any information required by this Chapter or by regulations promulgated thereunder.
7. Nothing in this subsection (x) shall be construed to prevent the Division from allowing any individual or entity to examine and copy any report, return, or any other written communication made by that individual or entity to the Division, its agents, or its employees. (7a) Nothing in this subsection shall be construed to prevent the Division from disclosing, upon request and on a reimbursable basis only, to officers and employees of the Department of Housing and Urban Development and to representatives of a public housing agency as defined in Section 303(i)(4) of the Social Security Act, any information from the records of the Division with respect to individuals applying for or participating in any housing assistance program administered by the Department of Housing and Urban Development who have signed an appropriate consent form approved by the Secretary of Housing and Urban Development. It is the purpose of this paragraph to assure the compliance with Section 303(i)(1) of the Social Security Act and it shall be construed accordingly.
  (7b) Nothing in this subsection shall be construed to prevent the Division from disclosing, upon request and on a reimbursable basis, to the Secretary of Health and Human Services, any information from the records of the Division as may be required by Section 303(h)(1) of the Social Security Act. It is the purpose of this paragraph to assure compliance with Section 303(h)(1) of the Social Security Act and it shall be construed accordingly.
8. Any finding of fact or law, judgment, determination, conclusion or final order made by the Assistant Secretary, the Board of Review, a hearing officer, appeals referee, or any other person acting under authority of the Division pursuant to the Employment Security Law is not admissible or binding in any separate or subsequent action or proceeding, between a person and his present or previous employer brought before an arbitrator, court or judge of this State or the United States, regardless of whether the prior action was between the same or related parties or involved the same facts.Provided, however, any finding of fact or law, judgment, determination, conclusion, or final order made by the Assistant Secretary, the Board of Review, a hearing officer, appeals referee, or any other person acting under the authority of the Division pursuant to the Employment Security Law shall be admissible in proceedings before the North Carolina Industrial Commission.
Service of process upon the Division in any proceeding instituted before an administrative agency or court of this State shall be pursuant to G.S. 1A-1 , Rule 4(j)(4); however, notice of the requirement to withhold unemployment compensation benefits pursuant to G.S. 110-136.2(f) shall be served upon the process agent for the Division by regular or courier mail.
Advisory rulings may be made by the Division with respect to the applicability of any statute or rule administered by the Division, as follows:
1. All requests for advisory rulings shall be made in writing and submitted to the Division. Such requests shall state the facts and statutes or rules on which the ruling is requested.
2. The Division may request from any person securing an advisory ruling any additional information that is necessary. Failure to supply such additional information shall be cause for the Division to decline to issue an advisory ruling.
3. The Division may decline to issue an advisory ruling if any administrative or judicial proceeding is pending with the person requesting the ruling on the same factual grounds. The Division may decline to issue an advisory ruling if such a ruling may harm the Division’s interest in any litigation in which it is or may be a party.
4. All advisory rulings shall be issued no later than 30 days from the date all information necessary to make a ruling has been received by the Division.
5. No advisory ruling shall be binding upon the Division provided that in any subsequent enforcement action initiated by the Division, any person’s reliance on such ruling shall be considered in mitigation of any penalty sought to be assessed.

History. Ex. Sess. 1936, c. 1, s. 11; 1939, c. 2; c. 27, s. 8; c. 52, s. 5; cc. 207, 209; 1941, c. 279, ss. 4, 5; 1943, c. 377, ss. 16-23; 1945, c. 522, ss. 1-3; 1947, c. 326, ss. 1, 3, 4, 26; c. 598, ss. 1, 6, 7; 1949, c. 424, s. 1; 1951, c. 332, ss. 1, 18; 1953, c. 401, ss. 1-4; 1955, c. 385, ss. 1, 2; c. 479; 1957, c. 1059, s. 1; 1969, c. 44, s. 63; c. 575, ss. 1, 2; 1971, c. 673, ss. 1, 2; 1977, c. 727, ss. 8-10; 1979, c. 660, s. 2; 1979, 2nd Sess., c. 1212, s. 2; 1981, c. 160, s. 1; 1983, c. 625, s. 16; 1983 (Reg. Sess., 1984), c. 995, s. 6; 1985, c. 197, ss. 1, 6, 7; c. 552, s. 23; 1987, c. 273; c. 764, ss. 4, 4.1, 5; 1989, c. 583, ss. 1, 2; c. 707, ss. 1, 2; 1991, c. 603, s. 1; c. 723, s. 3; 1993, c. 343, s. 1; c. 512, s. 3; 1995, c. 507, s. 27.8(n); 1999-340, s. 10; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b); 2004-203, s. 8; 2007-251, ss. 1, 2; 2011-401, s. 2.3; 2012-134, s. 6(a); 2013-2, s. 9(b); 2013-224, ss. 1, 2, 19, 20(a), (b); 2014-117, s. 1; 2015-238, ss. 2.4(b), 3.3(a); 2016-4, s. 2; 2021-90, s. 12.

Editor’s Note.

At the direction of the Revisor of Statutes, the spelling of the word “moneys” was changed to “monies” everywhere it appears in this section.

Session Laws 2015-238, s. 3.1(a), provides: “Notwithstanding the appointment provisions in G.S. 96-4(b) and in G.S. 96-15.3, as enacted by this act, and to achieve the staggered terms provided in G.S. 96-15.3, as enacted by this act, Jeanette Doran, appointed by the Governor in December 2013 to serve on the Board of Review as the member that represents the general public, is confirmed to serve on the Board of Review for the term beginning upon appointment and expiring on June 30, 2015. In accordance with G.S. 96-15.3, as enacted by this act, the term beginning July 1, 2015, will expire on June 30, 2019.”

Session Laws 2015-238, s. 3.1(c), provides: “Notwithstanding the appointment provisions in G.S. 96-4(b) and in G.S. 96-15.3, as enacted by this act, and to achieve the staggered terms provided in G.S. 96-15.3, as enacted by this act, Keith Holliday, appointed by the Governor in December 2013 to serve on the Board of Review as the member that represents employers, is confirmed to serve on the Board of Review for the term beginning upon appointment and expiring on June 30, 2016. In accordance with G.S. 96-15.3, as enacted by this act, the term beginning on July 1, 2016, will expire on June 30, 2020.”

Session Laws 2015-238, s. 3.1(d), provides: “Notwithstanding the appointment provisions in G.S. 96-4(b) and in G.S. 96-15.3, as enacted by this act, Stanley Campbell, appointed by the Governor in December 2013 to serve on the Board of Review as the member that represents employees, is confirmed to serve on the Board of Review for the term beginning upon appointment and expiring on June 30, 2017. In accordance with G.S. 96-15.3, as enacted by this act, the term beginning on July 1, 2017, will expire on June 30, 2021.”

Effect of Amendments.

Session Laws 2004-203, s. 8, effective August 17, 2004, substituted “subdivision” for “subsection (II)” in subdivision (t)(2).

Session Laws 2007-251, ss. 1 and 2, effective July 20, 2007, added the language beginning “Upon a motion” at the end of the introductory paragraph of subsection (h), added subdivisions (h)(1) through (h)(3); and added subsection (h1).

Session Laws 2011-401, s. 2.3, effective November 1, 2011, rewrote the section.

Session Laws 2012-134, s. 6(a), effective June 29, 2012, added the first and second sentences of subsection (x) and added subdivision (x)(1)(vii).

Session Laws 2013-2, s. 9(b), in subsection (b), substituted “Division” for “Employment Security Section and the Employment Insurance Section,” and added the last sentence; in subdivision (i)(1), substituted references to “employer” for “employing unit” throughout, deleted “firms, or other employing units” following “respect to persons” in the third sentence, and added “including the employer’s . . . during that quarter”; in subdivision (i)(2), substituted “a person” for “such employing unit”; in subsection (p), substituted references to “employer” for references to “employing unit” throughout subdivision (1)a, and deleted “for the purpose of G.S. 96-6 , 96-9, 96-12 and 96-12.01” following “benefits” at the end of the first sentence of subdivision (2); substituted “Board of Review” for “Division” or similar language throughout subsections (q), (r) and (s); in subsection (q), substituted “an employer” for “any ‘employing unit’ or ‘employer’ as said terms are defined by G.S. 96-8(4) and 96-8(5) and subdivisions thereunder” in the first sentence, substituted “an employer” for “any employing unit or employer as heretofore defined by the Employment Security Law” in the second sentence, added “employed in the capacity of an attorney by the Department” following “officer” in the fifth sentence, and substituted “employer” for “employing unit or employer either” in the seventh sentence, and deleted “Assistant Secretary or the” following “made by the” in the eighth sentence; and, in subsections (u) and (x), substituted “employer” or “an employer” for “any employing unit” or “employing unit” throughout. For effective date and applicability, see Editor’s note.

Session Laws 2013-224, ss. 1, 2, and 20(a), (b), effective June 27, 2013, substituted “Board of Review” for “Division” in the first sentence of subsections (q) and (u); and substituted “subsection (x)” for “subsection (t)” in subdivisions (x)(6) and (x)(7).

Session Laws 2014-117, s. 1, effective August 25, 2014, in subsection (x), added the present first introductory paragraph, and, in the present second introductory paragraph, added the first and second sentences, and, in the third sentence, substituted “Any disclosure” for “Disclosure” and “must” for “shall”; and added clause (viii) to subdivision (x)(1).

Session Laws 2015-238, s. 2.4(b), effective September 10, 2015, substituted “Division of Employment Security” for “Employment Security Section and the Employment Insurance Section” in the first sentence of subsection (j).

Session Laws 2015-238, s. 3.3(a), effective September 10, 2015, deleted subsection (b), which pertained to the three-person Board of Review appointed to determine appeals policies and procedures and to hear appeals arising from the decisions and determinations of the Division.

Session Laws 2016-4, s. 2, effective May 11, 2016, inserted “have the power to” near the beginning of the fifth sentence of subsection (q).

Session Laws 2021-90, s. 12, effective July 22, 2021, repealed subsection (g) pertaining to Advisory Councils; and substituted “Assistant Secretary” for “Assistant Secretary and with the advice and aid of the advisory councils” in subsection (h).

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

CASE NOTES

Editor’s Note. —

Most of the cases below were decided prior to the amendments made by Session Laws 2011-401, which were effective November 1, 2011, and references therein to the Employment Security Commission should be construed as references to the Division of Employment Security (DES) of the Department of Commerce.

Authority of Chairman of Commission. —

By subsection (a) of this section the chairman of the Employment Security Commission, except as otherwise provided by the Commission, is vested with all authority of the Commission, including authority to conduct hearings and make decisions when the Commission is not in session. State ex rel. Emp. Sec. Comm'n v. Roberts, 230 N.C. 262 , 52 S.E.2d 890, 1949 N.C. LEXIS 615 (1949).

The decision and order of the chairman, under subsection (a) of this section, are deemed the decision and order of the Commission. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

Because the chairman of the ESC had the authority to staff and make personnel decisions in the ESC, she had the authority, pursuant to G.S. 126-5(e) , to dismiss plaintiff from his exempt policymaking position within the ESC. Carrington v. Brown, 136 N.C. App. 554, 525 S.E.2d 230, 2000 N.C. App. LEXIS 104 (2000).

Merits of Labor Disputes. —

The Commission is charged with administering the benefits provided in this Chapter in accordance with the objective standards and criteria set up in the Chapter, but the merits of labor disputes do not belong to the Commission, these being matters properly pertaining to the field of labor relations. In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941).

Due Process Rights of Employees. —

To acknowledge that constitutional restraints exist upon a State government in dealing with its employees is not to say that all such employees have a right to due process notice and hearing before they can be removed from their employment. Nantz v. Employment Sec. Comm'n, 28 N.C. App. 626, 222 S.E.2d 474, 1976 N.C. App. LEXIS 2788 , aff'd, 290 N.C. 473 , 226 S.E.2d 340, 1976 N.C. LEXIS 1089 (1976).

This section sets forth in detail the procedure for hearings before the Commission and incident to appeal to the superior court. State ex rel. Emp. Sec. Comm'n v. Skyland Crafts, Inc., 240 N.C. 727 , 83 S.E.2d 893, 1954 N.C. LEXIS 517 (1954).

The Employment Security Law authorizes the Commission to establish its own methods of procedure and conduct of hearings. Hester v. Hanes Knitwear, 61 N.C. App. 730, 301 S.E.2d 508, 1983 N.C. App. LEXIS 2734 (1983).

Preliminary Injunction. —

Order granting an attorney and her law firm a preliminary injunction compelling the disclosure of unemployment hearings information was vacated because it did not mention the federal regulations concerning the confidentiality of unemployment insurance information and their bearing, if any, on the public records claim; such analysis would be necessary before finding whether the attorney and law firm had a likelihood of success on the merits. Wilson v. N.C. DOC, 239 N.C. App. 456, 768 S.E.2d 360, 2015 N.C. App. LEXIS 85 (2015).

Order granting an attorney and her law firm a preliminary injunction compelling the disclosure of unemployment hearings information was vacated and remanded for the trial court to make findings and conclusions addressing the likelihood of success; since the trial court had to enter additional findings and conclusions as to the likelihood of success element, its finding that injunctive relief was necessary to protect the attorney’s right to receive hearing notices on a daily basis could change. Wilson v. N.C. DOC, 239 N.C. App. 456, 768 S.E.2d 360, 2015 N.C. App. LEXIS 85 (2015).

Order granting an attorney and her law firm a preliminary injunction compelling the disclosure of unemployment hearings information was vacated and remanded because the trial court had to determine whether the amendment to subsection (x) changed the substance of the statute or merely clarified it, and in turn, whether the amendment applied to the claims of the attorney and law firm for the disclosure of hearing notices created prior to the amendment. Wilson v. N.C. DOC, 239 N.C. App. 456, 768 S.E.2d 360, 2015 N.C. App. LEXIS 85 (2015).

As to the employer’s right to appeal from an adverse decision, see Cianfarra v. North Carolina Dep't of Transp., 306 N.C. 737 , 295 S.E.2d 457, 1982 N.C. LEXIS 1554 (1982).

Whether someone is an “employee” is a mixed question of law and fact. The question of fact is what the terms, express or implied, of the employment contract are; the question of law is whether those terms show the requisite degree of control. State ex rel. Emp. Sec. Comm'n v. Faulk, 88 N.C. App. 369, 363 S.E.2d 225, 1988 N.C. App. LEXIS 3 , writ denied, 321 N.C. 480 , 364 S.E.2d 917, 1988 N.C. LEXIS 4 (1988).

Conclusiveness of Findings of Fact on Review. —

The findings of fact of the Employment Security Commission are conclusive upon review when there is any competent evidence or reasonable inference from such evidence to support them. Graham v. Wall, 220 N.C. 84 , 16 S.E.2d 691, 1941 N.C. LEXIS 482 (1941); State ex rel. Emp. Sec. Comm'n v. Roberts, 230 N.C. 262 , 52 S.E.2d 890, 1949 N.C. LEXIS 615 (1949); State ex rel. Emp. Sec. Comm'n v. Champion Distrib. Co., 230 N.C. 464 , 53 S.E.2d 674, 1949 N.C. LEXIS 380 (1949). See State ex rel. Emp. Sec. Comm'n v. Kermon, 232 N.C. 342 , 60 S.E.2d 580, 1950 N.C. LEXIS 517 (1950); State ex rel. Emp. Sec. Comm'n v. Monsees, 234 N.C. 69 , 65 S.E.2d 887, 1951 N.C. LEXIS 402 (1951); State ex rel. Emp. Sec. Comm'n v. Coe, 239 N.C. 84 , 79 S.E.2d 177, 1953 N.C. LEXIS 623 (1953); In re Stutts, 245 N.C. 405 , 95 S.E.2d 919, 1957 N.C. LEXIS 569 (1957); State ex rel. Emp. Sec. Comm'n v. Hennis Freight Lines, 248 N.C. 496 , 103 S.E.2d 829, 1958 N.C. LEXIS 527 (1958).

Findings of fact by the Commission which are supported by competent evidence in the record are conclusive on appeal. Yelverton v. Kemp Furn. Indus., Inc., 51 N.C. App. 215, 275 S.E.2d 553, 1981 N.C. App. LEXIS 2211 (1981); State ex rel. Emp. Sec. Comm'n v. Faulk, 88 N.C. App. 369, 363 S.E.2d 225, 1988 N.C. App. LEXIS 3 , writ denied, 321 N.C. 480 , 364 S.E.2d 917, 1988 N.C. LEXIS 4 (1988).

This section does not require the Commission to state the reasons for its rulings. In fact, since the appealing party must state the grounds for its exceptions, the mere overruling of the exceptions provides the parties with the reason for the ruling. State ex rel. Emp. Sec. Comm'n v. Faulk, 88 N.C. App. 369, 363 S.E.2d 225, 1988 N.C. App. LEXIS 3 , writ denied, 321 N.C. 480 , 364 S.E.2d 917, 1988 N.C. LEXIS 4 (1988).

Jurisdiction of Superior Court. —

The court erred in exercising jurisdiction over the Employment Security Commission pursuant to G.S. 1A-1 , Rule 4(j)(4), where the commission was never properly served with process, did not consent to personal jurisdiction, and did not voluntarily appear in the case. Croom v. DOC, Div. of Empl. Sec., 143 N.C. App. 493, 547 S.E.2d 87, 2001 N.C. App. LEXIS 297 (2001).

Employee’s petition to review an unemployment compensation denial was properly dismissed because (1) G.S. 96-15(h) required the petition’s actual delivery, under G.S. 1A-1 , N.C. R. Civ. P. 4, rather than mailing under G.S. 1A-1 , N.C. R. Civ. P. 5, as the statute required “certified mail, return receipt requested,” emphasizing actual delivery and closely mirroring G.S. 1A-1, N.C. R. Civ. P. 4(j), and (2) the petition was not delivered. Isenberg v. N.C. DOC, 241 N.C. App. 68, 772 S.E.2d 97, 2015 N.C. App. LEXIS 374 (2015).

Scope of Review in Superior Court. —

In appeals from the Employment Security Commission, the reviewing court may determine upon proper exceptions whether the facts found by the Commission were supported by competent evidence and whether the findings so supported sustain the legal conclusions and the award made, but in no event may the reviewing court consider the evidence for the purpose of finding the facts for itself. State ex rel. Emp. Sec. Comm'n v. Paul's Young Men's Shop, Inc., 32 N.C. App. 23, 231 S.E.2d 157, 1977 N.C. App. LEXIS 1852 , cert. denied, 292 N.C. 264 , 233 S.E.2d 396, 1977 N.C. LEXIS 1063 (1977).

The mandatory provisions in subsection (m) of this section are controlling, and the trial in the superior court on appeal must be subject to the limitation that the decision or determination of the Commission upon such review in the superior court “shall be conclusive and binding as to all questions of fact supported by any competent evidence.” State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709 , 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

When, in a proceeding under this Chapter to determine the liability of a defendant for taxation as an employer, exceptions are taken to the findings of fact made by the Commission in accordance with the procedure prescribed, defendant is not entitled to a trial de novo of the issues raised by his exceptions. State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709 , 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

When no exceptions are made to findings of fact, they are presumed to be supported by competent evidence and are binding on appeal. Davis v. Corning Glass Works, 65 N.C. App. 379, 309 S.E.2d 258, 1983 N.C. App. LEXIS 3498 (1983).

If the findings of fact of the Employment Security Commission are insufficient to enable the court to determine the rights of the parties upon the matters in controversy, the proceeding must be remanded to the end that the Commission make proper findings. State ex rel. Emp. Sec. Comm'n v. Paul's Young Men's Shop, Inc., 32 N.C. App. 23, 231 S.E.2d 157, 1977 N.C. App. LEXIS 1852 , cert. denied, 292 N.C. 264 , 233 S.E.2d 396, 1977 N.C. LEXIS 1063 (1977).

Right of Jury Trial Not Infringed. —

The provision of this section that the Commission’s findings of fact in a proceeding before it should be conclusive on appeal when supported by competent evidence is constitutional, and objection thereto on the ground that it deprives a defendant of his right to trial by jury is untenable, since the provision relates to the administrations of a tax law and the machinery for the collection of taxes, and further, since in addition to the remedy of appeal from the decision of the Commission, the statute provides that a defendant may pay the tax under protest and sue for its recovery. State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709 , 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

Appeal by Commission from Judgment of Superior Court. —

The Commission is not entitled to appeal from a judgment of the superior court that the employer does not come within this Chapter, entered in a proceeding by an employee for compensation; and where the Commission desired to have the liability of an employer for unemployment compensation contribution judicially determined on its contentions that the employer and another concern controlled by the same interests constituted but a single employing unit, it was held that it must follow the procedure prescribed by G.S. 96-10 . In re Mitchell, 220 N.C. 65 , 16 S.E.2d 476, 1941 N.C. LEXIS 474 (1941).

Employment Security Commission Testimony Held Privileged. —

Plaintiff could not use Employment Security Commission testimony to offer limited support to her Title VII claim, and statutory privilege barred using the same testimony for the state claim. Hartsell v. Duplex Prods., Inc., 895 F. Supp. 100, 1995 U.S. Dist. LEXIS 11670 (W.D.N.C. 1995).

Although federal law did not recognize a privilege for testimony from a state unemployment benefits hearing, reference to Employment Security Commission (ESC) testimony was excluded from plaintiff employee’s Title VII of the Civil Rights Act of 1964, 42 U.S.C.S. § 2000e et seq., action because the employee had the opportunity to engage in extensive discovery, and could have deposed the witnesses whose ESC testimony he sought to introduce, and plaintiffs should not be allowed to overstep the demarcation between ESC hearings and federal civil trials. Powell v. Town of Sharpsburg, 2009 U.S. Dist. LEXIS 25356 (E.D.N.C. Mar. 27, 2009).

Decision of the Employment Security Commission that an employer terminated an employee without cause, thereby supporting the employee’s claims that he was wrongfully terminated, was not admissible or binding under G.S. 96-4(t)(8) in the employee’s separate suit for retaliation under the North Carolina Retaliatory Employment Discrimination Act, G.S. 95-241 , and for intentional and negligent infliction of emotional distress. Smith v. Computer Task Group, Inc., 568 F. Supp. 2d 603, 2008 U.S. Dist. LEXIS 56358 (M.D.N.C. 2008).

Amendment Did Not Moot Appeal. —

Amendment of the statute did not moot the appeal from an order granting an attorney and her law firm a preliminary injunction compelling the disclosure of unemployment hearings information because the amendment did not provide the attorney and law firm the relief they sought; the position of the attorney and the law firm was that they were entitled to disclosure of daily hearing notices and to recover their attorneys’ fees incurred in enforcing their right. Wilson v. N.C. DOC, 239 N.C. App. 456, 768 S.E.2d 360, 2015 N.C. App. LEXIS 85 (2015).

OPINIONS OF ATTORNEY GENERAL

Information in a state unemployment tax act (SUTA) dumping settlement agreement that is entered into after the employer appeals a tax assessment is “information from records of a proceeding before . . . a hearing officer . . . compiled for the purpose of resolving issues raised pursuant to the Employment Security Law” and, as such, it is publicly disclosable pursuant to subdivision (t)(5) of this section. See opinion of Attorney General to Mr. Harry E. Payne, Jr., Chairman, Employment Security Commission of North Carolina, 2004 N.C. Op. Att'y Gen. 4 (3/26/04).

§ 96-4.1. Funds used in administering the unemployment compensation laws.

Four funds are established to administer this Chapter. The State Treasurer is responsible for investing all revenue received by the funds as provided in G.S. 147-69.2 and G.S. 147-69.3 . Interest and other investment income earned by a fund accrues to it. Payments from a fund may be made only upon the warrant of the Secretary of Commerce.

The four funds are:

The Employment Security Administration Fund established under G.S. 96-5 .
The Supplemental Employment Security Administration Fund established under G.S. 96-5.1 .
The Unemployment Insurance Fund established under G.S. 96-6 .
The Unemployment Insurance Reserve Fund established under G.S. 96-6.2 .

History. 2013-2, s. 1(b); 2013-224, s. 19.

Editor’s Note.

As enacted, this section had a reference to “G.S. 96-6.1” at the end of the section. The reference has been changed to “G.S. 96-6.2” at the direction of the Revisor of Statutes.

§ 96-5. Employment Security Administration Fund.

Fund Established. — The Employment Security Administration Fund is created as a special revenue fund. The fund consists of the following:
1. Monies appropriated by this State.
2. Monies received from the United States or another source for the administration of this Chapter.
3. Monies received from any agency of the United States or any other state as compensation for services or facilities supplied to the agency or state.
4. Monies received pursuant to any surety bond or insurance policy or from other sources for losses sustained by the Employment Security Administration Fund or by reason of damage to equipment or supplies purchased from monies in the fund.
5. Proceeds realized from the sale or disposition of equipment or supplies purchased from monies in the fund.
Use of Fund. — Monies in the Employment Security Administration Fund may be used by the Division only to administer this Chapter. Monies received in the fund from a source other than an appropriation by the General Assembly are appropriated for the purpose of administering this Chapter. The Secretary is authorized to requisition and receive from the State’s account in the Unemployment Trust Fund any monies standing to the State’s credit that are permitted by federal law to be used for administering this Chapter and to expend the monies for this purpose, without regard to a determination of necessity by a federal agency.
Repealed by Session Laws 2013-2, s. 1(a), effective July 1, 2013.
(c1) Repealed by Session Laws 2004-124, s. 13.7B(b), effective July 20, 2004.
through (g) Repealed by Session Laws 2013-2, s. 1(a), effective July 1, 2013.

History. Ex. Sess. 1936, c. 1, s. 13; 1941, c. 108, ss. 12, 13; 1947, c. 326, s. 5; c. 598, s. 1; 1949, c. 424, s. 2; 1951, c. 332, s. 18; 1953, c. 401, ss. 1, 5; 1977, c. 727, ss. 11-13; 1981, c. 160, s. 2; 1987, c. 17, ss. 1, 2; 1991, c. 689, s. 142; 1991, Ex. Sess., c. 6, s. 1; 1995 (Reg. Sess., 1996), c. 608, s. 2; 1996, 2nd Ex. Sess., c. 18, s. 26.6; 2004-124, s. 13.7B(b); 2005-276, s. 6.37(h); 2006-203, s. 22; 2011-401, s. 2.4; 2013-2, s. 1(a), (b); 2013-224, s. 19.

Editor’s Note.

Session Laws 1995 (Reg. Sess., 1996), c. 608, s. 3 was codified as subsection (c1) at the direction of the Revisor of Statutes.

At the direction of the Revisor of Statutes, the spelling of the word “moneys” was changed to “monies” everywhere it appears in this section.

Effect of Amendments.

Session Laws 2004-124, s. 13.7B(b), effective July 20, 2004, repealed subsection (c1).

Session Laws 2005-276, s. 6.37(h), effective July 1, 2005, in subsection (c), in the second sentence, deleted “and penalties” following “interest” and in the fifth sentence, inserted “of Chapter 163.”

Session Laws 2011-401, s. 2.4, effective November 1, 2011, rewrote the section.

Session Laws 2013-2, s. 1(a), (b), rewrote the section. For effective date and applicability, see Editor’s note.

Legal Periodicals.

For a survey of 1996 developments in constitutional law, see 75 N.C.L. Rev. 2252 (1997).

§ 96-5.1. Supplemental Employment Security Administration Fund.

Fund Established. — The Supplemental Employment Security Administration Fund is created as a special revenue fund. The fund consists of all interest and penalties paid under this Chapter by employers on overdue contributions and any appropriations made to the fund by the General Assembly. Penalties collected on unpaid taxes imposed by this section must be transferred to the Civil Penalty and Forfeiture Fund established in G.S. 115C-457.1 .
Use of Funds. — Monies in the Supplemental Employment Security Administration Fund may be used by the Division only for one or more of the purposes listed below and may not be used in lieu of federal funds made available to the Division for the administration of this Chapter:
1. The payment of costs and charges of administration that the Secretary of Labor determines are not eligible for payment from or were improperly paid from the Employment Security Administration Fund. The Supplemental Employment Security Administration Fund must reimburse the Employment Security Administration Fund for the amount of any improper payment. If the balance in the Supplemental Fund is insufficient, the Secretary must notify the Governor, who must request an appropriation for that purpose.
2. The temporary stabilization of federal funds cash flow.
3. Security for loans from the Unemployment Trust Fund.
4. The refund of an overpayment of interest previously credited to the fund. If an employer takes credit for a previous overpayment of interest when remitting contributions, the amount of credit taken for the overpayment of interest must be reimbursed to the Unemployment Insurance Fund.

History. 2013-2, s. 1(b); 2013-224, ss. 3, 19.

Editor’s Note.

At the direction of the Revisor of Statutes, the spelling of the word “moneys” was changed to “monies” everywhere it appears in this section.

Effect of Amendments.

Session Laws 2013-224, s. 3, effective June 27, 2013, in subsection (a), inserted “and penalties” in the second sentence, and added the third sentence.

§ 96-6. Unemployment Insurance Fund.

Establishment and Use. — The Unemployment Insurance Fund is established as an enterprise fund. The Division must administer the fund solely for the payment of unemployment compensation as that term is defined by section 3306(h) of the Code, exclusive of expenses of administration, and for refunds of sums erroneously paid into the fund. No money in the fund may be used, directly or indirectly, to pay interest on an advance received from the Unemployment Trust Fund.This fund consists of the following sources of revenue:
1. Contributions collected under this Chapter.
2. Property or securities acquired through the use of monies belonging to the fund.
3. Interest and investment earnings of the fund.
4. Monies received from this State’s account in the Unemployment Trust Fund in accordance with Title XII of the Social Security Act, as amended.
5. Monies credited to this State’s account in the Unemployment Trust Fund pursuant to section 903 of Title IX of the Social Security Act, as amended.
6. Monies paid to this State pursuant to section 204 of the Federal-State Extended Unemployment Compensation Act of 1970.
7. Reimbursement payments in lieu of contributions.
8. Any federally mandated penalty amount assessed under G.S. 96-18(h).
9. Amounts transferred from the Unemployment Insurance Reserve Fund.
Accounts. — The State Treasurer must maintain within the fund three separate accounts:
1. A clearing account.
2. An unemployment trust fund account.
3. A benefit account.
  (b1) Clearing Account. — The Division must credit monies payable to the Unemployment Insurance Fund to the clearing account. The Controller must immediately deposit amounts in the clearing account with the secretary of the treasury of the United States to the credit of the account of this State in the Unemployment Trust Fund.
  
  (b2) Unemployment Trust Fund Account. — The unemployment trust fund account consists of monies requisitioned from the State’s account in the Unemployment Trust Fund to make refunds of overpayments of contributions. To obtain funds needed to make refunds, the Controller must requisition the amount needed from the Unemployment Trust Fund and credit the amount received to this account.
Benefit Account. — The benefit account consists of monies requisitioned from the State’s account in the Unemployment Trust Fund to pay benefits. To obtain funds to pay benefits under this Chapter, the Controller must requisition the amount needed from the State’s account in the Unemployment Trust Fund and credit the amount received to this account. Warrants for the payment of benefits are payable from this account. Amounts in the benefit account that are not needed to pay the benefits for which they were requisitioned may be applied to the payment of benefits for succeeding periods or, in the discretion of the Controller, deposited to the credit of the State’s account in the Unemployment Trust Fund.
Discontinuance of Unemployment Trust Fund. — If the Unemployment Trust Fund or the State’s account within the federal Fund ceases to exist, the credit balance of the State’s account in that Fund must be transferred to the Unemployment Insurance Fund and credited to the benefit account.
, (f) Repealed by Session Laws 2013-2, s. 1(b), effective July 1, 2013.

History. Ex. Sess. 1936, c. 1, ss. 9, 18; 1939, c. 27, s. 7; c. 52, s. 4; c. 208; 1941, c. 108; 1945, c. 522, s. 4; 1947, c. 326, s. 6; 1953, c. 401, ss. 1, 6; 1959, c. 362, s. 1; 1961, c. 454, ss. 1-3; 1969, c. 575, s. 3; 1971, c. 673, ss. 3, 4; 1985, c. 197, s. 2; 2006-66, s. 6.19(a); 2006-203, s. 23; 2006-221, s. 3A; 2006-259, s. 40(a); 2011-401, s. 2.5; 2012-134, s. 3(e); 2013-2, s. 1(b); 2013-224, s. 19; 2013-391, s. 1.

Editor’s Note.

Session Laws 2006-66, s. 6.19(a), as added by Session Laws 2006-221, s. 3A, substituted G.S. 143B-426.39 E for G.S. 143B-426.39 B, which had been substituted for “G.S. 143-3.2” by Session Laws 2006-203, s. 23. The reference to G.S. 143B-426.39E has been changed to G.S. 143B-426.40 G at the direction of the Revisor of Statutes.

At the direction of the Revisor of Statutes, the spelling of the word “moneys” was changed to “monies” everywhere it appears in this section.

Effect of Amendments.

Session Laws 2006-66, s. 6.19(a), as added by Session Laws 2006-221, s. 3A, effective July 1, 2007, in subsections (b) and (c), substituted “G.S. 143B-426.39E” for “G.S. 143B-426.39B,” which had been substituted for “G.S. 143-3.2” by Session Laws 2006-203, s. 23. See Editor’s note.

Session Laws 2011-401, s. 2.5, effective November 1, 2011, rewrote the section.

Session Laws 2012-134, s. 3(e), effective October 1, 2013, in subsection (a), added the second sentence; added subdivision (a)(8); and deleted the last paragraph of subsection (a), which read “All moneys in the fund shall be commingled and undivided.” For applicability, see Editor’s note.

Session Laws 2013-2, s. 1(b), rewrote the section. For effective date and applicability, see Editor’s note.

Session Laws 2013-391, s. 1, substituted “solely for the payment . . . erroneously paid into the fund” for “exclusively for the purposes of this Chapter” in subsection (a); and redesignated former subdivision (a)(8) as present subdivision (a)(9). For applicability, see Editor’s note.

§ 96-6.1. [Repealed]

Repealed pursuant to the terms of G.S. 96-6.1(c), effective with respect to calendar quarters beginning on or after January 1, 2011.

History. 1999-321, s. 2; 2001-424, ss. 30.5(e), 30.5(f); 2005-276, ss. 8.8(a), 8.8(b), 6.37(i); 2006-203, s. 24.

Editor’s Note.

Former G.S. 96-6.1 pertained to training and reemployment contribution.

§ 96-6.2. Unemployment Insurance Reserve Fund.

Establishment and Use. — The Unemployment Insurance Reserve Fund is established as an enterprise fund. The Fund consists of the revenues derived from the surtax imposed under G.S. 96-9.7 . Monies in the Fund may be used only for the following purposes:
1. Interest payments required on advances under Title XII of the Social Security Act.
2. Principal payments on advances under Title XII of the Social Security Act.
3. Transfers to the Unemployment Insurance Fund for payment of benefits.
4. Administrative costs for the collection of the surtax.
5. Refunds of the surtax.
Fund Capped. — The balance in the Unemployment Insurance Reserve Fund on January 1 of any year may not exceed the greater of fifty million dollars ($50,000,000) or the amount of interest paid the previous September on advances under Title XII of the Social Security Act. Any amount in the fund that exceeds the cap must be transferred to the Unemployment Insurance Fund.

History. 2013-2, s. 1(b); 2013-224, ss. 4, 19.

Editor’s Note.

This section was enacted as G.S. 96-6.1 by Session Laws 2013-2, s. 1(b), and was renumbered as this section at the direction of the Revisor of Statutes.

At the direction of the Revisor of Statutes, the spelling of the word “moneys” was changed to “monies” in the third sentence of subsection (a).

Effect of Amendments.

Session Laws 2013-224, s. 4, effective June 27, 2013, substituted “an enterprise fund” for “a special revenue fund” in the first sentence of subsection (a).

§ 96-7. Representation in court.

In any civil action to enforce the provisions of this Chapter, the Secretary, the Department, and the State may be represented by any qualified attorney who is designated by it for this purpose.
All criminal actions for violation of any provision of this Chapter, or of any rules or regulations issued pursuant thereto, shall be prosecuted as now provided by law by the district attorney or by the prosecuting attorney of any county or city in which the violation occurs.

History. Ex. Sess. 1936, c. 1, s. 17; 1937, c. 150; 1973, c. 47, s. 2; 2011-401, s. 2.6.

Effect of Amendments.

Session Laws 2011-401, s. 2.6, effective November 1, 2011, substituted “the Secretary, the Department” for “the Commission” in subsection (a).

Article 2. Contributions and Payments by Employers.

§§ 96-8, 96-9. [Repealed]

Repealed by Session Laws 2013-2, s. 2(a), effective July 1, 2013.

History. S. 96-8: Ex. Sess. 1936, c. 1, s. 19; 1937, c. 448, s. 5; 1939, c. 27, ss. 11-13; c. 52, ss. 6, 7; c. 141; 1941, cc. 108, 198; 1943, c. 377, ss. 31-34; c. 552, ss. 1, 2; 1945, c. 522, ss. 5-10; c. 531, ss. 1, 2; 1947, c. 326, ss. 7-12; c. 598, ss. 1, 5, 8; 1949, c. 424, ss. 3-81/2; cc. 523, 863; 1951, c. 322, s. 1; c. 332, ss. 2, 3, 18; 1953, c. 401, ss. 1, 7-11; 1955, c. 385, ss. 3, 4; 1957, c. 1059, ss. 2-4; 1959, c. 362, ss. 2-6; 1961, c. 454, ss. 4-15; 1965, c. 795, ss. 2-5; 1969, c. 575, ss. 4-6, 15; 1971, c. 367; c. 673, ss. 5-13; c. 863; c. 1231, s. 1; 1973, c. 172, s. 1; c. 476, ss. 133, 152; c. 740, s. 2; c. 1138, ss. 1, 2; 1975, c. 226, s. 3; 1977, c. 727, ss. 14-36; 1979, c. 660, ss. 3-12; 1981, c. 160, ss. 3-12; c. 774, s. 1; 1983, c. 585, s. 20; c. 625, s. 9; c. 675; 1985, c. 57; c. 197, s. 3; c. 322, s. 1; c. 552, ss. 1-4; 1987, c. 103, ss. 2, 3; c. 212; c. 564, s. 21; 1987 (Reg. Sess., 1988), c. 999, s. 1; 1989, c. 410; c. 583, ss. 3, 5; c. 770, ss. 18, 19; 1991, c. 458, s. 1; 1993, c. 122, s. 1; c. 553, s. 30; 1993 (Reg. Sess., 1994), c. 680, ss. 4, 7-9; 1997-109, s. 5; 1997-120, s. 1; 1997-404, ss. 1, 2; 1997-443, s. 11A.118(a); 1997-456, s. 27; 1998-212, s. 11.8(g); 1999-196, ss. 1, 2; 2001-184, ss. 1, 2, 3; 2001-251, ss. 1, 2, 3, 4.; 2001-285, s. 1; 2001-414, ss. 34, 35, 36, 37, 38, 39.; 2001-424, s. 28.47; 2004-124, s. 13.7B(d); 2005-410, s. 4; 2009-101, s. 1; 2009-301, s. 1; 2009-366, s. 1; 2009-506, ss. 1, 2; 2010-71, ss. 1-3; 2011-145, s. 14.5B; 2011-183, ss. 69(a)-(c); 2011-391, s. 36; 2011-401, s. 2.7(a)-(g); repealed by 2013-2, s. 2(a), effective July 1, 2013. s. 96-9: Sess. 1936, c. 1, s. 7; 1939, c. 27, s. 6; 1941, c. 108, ss. 6, 8; c. 320; 1943, c. 377, ss. 11-14; 1945, c. 522, ss. 11-16; 1947, c. 326, ss. 13-15, 17; c. 881, s. 3; 1949, c. 424, ss. 9-13; c. 969; 1951, c. 322, s. 2; c. 332, ss. 4-7; 1953, c. 401, ss. 12-14; 1955, c. 385, ss. 5, 6; 1957, c. 1059, ss. 5-11; 1959, c. 362, ss. 7, 8; 1965, c. 795, ss. 6-10; 1969, c. 575, ss. 7, 8; 1971, c. 673, ss. 14-20; 1973, c. 172, ss. 2, 3; c. 740, s. 1; 1977, c. 727, ss. 37-49; 1979, c. 660, ss. 13-15; 1981, c. 160, ss. 13-15; c. 534; 1983, c. 585, ss. 1-11; 1985, c. 552, ss. 5-7, 13; 1987, c. 17, ss. 3-7; c. 197; 1987 (Reg. Sess., 1988), c. 999, ss. 2, 3; 1989, c. 583, ss. 4, 6; c. 770, s. 20; 1991, c. 276, s. 1; c. 421, s. 1; c. 458, ss. 2, 3; 1991, Ex. Sess., c. 6, s. 2; 1993, c. 85, s. 1; c. 424, s. 1; 1994, Ex. Sess., c. 10, ss. 1-3; 1995, c. 4, ss. 1-3; c. 463, ss. 1-3; 1996, 1st Ex. Sess., c. 1; 1997-398, s. 4; 1999-196, s. 3; 1999-321, ss. 1, 3-6; 1999-340, ss. 1-3; 1999-421, s. 1; 2000-140, s. 87; 2001-184, ss. 4, 5, 6; 2001-207, s. 1; 2001-251, ss. 2, 5; 2001-414, s. 40; 2001-424, ss. 30.5(f), 30.5(g), 30.5(h), 30.5(i), 30.5(j); 2001-513, s. 7; 2003-67, s. 1; 2003-220, ss. 2, 4; 2003-405, s. 1; 2004-124, s. 13.7B(a); 2004-170, s. 3(a); 2005-276, s. 6.37(j); 2005-410, ss. 2, 3, 5; 2006-251, s. 1; 2008-157, ss. 1, 2; 2011-183, s. 70; 2011-401, s. 2.8; 2012-134, s. 3(c); repealed by 2013-2, s. 2(a), effective July 1, 2013.

Editor’s Note.

Former G.S. 96-8 pertained to definitions. Former G.S. 96-9 pertained to contributions. For present provisions as to definitions, see G.S. 96-1 . For present provisions as to contributions, see G.S. 96-9.2 .

Session Laws 2013-2, s. 11, as amended by Session Laws 2013-224, s. 19, provides: “This act becomes effective July 1, 2013. Changes made by this act to unemployment benefits apply to claims for benefits filed on or after June 30, 2013. The requirements of G.S. 96- 15(a1) apply to any week of an attached claim filed on or after June 30, 2013. Changes made by this act to require an account balance by an employer that is a governmental entity or a nonprofit organization and that elects to finance benefits by making reimbursable payments in lieu of contributions apply to advance payments payable for calendar quarters beginning on or after July 1, 2013. Changes made by this act to the determination and application of the contribution rate apply to contributions payable for calendar quarters beginning on or after January 1, 2014.”

§ 96-9.1. Purpose.

The purpose of this Article is to provide revenue to finance the unemployment benefits allowed under this Chapter and to do so in as simple a manner as possible by imposing a State unemployment tax that is similar to the federal unemployment tax imposed under FUTA. All employers that are liable for the federal unemployment tax on wages paid for services performed in this State and all employers that are required by FUTA to be given a state reimbursement option are liable for a State unemployment tax on wages. Revenue from this tax, referred to as a contribution, is credited to the Unemployment Insurance Fund established in G.S. 96-6 .

History. 2013-2, s. 2(b); 2013-224, s. 19.

Editor’s Note.

Session Laws 1977, c. 727, s. 58, provides: “If U.S. Public Law 94-566 or the federal acts it amends should be adjudged unconstitutional or invalid in its or their application or stayed pendente lite as to State or local employees by a court of competent jurisdiction, then the coverage of those employees under this act is automatically stayed or repealed to the extent of the adjudged inapplicability. The repeal shall be effective from the date of final disposition upon appeal or from the date of expiration of the right of appeal and shall apply to relevant matters pending at that time. If Public Law 94-566 or those provisions thereof relating to coverage of State and local employees should at any time be repealed by the U.S. Congress, then the provisions of this act relating to coverage of State and local employees shall be automatically repealed.” This note formerly appeared under G.S. 96-8 and G.S. 96-9, which were repealed by Session Laws 2013-2, s. 2(a).

Session Laws 2013-2, s. 2(b), effective July 1, 2013, rewrote the Article heading, which formerly read “Unemployment Insurance Division.”

§ 96-9.2. Required contributions to the Unemployment Insurance Fund.

Required Contribution. — An employer is required to make a contribution in each calendar year to the Unemployment Insurance Fund in an amount equal to the applicable percentage of the taxable wages the employer pays its employees during the year for services performed in this State. An employer may not deduct the contributions due in whole or in part from the remuneration of the individuals employed. Taxable wages are determined in accordance with G.S. 96-9.3 . The applicable percentage for an employer is considered the employer’s contribution rate and determined in accordance with this section.
Contribution Rate for Beginning Employer. — The contribution rate for a beginning employer until the employer’s account has been chargeable with benefits for at least 12 calendar months ending July 31 immediately preceding the computation date is one percent (1%). An employer’s account has been chargeable with benefits for at least 12 calendar months if the employer has reported wages paid in four completed calendar quarters and its liability extends over all or part of two consecutive calendar years.
Contribution Rate for Experience-Rated Employer. — The contribution rate for an experience-rated employer who does not qualify as a beginning employer under subsection (b) of this section is determined in accordance with the table set out below and then rounded to the nearest one-hundredth percent (0.01%), subject to the minimum and maximum contribution rates. The minimum contribution rate is six-hundredths of one percent (0.06%). The maximum contribution rate is five and seventy-six hundredths percent (5.76%). “Total insured wages” are the total wages reported by all insured employers for the 12-month period ending on June 30 preceding the computation date. The calculations in the table set out below are applied as of September 1 following the computation date. An employer’s experience rating is computed as a reserve ratio in accordance with G.S. 96-9.4 . An employer’s reserve ratio percentage (ERRP) is the employer’s reserve ratio multiplied by sixty-eight hundredths. A positive ERRP produces a lower contribution rate, and a negative ERRP produces a higher contribution rate.
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Notification of Contribution Rate. — The Division must notify an employer of the employer’s contribution rate for a calendar year by January 1 of that year. The contribution rate becomes final unless the employer files an application for review and redetermination prior to May 1 following the effective date of the contribution rate. The Division may redetermine the contribution rate on its own motion within the same time period.
Voluntary Contribution. — An employer that is subject to this section may make a voluntary contribution to the Unemployment Insurance Fund in addition to its required contribution. A voluntary contribution is credited to the employer’s account. A voluntary contribution made by an employer within 30 days after the date on an annual notice of its contribution rate is considered to have been made as of the previous July 31.

UI Trust Fund Balance as Percentage of Total Insured Wages Contribution Rate Less than or equal to 1% 2.9% minus ERRP Greater than 1% but less than or equal to 1.25% 2.4% minus ERRP Greater than 1.25% 1.9% minus ERRP

History. 2013-2, s. 2(b); 2013-224, ss. 5, 19; 2013-391, s. 2; 2015-238, s. 4.1(a); 2016-92, s. 5(a).

Editor's Note.

Session Laws 2021-178, s. 4, provides: “Notwithstanding G.S. 96-9.2(c), the base contribution rate determined under G.S. 96-9.2(c) for an experience-rated employer will remain at one and nine-tenths percent (1.9%) for the 2022 calendar year.”

Effect of Amendments.

Session Laws 2013-224, s. 5, effective June 27, 2013, substituted “its liability extends over all or part of” for “these quarters are in” in the second sentence of subsection (b).

Session Laws 2013-391, s. 2, effective July 1, 2013, in subsection (a), added the third sentence, rewrote the fourth sentence, and deleted the former fifth through ninth sentences; in subsection (b), rewrote the subsection heading, which formerly read: “Standard Beginning Rate,” substituted “contribution rate for a beginning employer” for “standard beginning rate applies to an employer,” and added “is one percent (1%)”; in subsection (c), rewrote the subsection heading and the first sentence, and added the last three sentences, and in the table, deleted the former first column, deleted “All balances” preceding “Less than or equal to 1%” in the present first column, and deleted “1%” preceding “2.9% minus ERRP” in the second column. For applicability, see Editor’s note.

Session Laws 2015-238, s. 4.1(a), effective September 10, 2015, substituted “June 30” for “July 31” in the fourth sentence of subsection (c). For applicability, see editor’s note.

Session Laws 2016-92, s. 5(a), effective July 11, 2016, added the fifth sentence in subsection (c). See editor’s note for applicability.

CASE NOTES

Editor’s Note. —

Most of the cases below were decided under former G.S. 96-9, or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2. In addition, many of these cases were decided prior to the amendments made by Session Laws 2011-401, and references therein to the Employment Security Commission should be construed as references to the Division of Employment Security (DES) of the Department of Commerce.

Application of this section to church-related schools does not violate the free exercise and establishment clauses of U.S. Const., Amend. I. Ascension Lutheran Church v. Employment Sec. Comm'n, 501 F. Supp. 843, 1980 U.S. Dist. LEXIS 14638 (W.D.N.C. 1980), disapproved, St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 101 S. Ct. 2142, 68 L. Ed. 2d 612, 1981 U.S. LEXIS 105 (1981).

Effect of Reinstatement of Liability After Prior Exemption. —

Where an employer, otherwise subject to the provisions of this Chapter, is exempted from those provisions by legislative action and by legislative action that exemption is subsequently terminated, and additionally, where there have been no changes in the circumstances or activities of the employer, upon reinstatement of liability under this Chapter that employer is entitled to credit for its prior account balance, and that employer’s contribution rate should be determined primarily by reference to its former experience rating at the time of its exemption. The burden will be upon the Commission to show what, if any, changes in circumstances have come about which would justify an upward revision of that employer’s rate of contribution. State ex rel. Emp. Sec. Comm'n v. Blue Ridge Broadcasting Corp., 42 N.C. App. 702, 257 S.E.2d 640, 1979 N.C. App. LEXIS 2984 , cert. denied, 298 N.C. 805 , 262 S.E.2d 4, 1979 N.C. LEXIS 1462 (1979).

Contributions Constitute a Tax. —

Contributions imposed on employers within the purview of this Chapter are compulsory and therefore constitute a tax, and they are not rendered any less a tax by reason of the provision that they should be segregated in a special fund for distribution in furtherance of the purpose of the Chapter. Prudential Ins. Co. of Am. v. Powell, 217 N.C. 495 , 8 S.E.2d 619, 1940 N.C. LEXIS 273 (1940).

A State bank which is a member of the federal reserve system is not exempt from taxation under this Chapter because of its connection with the Federal Deposit Insurance Corporation nor may it claim such exemption because the tax would discriminate against it in favor of national member banks, since to relieve it from such taxation would discriminate in favor of it against nonmember State banks. Unemployment Comp. Comm'n v. Wachovia Bank & Trust Co., 215 N.C. 491 , 2 S.E.2d 592, 1939 N.C. LEXIS 298 (1939).

Declaratory Judgment as to Inclusion of Certain Salaries Cannot Be Obtained. —

An action to determine whether salaries paid certain employees should be included in computing the contributions to be paid by an employer under the Unemployment Compensation Act involves solely an issue of fact and does not involve any right, status or legal relation, and the employer may not maintain proceedings under the Declaratory Judgment Act, G.S. 1-253 et seq., to determine the question. Prudential Ins. Co. of Am. v. Powell, 217 N.C. 495 , 8 S.E.2d 619, 1940 N.C. LEXIS 273 (1940).

Prior to the 1949 amendment, subdivision (c)(4) of this section, by its own limitation, restricted the transfer of reserve accounts to those cases where the account was to be transferred in toto; and even then, such reserve account could be transferred only to such employing unit defined in G.S. 96-8(5)b (now repealed), as might acquire the organization, trade, or business of another for whom a reserve account had been theretofore established and maintained. State ex rel. Emp. Sec. Comm'n v. News Publishing Co., 228 N.C. 332 , 45 S.E.2d 391, 1947 N.C. LEXIS 332 (1947).

Transfer of Reserve Credited to Particular Employer Through Misapprehension. —

Subdivision (c)(4) authorizes the Commission to transfer a reserve fund only upon the mutual consent of the parties. However, the law does not apply where such reserve was credited to a particular person, firm or corporation under a misapprehension of the facts or the status of the person, firm or corporation making the contribution. State ex rel. Unemployment Comp. Comm'n v. Nissen, 227 N.C. 216 , 41 S.E.2d 734, 1947 N.C. LEXIS 382 (1947).

§ 96-9.3. Determination of taxable wages.

Determination. — The Division must determine the taxable wages for each calendar year. An employer is not liable for contributions on wages paid to an employee in excess of taxable wages. The taxable wages of an employee is an amount equal to the greater of the following:
1. The federal taxable wages set in section 3306 of the Code.
2. Fifty percent (50%) of the average yearly insured wage, rounded to the nearest multiple of one hundred dollars ($100.00). The average yearly insured wage is the average weekly wage on the computation date multiplied by 52.
Wages Included. — The following wages are included in determining whether the amount of wages paid to an individual in a single calendar year exceeds taxable wages:
1. Wages paid to an individual in this State by an employer that made contributions in another state upon the wages paid to the individual because the work was performed in the other state.
2. Wages paid by a successor employer to an individual when all of the following apply:
  1. The individual was an employee of the predecessor and was taken over as an employee by the successor as a part of the organization acquired.
  2. The predecessor employer paid contributions on the wages paid to the individual while in the predecessor’s employ during the year of acquisition.
  3. The account of the predecessor is transferred to the successor.

History. 2013-2, s. 2(b); 2013-224, s. 19.

§ 96-9.4. Determination of employer’s reserve ratio.

Account Balance. — The Division must determine the balance of an employer’s account on the computation date by subtracting the total amount of all benefits charged to the employer’s account for all past periods from the total of all contributions and other amounts credited to the employer for those periods. If the Division finds that an employer failed to file a report or finds that a report filed by an employer is incorrect or insufficient, the Division must determine the employer’s account balance based upon the best information available to it and must notify the employer that it will use this balance to determine the employer’s reserve ratio unless the employer provides additional information within 15 days of the date of the notice.
Reserve Ratio. — The Division must determine an employer’s reserve ratio, which is used to determine the employer’s contribution rate. The employer’s reserve ratio is the quotient obtained by dividing the employer’s account balance on the computation date by the total taxable payroll of the employer for the 36 calendar month period ending June 30 preceding the computation date, expressed as a percentage.

History. 2013-2, s. 2(b); 2013-224, s. 19.

§ 96-9.5. Performance of services in this State.

A service is performed in this State if it meets one or more of the following descriptions:

The service is localized in this State. Service is localized in this State if it meets one of the following conditions:
1. It is performed entirely within the State.
2. It is performed both within and without the State, but the service performed without the State is incidental to the individual’s service within the State. For example, the individual’s service without the State is temporary or transitory in nature or consists of isolated transactions.
The service is not localized in any state but some of the service is performed in this State, and one or more of the following applies:
1. The base of operations is in this State.
2. There is no base of operations and the place from which the service is directed or controlled is in this State.
3. The service is not performed in any state that has a base of operations or a place from which the service is directed or controlled and the individual who performs the service is a resident of this State.
The service, wherever performed, is within the United States or Canada and both of the following apply:
1. The service is not covered under the employment security law of any other state or Canada.
2. The place from which the service is directed or controlled is in this State.
The service is performed outside the United States or Canada by a citizen of the United States in the employ of an American employer and at least one of the following applies. For purposes of this subdivision, the term “American employer” has the same meaning as defined in section 3306 of the Code:
1. The employer’s principal place of business in the United States is located in this State.
2. The employer has no place of business in the United States, but the employer is one of the following:
  1. An individual who is a resident of this State.
  2. A corporation that is organized under the laws of this State.
  3. A partnership or a trust and more of its partners or trustees are residents of this State than of any other state.
  4. A limited liability company and more of its members are residents of this State than of any other state.
3. The employer has elected coverage in this State in accordance with G.S. 96-9.8 .
4. The employer has not elected coverage in any state and the employee has filed a claim for benefits under the law of this State based on the service provided to the employer.

History. 2013-2, s. 2(b); 2013-224, ss. 19, 20(c).

Effect of Amendments.

Session Laws 2013-224, s. 20(c), effective June 27, 2013, substituted “G.S. 96-9.8” for “G.S. 96-9.9” in subdivision (4)c.

§ 96-9.6. Election to reimburse Unemployment Insurance Fund in lieu of contributions.

Applicability. — This section applies to a governmental entity, a nonprofit organization, and an Indian tribe that is required by section 3309 of the Code to have a reimbursement option. Each of these employers must finance benefits under the contributions method imposed under G.S. 96-9.2 unless the employer elects to finance benefits by making reimbursable payments to the Division for the Unemployment Insurance Fund.
Election. — An employer may make an election under this section by filing a written notice of its election with the Division at least 30 days before the January 1 effective date of the election. An Indian tribe may make separate elections for itself and each subdivision, subsidiary, or business enterprise wholly owned by the tribe. A new employer may make an election under this section by filing a written notice of its election within 30 days after the employer receives notification from the Division that it is eligible to make an election under this section.An election is valid for a minimum of four years and is binding until the employer files a notice terminating its election. An employer must file a written notice of termination with the Division at least 30 days before the January 1 effective date of the termination. The Division must notify an employer of a determination of the effective date of an election the employer makes and of any termination of the election. These determinations are subject to reconsideration, appeal, and review. An employer that makes the election allowed by this section may not deduct any amount due under this section from the remuneration of the individuals it employs.
Reimbursable Amount. — An employer must reimburse the Unemployment Insurance Fund for the amount of benefits that are paid to an individual for weeks of unemployment that begin within a benefit year established during the effective period of the employer’s election and are attributable to service that is covered by section 3309 of the Code and was performed in the employ of the employer. For regular benefits, the reimbursable amount is the amount of regular benefits paid. For extended benefits, the reimbursable amount is the amount not reimbursed by the federal government.
Account. — The Division must establish a separate account for each reimbursing employer. The Division must credit payments made by the employer to the account. The Division must charge to the account benefits that are paid by the Unemployment Insurance Fund to individuals for weeks of unemployment that begin within a benefit year established during the effective period of the election and are attributable to service in the employ of the employer. All benefits paid must be charged to the employer’s account except benefits paid through error.The Division must furnish an employer with a statement of all credits and charges made to its account as of the computation date prior to January 1 of the succeeding year. The Division may, in its sole discretion, provide a reimbursing employer with informational bills or lists of charges on a basis more frequent than yearly if the Division finds it is in the best interest of the Division and the affected employer to do so.
Annual Reconciliation. — A reimbursing employer must maintain an account balance equal to one percent (1%) of its taxable wages. The Division must determine the balance of each employer’s account on the computation date. If there is a deficit in the account, the Division must bill the employer for the amount necessary to bring its account to one percent (1%) of its taxable wages for the immediate four quarters preceding July 1. Except as provided in subsection (j) of this section, any amount in the account in excess of the one percent (1%) of taxable wages will be retained in the employer’s account as a credit and will not be refunded to the employer. The Division must send a bill as soon as practical. Payment is due within 30 days from the date a bill is mailed. Amounts unpaid by the due date accrue interest and penalties in the same manner as past-due contributions and are subject to the same collection remedies provided under G.S. 96-10 for past-due contributions.
Quarterly Wage Reports. — A reimbursing employer must submit quarterly wage reports to the Division on or before the last day of the month following the close of the calendar quarter in which the wages are paid. During the first four quarters following an election to be a reimbursing employer, the employer must submit an advance payment with its quarterly report. The amount of the advance payment is equal to one percent (1%) of the taxable wages reported on the quarterly wage report. The Division must remit the payments to the Unemployment Insurance Fund and credit the payments to the employer’s account.
Change in Election. — The Division must close the account of an employer that has been paying contributions under G.S. 96-9.2 and that elects to change to a reimbursement basis under this section. A closed account may not be used in any future computation of a contribution rate. The Division must close the account of an employer that terminates its election to reimburse the Unemployment Insurance Fund in lieu of making contributions. An employer that terminates its election under this section is subject to the standard beginning rate.
Noncompliance by Indian Tribes. — An Indian tribe that makes an election under this section and then fails to comply with this section is subject to the following consequences:
1. An employer that fails to pay an amount due within 90 days after receiving a bill and has not paid this liability as of the computation date loses the option to make reimbursable payments in lieu of contributions for the following calendar year. An employer that loses the option to make reimbursable payments in lieu of contributions for a calendar year regains that option for the following calendar year if it pays its outstanding liability and makes all contributions during the year for which the option was lost.
2. Services performed for an employer that fails to make payments, including interest and penalties, required under this section after all collection activities considered necessary by the Division have been exhausted, are no longer treated as “employment” for the purpose of coverage under this Chapter. An employer that has lost coverage regains coverage under this Chapter for services performed if the Division determines that all contributions, payments in lieu of contributions, penalties, and interest have been paid. The Division must notify the Internal Revenue Service and the United States Department of Labor of any termination or reinstatement of coverage pursuant to this subsection.
Expired January 1, 2016.
Refund. — If a reimbursing employer erroneously remits an amount in excess of the amount due, the employer may apply to the Division for a refund of the excess amount remitted within the time limits in this subsection. The Division must determine that the requested refund was in excess of the amount due and was erroneously paid. The Division must refund, without interest, the excess amount but in no event will the refund result in an account balance less than one percent (1%) of the reimbursing employer’s taxable wages. The refund application must be filed by the later of the following:
1. Five years from the last day of the calendar year with respect to which a payment was made.
2. One year from the date on which such payment was made.

History. 2013-2, s. 2(b); 2013-224, ss. 6, 7, 19; 2017-8, s. 3.3(a).

Editor’s Note.

Subsection (i) of this section which provided a transitional adjustment period for certain employers who elected to be reimbursing employers, expired by its own terms, effective January 1, 2016.

Effect of Amendments.

Session Laws 2013-224, ss. 6 and 7, effective June 27, 2013, in subsection (e), substituted “immediate four quarters preceding July 1” for “preceding calendar year” in the third sentence, and added the fourth sentence; and substituted “preceding fiscal year” for “2013 calendar year” in subdivision (i)(1).

Session Laws 2017-8, s. 3.3(a), effective April 27, 2017, substituted “Except as provided in subsection (j) of this section, any amount” for “Any amount” in the fourth sentence of subsection (e); and added subsection (j).

§ 96-9.7. Surtax for the Unemployment Insurance Reserve Fund.

Surtax Imposed. — A surtax is imposed on an employer who is required to make a contribution to the Unemployment Insurance Fund equal to twenty percent (20%) of the contribution due under G.S. 96-9.2 . Except as provided in this section, the surtax is collected and administered in the same manner as contributions. Surtaxes collected under this section must be credited to the Unemployment Insurance Reserve Fund established under G.S. 96-6.2 . Interest and penalties collected on unpaid surtaxes imposed by this section must be credited to the Supplemental Employment Security Administration Fund. Penalties collected on unpaid surtaxes imposed by this section must be transferred to the Civil Penalty and Forfeiture Fund established in G.S. 115C-457.1 .
Suspension of Tax. — The tax does not apply in a calendar year if, as of September 1 of the preceding calendar year, the amount in the State’s account in the Unemployment Trust Fund equals or exceeds one billion dollars ($1,000,000,000).

History. 2013-2, s. 2(b); 2013-224, ss. 8, 19; 2017-8, s. 3.1(a).

Editor’s Note.

The reference to “G.S. 96-6.1” at the end of the third sentence of subsection (a), as amended by Session Laws 2013-224, s. 8, has been changed to “G.S. 96-6.2,” at the direction of the Revisor of Statutes.

Effect of Amendments.

Session Laws 2013-224, s. 8, effective June 27, 2013, in subsection (a), substituted “G.S. 96-6.1” for “G.S. 96-6” in the third sentence, inserted “and penalties” in the fourth sentence, and substituted “must be transferred” for “must be credited” in the last sentence.

Session Laws 2017-8, s. 3.1(a), substituted “September 1 of the preceding calendar year” for “the preceding August 1 computation date” in subsection (b). For effective date and applicability, see editor’s note.

§ 96-9.8. Voluntary election to pay contributions.

When Allowed. — An employer may elect to be subject to the contribution requirement imposed by G.S. 96-9.2 and thereby provide benefit coverage for its employees as follows:
1. An employer that is not otherwise liable for contributions under G.S. 96-9.2 may elect to pay contributions to the same extent as an employer that is liable for those contributions.
2. An employer that pays for services that are not otherwise subject to the contribution requirement may elect to pay contributions on those services performed by individuals in its employ in one or more distinct establishments or places of business.
3. An employer that employs the services of an individual who resides within this State but performs the services entirely without the State may elect to have the individual’s service constitute employment subject to contributions if no contributions are required or paid with respect to the services under an employment security law of any other state or of the federal government.
Election. — To make an election under this section, an employer must file an application with the Division. An election is effective on the date stated by the Division in a letter approving the election. An election is irrevocable for the two-year period beginning on the effective date.
Termination. — The Division may, on its own motion, terminate coverage of an employer who has become subject to this Chapter solely by electing coverage under this section. This termination may occur within the two-year minimum election period. The Division must give the employer 30 days written notice of a decision to terminate an election. The notice must be mailed to the employer’s last known address. An employer that elects coverage under this section may, subsequent to the two-year minimum election period, terminate the election by filing a notice of termination with the Division. The notice must be given prior to the first day of March following the first day of January of the calendar year for which the employer wishes to cease coverage under this section.

History. 2013-2, s. 2(b); 2013-224, s. 19.

CASE NOTES

Editor’s Note. —

The cases below were decided under former G.S. 96-11 , or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2.

Employer Remains Covered Until Coverage Is Terminated as Provided by This Section. —

Where employment within the meaning of the Employment Security Law is once established and the employer becomes covered thereunder, he remains so until coverage is terminated as provided by this section. State ex rel. Emp. Sec. Comm'n v. Coe, 239 N.C. 84 , 79 S.E.2d 177, 1953 N.C. LEXIS 623 (1953).

Effect of Reinstatement of Liability After Prior Exemption. —

§§ 96-9.9 through 96-9.14.

Reserved for future codification purposes.

Article 2A. Administration and Collection of Contributions.

§ 96-9.15. Report and payment.

Report and Payment. — Contributions are payable to the Division when a report is due. A report is due on or before the last day of the month following the close of the calendar quarter in which the wages are paid. The Division must remit the contributions to the Unemployment Insurance Fund. If the amount of the contributions shown to be due after all credits is less than five dollars ($5.00), no payment need be made.
Overpayment. — If an employer remits an amount in excess of the amount of contributions due, including any applicable penalty and interest, the excess amount remitted is considered an overpayment. The Division must refund an overpayment unless the amount of the overpayment is less than five dollars ($5.00). Overpayments of less than five dollars ($5.00) may be refunded only upon receipt of a written demand for the refund from the employer within the time allowed under G.S. 96-10(e).
Method of Payment. — An employer may pay contributions by electronic funds transfer. When an electronic funds transfer cannot be completed due to insufficient funds or the nonexistence of an account of the transferor, the Division may assess a penalty equal to ten percent (10%) of the amount of the transfer, subject to a minimum of one dollar ($1.00) and a maximum of one thousand dollars ($1,000). The Division may waive this penalty for good cause shown.The Division may allow an employer to pay contributions by credit card. An employer that pays by credit card must include an amount equal to any fee charged by the Division for the use of the card. A payment of taxes that is made by credit card and is not honored by the card issuer does not relieve the employer of the obligation to pay the taxes.An employer that does not pay by electronic funds transfer or by credit card must pay by check or cash. A check must be drawn on a United States bank and cash must be in currency of the United States.
Form of Report. — An employer must complete the tax form prescribed by the Division. An employer or an agent of an employer that reports wages for at least 10 employees must file the portion of the “Employer’s Quarterly Tax and Wage Report” that contains the name, social security number, and gross wages of each employee in an electronic format prescribed by the Division. For failure of an employer to comply with this subsection, the Division must assess a penalty of twenty-five dollars ($25.00). For failure of an agent of an employer to comply with this subsection, the Division may deny the agent the right to report wages and file reports for that employer for a period of one year following the calendar quarter in which the agent filed the improper report. The Division may reduce or waive a penalty for good cause shown.
Jeopardy Assessment. — The Secretary may immediately assess and collect a contribution the Secretary finds is due from an employer if the Secretary determines that collection of the tax is in jeopardy and immediate assessment and collection are necessary in order to protect the interest of the State and the Unemployment Insurance Fund.
Domestic Employer Exception. — The Division may authorize an employer of domestic service employees to file an annual report and to file that report by telephone. An annual report allowed under this subsection is due on or before the last day of the month following the close of the calendar year in which the wages are paid. A domestic service employer that files a report by telephone must contact either the tax auditor assigned to the employer’s account or the Division of Employment Security in Raleigh and report the required information to that auditor or to that section by the date the report is due.

History. 2013-2, s. 3(b); 2013-224, ss. 18, 19; 2015-238, s. 2.4(c); 2018-94, s. 4(a).

Effect of Amendments.

Session Laws 2013-224, s. 18, effective June 27, 2013, substituted “an electronic format” for “a format” in the second sentence of subsection (d).

Session Laws 2015-238, s. 2.4(c), effective September 10, 2015, substituted “Division of Employment Security” for “Employment Insurance Section” in the last sentence of subsection (f).

Session Laws 2018-94, s. 4(a), effective January 1, 2019, substituted “10 employees” for “25 employees” in subsection (d).

§ 96-10. Collection of contributions.

Interest on Past-Due Contributions. — Contributions unpaid on the date on which they are due and payable, as prescribed by the Division, shall bear interest at the rate set under G.S. 105-241.21 per month from and after that date until payment plus accrued interest is received by the Division. An additional penalty in the amount of ten percent (10%) of the taxes due shall be added. The clear proceeds of any civil penalties levied pursuant to this section shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2 . Interest collected pursuant to this subsection shall be paid into the Special Employment Security Administration Fund. If any employer, in good faith, pays contributions to another state or to the United States under the Federal Unemployment Tax Act, prior to a determination of liability by this Division, and the contributions were legally payable to this State, the contributions, when paid to this State, shall be deemed to have been paid by the due date under the law of this State if they were paid by the due date of the other state or the United States.
Collection. —
1. If, after due notice, any employer defaults in any payment of contributions or interest thereon, the amount due shall be collected by civil action in the name of the Division, and the employer adjudged in default shall pay the costs of such action. Civil actions brought under this section to collect contributions or interest thereon from an employer shall be heard by the court at the earliest possible date, and shall be entitled to preference upon the calendar of the court over all other civil actions, except petitions for judicial review under this Chapter and cases arising under the Workers’ Compensation Law of this State; or, if any contribution imposed by this Chapter, or any portion thereof, and/or penalties duly provided for the nonpayment thereof shall not be paid within 30 days after the same become due and payable, and after due notice and reasonable opportunity for hearing, the Division, under the hand of the Assistant Secretary, may certify the same to the clerk of the superior court of the county in which the delinquent resides or has property, and additional copies of said certificate for each county in which the Division has reason to believe the delinquent has property located. If the amount of a delinquency is less than fifty dollars ($50.00), the Division may not certify the amount to the clerk of court until a field tax auditor or another representative of the Division personally contacts, or unsuccessfully attempts to personally contact, the delinquent and collect the amount due. A certificate or a copy of a certificate forwarded to the clerk of the superior court shall immediately be docketed and indexed on the cross index of judgments, and from the date of such docketing shall constitute a preferred lien upon any property which said delinquent may own in said county, with the same force and effect as a judgment rendered by the superior court. The Division shall forward a copy of said certificate to the sheriff or sheriffs of such county or counties, or to a duly authorized agent of the Division, and when so forwarded and in the hands of such sheriff or agent of the Division, shall have all the force and effect of an execution issued to such sheriff or agent of the Division by the clerk of the superior court upon a judgment of the superior court duly docketed in said county. Provided, however, the Division may in its discretion withhold the issuance of said certificate or execution to the sheriff or agent of the Division for a period not exceeding 180 days from the date upon which the original certificate is certified to the clerk of superior court. The Division is further authorized and empowered to issue alias copies of said certificate or execution to the sheriff or sheriffs of such county or counties, or to a duly authorized agent of the Division in all cases in which the sheriff or duly authorized agent has returned an execution or certificate unsatisfied; when so issued and in the hands of the sheriff or duly authorized agent of the Division, such alias shall have all the force and effect of an alias execution issued to such sheriff or duly authorized agent of the Division by the clerk of the superior court upon a judgment of the superior court duly docketed in said county. Provided, however, that notwithstanding any provision of this subsection, upon filing one written notice with the Division, the sheriff of any county shall have the sole and exclusive right to serve all executions and make all collections mentioned in this subsection and in such case no agent of the Division shall have the authority to serve any executions or make any collections therein in such county. A return of such execution, or alias execution, shall be made to the Division, together with all moneys collected thereunder, and when such order, execution, or alias is referred to the agent of the Division for service the said agent of the Division shall be vested with all the powers of the sheriff to the extent of serving such order, execution or alias and levying or collecting thereunder. The agent of the Division to whom such order or execution is referred shall give a bond not to exceed three thousand dollars ($3,000) approved by the Division for the faithful performance of such duties. The liability of said agent shall be in the same manner and to the same extent as is now imposed on sheriffs in the service of executions. If any sheriff of this State or any agent of the Division who is charged with the duty of serving executions shall willfully fail, refuse, or neglect to execute any order directed to him by the said Division and within the time provided by law, the official bond of such sheriff or of such agent of the Division shall be liable for the contributions, penalty, interest, and costs due by the employer. Any judgment that is executable and allowed under this section shall be subject to attachment and garnishment under G.S. 1-359(b) in payment of unpaid taxes that are due from the employer and collectable under this Article.
2. Any representative of the Division may examine and copy the county tax listings, detailed inventories, statements of assets or similar information required under General Statutes, Chapter 105, to be filed with the tax supervisor of any county in this State by any person, firm, partnership, or corporation, domestic or foreign, engaged in operating any business enterprise in such county. Any such information obtained by an agent or employee of the Division shall not be divulged, published, or open to public inspection other than to the Division’s employees in the performance of their public duties. Any employee of the Division who violates any provision of this section shall be fined not less than twenty dollars ($20.00), nor more than two hundred dollars ($200.00), or imprisoned for not longer than 90 days, or both.
3. When the Division furnishes the clerk of superior court of any county in this State a written statement or certificate to the effect that any judgment docketed by the Division against any firm or individual has been satisfied and paid in full, and said statement or certificate is signed by the Secretary of Commerce and attested by the Assistant Secretary, with the seal of the Division affixed, it shall be the duty of the clerk of superior court to file said certificate and enter a notation thereof on the margin of the judgment docket to the effect that said judgment has been paid and satisfied in full, and is in consequence canceled of record. The cancellation shall have the full force and effect of a cancellation entered by an attorney of record for the Division. It shall also be the duty of such clerk, when any such certificate is furnished him by the Division showing that a judgment has been paid in part, to make a notation on the margin of the judgment docket showing the amount of such payment so certified and to file said certificate. This paragraph shall apply to judgments already docketed, as well as to the future judgments docketed by the Division. For the filing of said statement or certificate and making new notations on the record, the clerk of superior court shall be paid a fee of fifty cents (50¢) by the Division.
Priorities under Legal Dissolution or Distributions. — In the event of any distribution of an employer’s assets pursuant to an order of any court under the laws of this State, including any receivership, assignment for benefit of creditors, adjudicated insolvency, composition, or similar proceeding, contributions then or thereafter due shall be paid in full prior to all other claims except taxes, and claims for remuneration of not more than two hundred and fifty dollars ($250.00) to each claimant, earned within six months of the commencement of the proceeding. In the event of an employer’s adjudication in bankruptcy, judicially confirmed extension proposal, or composition, under the Federal Bankruptcy Act of 1898, as amended, contributions then or thereafter due shall be entitled to such priority as is provided in section 64(a) of that act (U.S.C., Title 11, section 104(a)), as amended.A receiver of any covered employer placed into an operating receivership pursuant to an order of any court of this State shall pay to the Division any contributions, penalties or interest then due out of moneys or assets on hand or coming into his possession before any such moneys or assets may be used in any manner to continue the operation of the business of the employer while it is in receivership.
Collections of Contributions upon Transfer or Cessation of Business. — The contribution or tax imposed by G.S. 96-9.2 , and subsections thereunder, of this Chapter shall be a lien upon the assets of the business of any employer subject to the provisions hereof who shall lease, transfer or sell out his business, or shall cease to do business and such employer shall be required, by the next reporting date as prescribed by the Division, to file with the Division all reports and pay all contributions due with respect to wages payable for employment up to the date of such lease, transfer, sale or cessation of the business and such employer’s successor in business shall be required to withhold sufficient of the purchase money to cover the amount of said contributions due and unpaid until such time as the former owner or employer shall produce a receipt from the Division showing that the contributions have been paid, or a certificate that no contributions are due. If the purchaser of a business or a successor of such employer shall fail to withhold purchase money or any money due to such employer in consideration of a lease or other transfer and the contributions shall be due and unpaid after the next reporting date, as above set forth, such successor shall be personally liable to the extent of the assets of the business so acquired for the payment of the contributions accrued and unpaid on account of the operation of the business by the former owner or employer.
Refunds. — If not later than five years from the last day of the calendar year with respect to which a payment of any contributions or interest thereon was made, or one year from the date on which such payment was made, whichever shall be the later, an employer or employing unit who has paid such contributions or interest thereon shall make application for an adjustment thereof in connection with subsequent contribution payments, or for a refund, and the Division shall determine that such contributions or any portion thereof was erroneously collected, the Division shall allow such employer or employing unit to make an adjustment thereof, without interest, in connection with subsequent contribution payments by him, or if such an adjustment cannot be made in the next succeeding calendar quarter after such application for such refund is received, a cash refund may be made, without interest, from the fund: Provided, that any interest refunded under this subsection, which has been paid into the Special Employment Security Administration Fund established pursuant to G.S. 96-5(c) , shall be paid out of such fund. For like cause and within the same period, adjustment or refund may be so made on the Division’s own initiative. Provided further, that nothing in this section or in any other section of this Chapter shall be construed as permitting the refund of moneys due and payable under the law and regulations in effect at the time such moneys were paid. In any case, where the Division finds that any employing unit has erroneously paid to this State contributions or interest upon wages earned by individuals in employment in another state, refund or adjustment thereof shall be made, without interest, irrespective of any other provisions of this subsection, upon satisfactory proof to the Division that such other state has determined the employing unit liable under its law for such contributions or interest.
No injunction shall be granted by any court or judge to restrain the collection of any tax or contribution or any part thereof levied under the provisions of this Chapter nor to restrain the sale of any property under writ of execution, judgment, decree or order of court for the nonpayment thereof. Whenever any employer, person, firm or corporation against whom taxes or contributions provided for in this Chapter have been assessed, shall claim to have a valid defense to the enforcement of the tax or contribution so assessed or charged, such employer, person, firm or corporation shall pay the tax or contribution so assessed to the Division; but if at the time of such payment he shall notify the Division in writing that the same is paid under protest, such payment shall be without prejudice to any defenses or rights he may have in the premises, and he may, at any time within 30 days after such payment, demand the same in writing from the Division; and if the same shall not be refunded within 90 days thereafter, he may sue the Division for the amount so demanded; such suit against the Division must be brought in the Superior Court of Wake County, or in the county in which the taxpayer resides, or in the county where the taxpayer conducts his principal place of business; and if, upon the trial it shall be determined that such tax or contribution or any part thereof was for any reason invalid, excessive or contrary to the provisions of this Chapter, the amount paid shall be refunded by the Division accordingly. The remedy provided by this subsection shall be deemed to be cumulative and in addition to such other remedies as are provided by other subsections of this Chapter. No suit, action or proceeding for refund or to recover contributions or payroll taxes paid under protest according to the provisions of this subsection shall be maintained unless such suit, action or proceeding is commenced within one year after the expiration of the 90 days mentioned in this subsection, or within one year from the date of the refusal of the Division to make refund should such refusal be made before the expiration of said 90 days above mentioned. The one-year limitation here imposed shall not be retroactive in its effect, shall not apply to pending litigation nor shall the same be construed as repealing, abridging or extending any other limitation or condition imposed by this Chapter.
Upon the motion of the Division, any employer refusing to submit any report required under this Chapter, after 10 days’ written notice sent by the Division by registered or certified mail to the employer’s last known address, may be enjoined by any court of competent jurisdiction from hiring and continuing in employment any employees until such report is properly submitted. When an execution has been returned to the Division unsatisfied, and the employer, after 10 days’ written notice sent by the Division by registered or certified mail to the employer’s last known address, refuses to pay the contributions covered by the execution, such employer shall upon the motion of the Division be enjoined by any court of competent jurisdiction from hiring and continuing in employment any employees until such contributions have been paid.An employer who fails to file a report within the required time shall be assessed a late filing penalty of five percent (5%) of the amount of contributions due with the report for each month or fraction of a month the failure continues. The penalty may not exceed twenty-five percent (25%) of the amount of contributions due. An employer who fails to file a report within the required time but owes no contributions shall not be assessed a penalty unless the employer’s failure to file continues for more than 30 days.
When any uncertified check is tendered in payment of any contributions to the Division and such check shall have been returned unpaid on account of insufficient funds of the drawer of said check in the bank upon which same is drawn, a penalty shall be payable to the Division, equal to ten percent (10%) of the amount of said check, and in no case shall such penalty be less than one dollar ($1.00) nor more than two hundred dollars ($200.00).
Except as otherwise provided in this subsection, no suit or proceedings for the collection of unpaid contributions may be begun under this Chapter after five years from the date on which the contributions become due, and no suit or proceeding for the purpose of establishing liability and/or status may be begun with respect to any period occurring more than five years prior to the first day of January of the year within which the suit or proceeding is instituted. This subsection shall not apply in any case of willful attempt in any manner to defeat or evade the payment of any contributions becoming due under this Chapter. A proceeding shall be deemed to have been instituted or begun upon the date of issuance of an order by the Board of Review directing a hearing to be held to determine liability or nonliability, and/or status under this Chapter of an employing unit, or upon the date notice and demand for payment is mailed by certified mail to the last known address of the employing unit. The order shall be deemed to have been issued on the date the order is mailed by certified mail to the last known address of the employing unit. The running of the period of limitations provided in this subsection for the making of assessments or collection shall, in a case under Title II of the United States Code, be suspended for the period during which the Division is prohibited by reason of the case from making the assessment or collection and for a period of one year after the prohibition is removed.
Waiver of Interest and Penalties. — The Division may, for good cause shown, reduce or waive any interest assessed on unpaid contributions under this section. The Division may reduce or waive any penalty provided in G.S. 96-10(a) or G.S. 96-10(g). The late filing penalty under G.S. 96-10(g) shall be waived when the mailed report bears a postmark that discloses that it was mailed by midnight of the due date but was addressed or delivered to the wrong State or federal agency. The late payment penalty and the late filing penalty imposed by G.S. 96-10(a) and G.S. 96-10(g) shall be waived where the delay was caused by any of the following:
1. The death or serious illness of the employer or a member of his immediate family, or by the death or serious illness of the person in the employer’s organization responsible for the preparation and filing of the report;
2. Destruction of the employer’s place of business or business records by fire or other casualty;
3. Failure of the Division to furnish proper forms upon timely application by the employer, by reason of which failure the employer was unable to execute and file the report on or before the due date;
4. The inability of the employer or the person in the employer’s organization responsible for the preparation and filing of reports to obtain an interview with a representative of the Division upon a personal visit to the central office or any local office for the purpose of securing information or aid in the proper preparation of the report, which personal interview was attempted to be had within the time during which the report could have been executed and filed as required by law had the information at the time been obtained;
5. The entrance of one or more of the owners, officers, partners, or the majority stockholder into the Armed Forces of the United States, or any of its allies, or the United Nations, provided that the entrance was unexpected and is not the annual two weeks training for reserves; and
6. Other circumstances where, in the opinion of the Secretary, Assistant Secretary, or their designees, the imposition of penalties would be inequitable.
  In the waiver of any penalty, the burden shall be upon the employer to establish to the satisfaction of the Secretary, Assistant Secretary, or their designees, that the delinquency for which the penalty was imposed was due to any of the foregoing facts or circumstances.The waiver or reduction of interest or a penalty under this subsection shall be valid and binding upon the Division. The reason for any reduction or waiver shall be made a part of the permanent records of the employing unit to which it applies.

History. Ex. Sess. 1936, c. 1, s. 14; 1939, c. 27, ss. 9, 10; 1941, c. 108, ss. 14-16; 1943, c. 377, ss. 24-28; 1945, c. 221, s. 1; c. 288, s. 1; c. 522, ss. 17-20; 1947, c. 326, ss. 18-20; c. 598, s. 9; 1949, c. 424, ss. 14-16; 1951, c. 332, ss. 8, 20; 1953, c. 401, s. 15; 1959, c. 362, s. 9; 1965, c. 795, s. 11; 1971, c. 673, s. 21; 1973, c. 108, s. 43; c. 172, s. 4; 1977, c. 727, s. 50; 1979, c. 660, s. 16; 1981, c. 160, s. 16; 1989, c. 770, s. 21; 1991, c. 422, s. 1; 1995, c. 463, ss. 4-6; 1997-398, ss. 1-3; 2001-207, ss. 2, 3; 2005-276, s. 6.37(k); 2007-491, s. 44(1)a; 2011-401, s. 2.9; 2013-224, ss. 9, 20(d); 2015-238, s. 2.5(b).

Editor’s Note.

Session Laws 2020-3, s. 1.4(b), effective May 4, 2020, amended G.S. 105-356(a) to give a priority for liens as a State tax for unemployment contributions under GS 96-10.

Effect of Amendments.

Session Laws 2007-491, s. 44(1)a, effective January 1, 2008, substituted “105-241.21” for “105-241.1(i)” in subsection (a).

Session Laws 2005-276, s. 6.37(k), effective July 1, 2005, in subsection (a), added the third sentence, and in the fourth sentence, deleted “Penalties and” from the beginning.

Session Laws 2011-401, s. 2.9, effective November 1, 2011, rewrote the section.

Session Laws 2013-224, ss. 9 and 20(d), effective June 27, 2013, substituted “G.S. 96-9.2” for “G.S. 96-9” in subsection (d); and inserted “or certified” in the second sentence of subsection (g).

Session Laws 2015-238, s. 2.5(b), effective September 10, 2015, added the last sentence to subdivision (b)(1) and substituted “Board of Review ” for “Assistant Secretary of the Division” in the third sentence of subsection (i).

Legal Periodicals.

For note on unemployment compensation and labor dispute disqualification, see 16 Wake Forest L. Rev. 472 (1980).

For a survey of 1996 developments in constitutional law, see 75 N.C.L. Rev. 2252 (1997).

CASE NOTES

Editor’s Note. —

This Chapter provides remedies for an employer who claims a valid defense to the enforcement of the tax or to the collection of the contributions assessed. In addition to right of appeal from the decision of the Commission, it is provided that he may pay the tax under protest and sue for its recovery. The remedy provided by this section must be pursued in the manner therein prescribed. State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709 , 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

The remedies provided by this Chapter are adequate and preclude an employer from maintaining suit in the superior court seeking judgment that salaries paid certain of its employees should not be included in computing the amount of contributions it should pay. Prudential Ins. Co. of Am. v. Powell, 217 N.C. 495 , 8 S.E.2d 619, 1940 N.C. LEXIS 273 (1940).

This section provides an adequate remedy to sue the Employment Security Commission in state superior court for refund of unemployment taxes paid under protest. Ascension Lutheran Church v. Employment Sec. Comm'n, 501 F. Supp. 843, 1980 U.S. Dist. LEXIS 14638 (W.D.N.C. 1980), disapproved, St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 101 S. Ct. 2142, 68 L. Ed. 2d 612, 1981 U.S. LEXIS 105 (1981).

Right to Raise Question of Constitutionality. —

In an action by the Employment Security Commission to determine liability of defendant for contributions under the act, the defendant may not raise the question of the constitutionality of the statute under which the Commission levied the assessment in question, it being required in order to raise this defense that he pay the contributions under protest and sue for recovery. State ex rel. Emp. Sec. Comm'n v. Kermon, 232 N.C. 342 , 60 S.E.2d 580, 1950 N.C. LEXIS 517 (1950).

Judgment That Certain Salaries Should Not Be Included Cannot Be Obtained. —

A judgment that salaries paid to certain of plaintiff ’s employees should not be included in computing the amount of the contributions plaintiff should pay under this Chapter would in effect enjoin the Commission from seeking further to collect the amount of contributions which it contends are justly due, and it being expressly provided that injunction shall not lie to restrain the collection of any tax or contribution levied under the Chapter, the court is without jurisdiction of an action seeking such relief, since it may not do indirectly what it is prohibited from doing directly. Prudential Ins. Co. of Am. v. Powell, 217 N.C. 495 , 8 S.E.2d 619, 1940 N.C. LEXIS 273 (1940).

Single Employing Unit. —

Where the Commission contended that an employer and another concern controlled by the same interests jointly constituted a single employment unit liable for the payment of unemployment compensation contributions and it wished to have this liability judicially adjudged, it was required to follow the procedure prescribed by this section. In re Mitchell, 220 N.C. 65 , 16 S.E.2d 476, 142 A.L.R. 931 (1941). See note to G.S. 96-8 .

Subsection (e), relating to refunds, is procedural; the limitation it imposes is addressed to the power of the Commission to make a refund and the conditions upon which it may be made rather than to any limitation upon an action for the recovery of money. It is broad enough in its phraseology to cover refund of money paid through mistake, without raising technical distinctions between voluntary and involuntary payments. B-C Remedy Co. v. Unemployment Comp. Comm'n, 226 N.C. 52 , 36 S.E.2d 733, 1946 N.C. LEXIS 391 (1946).

Retroactive Extension of Time for Applying for Refunds. —

While the limitation on the authority of the Commission to make refunds is fatal to a claim, so long as the limitation lasts, a change of law, enlarging time in which refunds may be applied for or made, does not involve any constitutional inhibitions such as apply to ordinary statutes of limitation, and the legislature has the power to apply the extended time retroactively. B-C Remedy Co. v. Unemployment Comp. Comm'n, 226 N.C. 52 , 36 S.E.2d 733, 1946 N.C. LEXIS 391 (1946) (so holding as to the 1943 amendment of subsection (e)) .

The trial court can properly award prejudgment interest on protested unemployment compensation tax payments recovered in actions against the Employment Security Commission brought under this section. Begley v. Employment Sec. Comm'n, 50 N.C. App. 432, 274 S.E.2d 370, 1981 N.C. App. LEXIS 2137 (1981).

Payments collected as penalties under the Employment Security Act are “additional taxes” and thus remedial, rather than punitive, in nature; accordingly, payments collected by the Employment Security Commission pursuant to G.S. 96-10 are not subject to N.C. Const. Art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418, 2003 N.C. App. LEXIS 1794 (2003), aff'd in part and rev'd in part, 359 N.C. 474 , 614 S.E.2d 504, 2005 N.C. LEXIS 694 (2005).

§ 96-10.1. Compromise of liability.

Authority. — The Secretary may compromise an employer’s liability under this Article when the Secretary determines that the compromise is in the best interest of the State and makes one or more of the following findings:
1. There is a reasonable doubt as to the amount of the liability of the employer under the law and the facts.
2. The employer is insolvent and the Secretary probably could not otherwise collect an amount equal to, or in excess of, the amount offered in compromise. An employer is considered insolvent only in one of the following circumstances:
  1. It is plain and indisputable that the employer is clearly insolvent and will remain so in the reasonable future.
  2. The employer has been determined to be insolvent in a judicial proceeding.
3. Collection of a greater amount than that offered in compromise is improbable, and the funds or a substantial portion of the funds offered in the settlement come from sources from which the Secretary could not otherwise collect.
Written Statement. — When the Secretary compromises an employer’s liability under this section and the amount of the liability is at least one thousand dollars ($1,000), the Secretary must make a written statement that sets out the amount of the liability, the amount accepted under the compromise, a summary of the facts concerning the liability, and the findings on which the compromise is based. The Secretary must sign the statement and keep a record of the statement.

History. 2013-2, s. 3(b); 2013-224, s. 19.

Article 2B. Administration of Employer Accounts.

§ 96-11. [Repealed]

Repealed by Session Laws 2013-2, s. 2(a), effective July 1, 2013.

History. Ex. Sess. 1936, c. 1, s. 8; 1939, c. 52, ss. 2, 3; 1941, c. 108, s. 9; 1945, c. 522, ss. 21-23; 1949, c. 424, ss. 17, 18; c. 522; 1951, c. 332, s. 9; c. 1147; 1953, c. 401, s. 16; 1955, c. 385, s. 10; 1959, c. 362, ss. 10, 11; 1961, c. 454, s. 16; 1965, c. 795, ss. 12-14; 1971, c. 673, ss. 22-24; 1973, c. 172, s. 5; 1977, c. 727, s. 51; 1979, c. 660, s. 17; 1985, c. 552, s. 8; 1991, c. 421, s. 2; 2011-401, s. 2.10; repealed by 2013-2, s. 2(a), effective July 1, 2013.

Editor’s Note.

Session Laws 2013-2, s. 4, added Article 2B, which includes G.S. 96-11 through 96-11.9.

Former G.S. 96-11 pertained to period, election, and termination of employer’s coverage. For present similar provisions, see G.S. 96-9.8 and G.S. 96-11 .9.

Session Laws 2013-2, s. 11, as amended by Session Laws 2013-224, s. 19, provides: “This act becomes effective July 1, 2013. Changes made by this act to unemployment benefits apply to claims for benefits filed on or after June 30, 2013. The requirements of G.S. 96-15(a1) apply to any week of an attached claim filed on or after June 30, 2013. Changes made by this act to require an account balance by an employer that is a governmental entity or a nonprofit organization and that elects to finance benefits by making reimbursable payments in lieu of contributions apply to advance payments payable for calendar quarters beginning on or after July 1, 2013. Changes made by this act to the determination and application of the contribution rate apply to contributions payable for calendar quarters beginning on or after January 1, 2014.”

§ 96-11.1. Employer accounts.

The Division must maintain a separate account for each employer. The Division must credit the employer’s account with all contributions paid by the employer or on the employer’s behalf and must charge the employer’s account for benefits as provided in this Chapter. The Division must prepare an annual statement of all charges and credits made to the employer’s account during the 12 months preceding the computation date. The Division must send the statement to the employer when the Division notifies the employer of the employer’s contribution rate for the succeeding calendar year. The Division may provide a statement of charges and credits more frequently upon a request by the employer.

History. 2013-2, s. 4; 2013-224, s. 19.

§ 96-11.2. Allocation of charges to base period employers.

Benefits paid to an individual are charged to an employer’s account quarterly. Benefits paid to an individual must be allocated to the account of each base period employer in the proportion that the base period wages paid to the individual in a calendar quarter by each base period employer bears to the total wages paid to the individual in the base period by all base period employers. The amount allocated to an employer that pays contributions is multiplied by one hundred twenty percent (120%) and charged to that employer’s account. The amount allocated to an employer that elects to reimburse the Unemployment Insurance Fund in lieu of paying contributions is the amount of benefits charged to that employer’s account.

History. 2013-2, s. 4; 2013-224, ss. 10, 19; 2015-238, s. 4.2(a).

Effect of Amendments.

Session Laws 2013-224, s. 10, effective June 27, 2013, substituted “the base period” for “that quarter” in the second sentence of this section.

The 2015 amendment, effective January 3, 2016, substituted “quarterly” for “when the individual’s benefit year has expired” at the end of the first sentence. For applicability, see editor’s note.

§ 96-11.3. Noncharging of benefits.

To Specific Employer. — Benefits paid to an individual under a claim filed for a period occurring after the date of the individual’s separation from employment may not be charged to the account of the employer by whom the individual was employed at the time of the separation if the separation is due to one of the reasons listed below and the employer promptly notifies the Division, in accordance with rules adopted by the Division, of the reason:
1. The individual left work without good cause attributable to the employer.
2. The employer discharged the individual for misconduct in connection with the work.
3. The employer discharged the individual solely for a bona fide inability to do the work for which the individual was hired and the individual’s period of employment was 100 days or less.
4. The separation is a disqualifying separation under G.S. 96-14.7 .
To Any Base Period Employer. — Benefits paid to an individual may not be charged to the account of an employer of the individual if the benefits paid meet any of the following descriptions:
1. They were paid to an individual who is attending a vocational school or training program approved by the Division.
2. They were paid to an individual for unemployment due directly to a disaster covered by a federal disaster declaration.
3. They were paid to an individual who left work for good cause under G.S. 96-14.8 .
4. They were paid as a result of a decision by the Division and the decision is ultimately reversed upon final adjudication.
Current Employer. — At the request of the employer, no benefit charges may be made to the account of an employer that has furnished work to an individual who, because of the loss of employment with one or more other employers, is eligible for partial benefits while still being furnished work by the employer on substantially the same basis and substantially the same wages as had been made available to the individual during the individual’s base period. This prohibition applies regardless of whether the employments were simultaneous or successive. A request made under this subsection must be filed in accordance with rules adopted by the Division.

History. 2013-2, s. 4; 2013-224, s. 19; 2017-8, s. 1(b).

Effect of Amendments.

Session Laws 2017-8, s. 1(b), effective October 1, 2016, rewrote subdivision (b)(2), which formerly read: “They were paid to an individual for unemployment due directly to a major natural disaster declared by the President pursuant to the Disaster Relief Act of 1970, and the individual receiving the benefits would have been eligible for disaster unemployment assistance under this federal act if the individual had not received benefits under this Chapter.”

§ 96-11.4. No relief for errors resulting from noncompliance.

Charges for Errors. — An employer’s account may not be relieved of charges relating to benefits paid erroneously from the Unemployment Insurance Fund if the Division determines that both of the following apply:
1. The erroneous payment was made because the employer, or the agent of the employer, was at fault for failing to respond timely or adequately to a written request from the Division for information relating to the claim for unemployment compensation. An erroneous payment is one that would not have been made but for the failure of the employer or the employer’s agent to respond to the Division’s request for information related to that claim.
2. The employer or agent has a pattern of failing to respond timely or adequately to requests from the Division for information relating to claims for unemployment compensation. In determining whether the employer or agent has a pattern of failing to respond timely or adequately, the Division must consider the number of documented instances of that employer’s or agent’s failures to respond in relation to the total requests made to that employer or agent. An employer or agent may not be determined to have a pattern of failing to respond if the number of failures during the year prior to the request is fewer than two or less than two percent (2%) of the total requests made to that employer or agent, whichever is greater.
Appeals. — An employer may appeal a determination by the Division prohibiting the relief of charges under this section in the same manner as other determinations by the Division with respect to the charging of employer accounts.
Applicability. — This section applies to erroneous payments established on or after October 21, 2013.

History. 2013-2, s. 4; 2013-224, ss. 11, 19.

Effect of Amendments.

Session Laws 2013-224, s. 11, effective June 27, 2013, in the third sentence of subdivision (a)(2), added “fewer than two or” and “whichever is greater.”

§ 96-11.5. Contributions credited to wrong account.

Refund of Contributions Credited to Wrong Account. — When contributions are credited to the wrong account, the erroneous credit may be adjusted only by refunding the employer who made the payment that was credited in error. This applies regardless of whether the employer to whom the payment was credited in error is a related entity of the employer to whom the payment should have been credited. An employer whose payment is credited to the wrong account may request a refund of the amount erroneously credited by filing a request for refund within five years of the last day of the calendar year in which the erroneous credit occurred.
Effect on Contribution Rate. — Failure of the Division to credit the correct account for contributions does not affect the contribution rate determined under G.S. 96-9.2 for either the employer whose account should have been credited for the contributions or the employer whose account was credited, and it does not affect the liability of an employer for contributions determined under those rates. No prior contribution rate for either of the employers may be adjusted even though the contribution rates were based on incorrect amounts in their account. An employer is liable for contributions determined under those rates for the five calendar years preceding the year in which the error is determined. This applies regardless of whether the employer acted in good faith.

History. 2013-2, s. 4; 2013-224, s. 19.

§ 96-11.6. Interest on Unemployment Insurance Fund allocated among employers’ accounts.

The Division must determine the ratio of the credit balance in each employer’s account to the total of the credit balances in all employers’ accounts as of the computation date. The Division must allocate an amount equal to the interest credited to this State’s account in the Unemployment Trust Fund for the four completed calendar quarters preceding the computation date on a pro rata basis to these accounts. The amount must be prorated to an employer’s account in the same ratio that the credit balance in the employer’s account bears to the total of the credit balances in all the accounts. Voluntary contributions made by an employer after July 31 of a year are not considered a part of the employer’s account balance used in determining the allocation under this section until the computation date in the following year.

History. 2013-2, s. 4; 2013-224, s. 19.

§ 96-11.7. Transfer of account to another employer.

Acquisition of a Business. — When an employer acquires all of the business of another employer, the account of the predecessor must be transferred as of the date of the acquisition to the successor for use in the determination of the successor’s contribution rate. This subsection does not apply when there is no common ownership between the predecessor and the successor and the successor acquired the assets of the predecessor in a sale in bankruptcy.
Acquisition of Portion of a Business. — When a distinct and severable portion of an employer’s business is transferred to a successor employer and the successor employer continues to operate the acquired business, the portion of the account attributable to the transferred business may, with the approval of the Division, be transferred by mutual consent to the successor employer as of the date of the transfer. A successor employer that is a related entity of the transferring employer is eligible for a transfer from the transferring employer’s account only to the extent permitted by rules adopted by the Division. No transfer may be made to the account of an employer that has ceased to be an employer under G.S. 96-11.9 .If a transfer of part or all of an account is allowed under this subsection, the successor employer requesting the transfer may make a request for transfer by filing an application for transfer with the Division within two years after the date the business was transferred.
Acquisition by Related Party. — If an employer transfers its business, or a portion thereof, to another person and, at the time of the transfer, there is substantially common ownership, management, or control of the predecessor employer and the transferee, then the portion of the account attributable to the transferred business must be transferred to the transferee as of the date of the transfer for use in the determination of the transferee’s contribution rate.Substantially common ownership, management, or control exists if one or more persons, entities, or other organizations owning, managing, or controlling the business maintain substantial ownership, management, or control of the transferee. Control may occur by means of ownership of the organization conducting the business, ownership of assets necessary to conduct the business, security arrangements or lease arrangements covering assets necessary to conduct the business, or a contract when the ownership, stated arrangements, or contract provide for or allow direction of the internal affairs or conduct of the business. Control is not affected by changes in the form of a business, reorganization of a business, or expansion of a business.
(c1) Acquisition to Obtain Lower Contribution Rate. — The account of the predecessor employer will not be transferred if the Division finds that a person formed or acquired the business solely or primarily for the purpose of obtaining a lower contribution rate.
Contribution Rate. — If the effective date of a transfer of an account under this section is after the computation date in a calendar year, the Division must recalculate the contribution rate for the predecessor employer and the successor employer based on their account balances on the effective date of the account transfer.
Liability for Contributions. — An employer that, by operation of law, purchase, or otherwise is the successor to an employer liable for contributions becomes liable for contributions on the day of the succession. This subsection does not affect the successor’s liability as otherwise prescribed by law for unpaid contributions due from the predecessor.
Deceased or Insolvent Employer. — When the business of a deceased person or of an insolvent debtor is taken over and operated by an administrator, executor, receiver, or trustee in bankruptcy, the new employer automatically succeeds to the account and contribution rate of the deceased person or insolvent debtor without the necessity of filing an application for the transfer of the account.
Continuation of Existing Account. — Any transferee subject to a complete transfer of account under this section must not request or maintain an account with the Division other than the account of the existing business. If a transferee receives a new account and the Division subsequently finds that the transferee is subject to a complete transfer of account under this section, the Division must recalculate the annual tax rates based on the combined annual account balances of the new employer and the existing business.

History. 2013-2, s. 4; 2013-224, s. 19; 2016-4, s. 1; 2017-8, s. 4(a).

Effect of Amendments.

Session Laws 2016-4, s. 1, effective May 11, 2016, rewrote subsection (c).

Session Laws 2017-8, s. 4(a), effective July 1, 2017, rewrote this section.

§ 96-11.8. Closure of account.

Account Closed. — When an employer ceases to be an employer under G.S. 96-11.9 , the employer’s account must be closed and may not be used in any future computation of the employer’s contribution rate. An employer has no right or claim to any amounts paid by the employer into the Unemployment Insurance Fund.
Exception for Active Duty. — If the Division finds that an employer’s business is closed solely because one or more of its owners, officers, or partners or its majority stockholder enters into the Armed Forces of the United States, an ally, or the United Nations, the employer’s account may not be terminated. If the business resumes within two years after the discharge or release of the affected individual from active duty in the Armed Forces of the United States, the employer’s account is considered to have been chargeable with benefits throughout more than 13 consecutive calendar months ending July 31 immediately preceding the computation date. This subsection applies only to an employer that makes contributions under G.S. 96-9.2 . This subsection does not apply to an employer that makes payments in lieu of contributions under G.S. 96-9.6 .

History. 2013-2, s. 4; 2013-224, s. 19.

§ 96-11.9. Termination of coverage.

By Law. — An employer that has not paid wages for two consecutive calendar years ceases to be an employer liable for contributions under this Chapter.
By Application. — An employer may file an application with the Division to terminate coverage. An application for termination must be filed prior to March 1 of the calendar year for which the employer wishes to cease coverage. The Division may terminate coverage if it finds that the employer was not liable for contributions during the preceding calendar year. Termination of coverage under this subsection is effective as of January 1 of the calendar year in which the application is granted.
After Reactivation. — If the Division reactivates the account of an employer that has been closed, the employer may file an application with the Division to terminate coverage. The application must be filed within 120 days after the Division notifies the employer of the reactivation of the employer’s account. The Division may terminate coverage if it finds that the employer was not liable for contributions during the preceding calendar year. Termination of coverage under this subsection is effective as of January 1 of the calendar year in which the application is granted. An employer’s protest of liability upon reactivation is considered an application for termination.
After Discovery. — When the Division discovers that an employer is liable for contributions for a period of more than two years, the employer may file an application with the Division to terminate coverage. The application must be filed within 90 days after the Division notifies the employer of the discovered liability. The Division may terminate coverage if it finds that the employer was not liable for contributions during the preceding calendar year. An employer’s protest of liability upon discovery is considered an application for termination. An employer is not eligible for termination of liability under this subsection if the employer willfully attempted to defeat or evade the payment of contributions.

History. 2013-2, s. 4; 2013-224, s. 19.

CASE NOTES

Editor’s Note. —

The cases below were decided under former G.S. 96-11 , or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2.

Employer Remains Covered Until Coverage Is Terminated as Provided by This Section. —

Effect of Reinstatement of Liability After Prior Exemption. —

Article 2C. Benefits Payable for Unemployment Compensation.

§ 96-12. [Repealed]

Repealed by Session Laws 2013-2, s. 2(a), effective July 1, 2013.

History. Ex. Sess. 1936, c. 1, s. 3; 1937, c. 448, s. 1; 1939, c. 27, ss. 1-3, 14; c. 141; 1941, c. 108, s. 1; c. 276; 1943, c. 377, ss. 1-4; 1945, c. 522, ss. 24-26; 1947, c. 326, s. 21; 1949, c. 424, ss. 19-21; 1951, c. 332, ss. 10-12; 1953, c. 401, ss. 17, 18; 1957, c. 1059, ss. 12, 13; c. 1339; 1959, c. 362, ss. 12-15; 1961, c. 454, ss. 17, 18; 1965, c. 795, ss. 15, 16; 1969, c. 575, s. 9; 1971, c. 673, ss. 25, 26; 1973, c. 1138, ss. 3-7; 1975, c. 2, ss. 1-5; 1977, c. 727, s. 52; 1979, c. 660, ss. 18, 19; 1981, c. 160, ss. 17-23; 1981 (Reg. Sess., 1982), c. 1178, ss. 3-14; 1983, c. 585, ss. 12-16; c. 625, ss. 1, 7; 1985, c. 552, s. 9; 1985 (Reg. Sess., 1986), c. 918; 1987, c. 17, s. 8; 1993, c. 122, s. 2; 1993 (Reg. Sess., 1994), c. 680, ss. 1-3; 1995 (Reg. Sess., 1996), c. 646, s. 25(a); 1997-456, s. 27; 1999-340, s. 11; 2001-414, s. 41; 2011-401, s. 2.11; repealed by 2013-2, s. 2(a), effective July 1, 2013.

Editor’s Note.

Session Laws 2013-2, 5, added Article 2C, which includes G.S. 96-12 (now repealed) through G.S. 96-14.14 .

Former G.S. 96-12 pertained to benefits. For present similar provisions, see G.S. 96-14.1 and G.S. 96-14.2 .

Legal Periodicals.

For article, “An Administrative Right to be Free from Sexual Violence? Title IX Enforcement in Historical and Institutional Perspective,” see 66 Duke L.J. 1847 (2017).

§ 96-12.01.

Recodified as G.S. 96-14.14 by Session Laws 2013-2, s. 6, effective July 1, 2013.

§§ 96-12.1 through 96-14. [Repealed]

Repealed by Session Laws 2013-2, s. 2(a), effective July 1, 2013.

History. S. 96-12.1; 1991, c. 409, s. 1; 1993, c. 343, s. 6; 2011-401, s. 2.13; repealed by 2013-2, s. 2(a), effective July 1, 2013. s. 96-13: Ex. Sess. 1936, c. 1, s. 4; 1939, c. 27, ss. 4, 5; c. 141; 1941, c. 108, s. 2; 1943, c. 377, s. 5; 1945, c. 522, ss. 27-28; 1947, c. 326, s. 22; 1949, c. 424, s. 22; 1951, c. 332, s. 13; 1961, c. 454, s. 19; 1965, c. 795, ss. 17, 18; 1969, c. 575, ss. 10, 11; 1971, c. 673, ss. 27, 28; 1973, c. 172, s. 6; 1975, c. 2, s. 6; c. 8, ss. 1, 2; c. 226, ss. 1, 2; 1977, c. 727, s. 53; 1979, c. 660, ss. 20, 21, 29-31; 1981, c. 160, ss. 24, 25; c. 883; 1983, c. 585, s. 17; c. 625, ss. 2-5; 1985, c. 53; c. 197, ss. 4, 5; c. 552, ss. 10, 11; c. 616, s. 2; 1989, c. 707, s. 3; c. 770, s. 22; 1991, c. 423, s. 1; 1993 (Reg. Sess., 1994), c. 680, s. 5; 1995, c. 270, s. 1; c. 284, s. 1; 1997-398, s. 5; 1997-456, s.27; 1999-463, Ex. Sess., s. 7; 2003-1, s. 1; 2003-220, s. 5; 2005-410, s. 1; 2009-301, s. 2; 2011-401, s. 2.14; repealed by 2013-2, s. 2(a), effective July 1, 2013. s. 96-14: Ex. Sess. 1936, c. 1, s. 5; 1937, c. 448, ss. 2, 3; 1939, c. 52, s. 1; 1941, c. 108, ss. 3, 4; 1943, c. 377, ss. 7, 8; 1945, c. 522, s. 29; 1947, c. 598, s. 10; c. 881, ss. 1, 2; 1949, c. 424, ss. 23-25; 1951, c. 332, s. 14; 1955, c. 385, ss. 7, 8; 1961, c. 454, s. 20; 1965, c. 795, s. 19; 1969, c. 575, s. 12; 1971, c. 673, s. 29; 1977, c. 26; 1981, c. 160, s. 26; c. 593; 1981 (Reg. Sess., 1982), c. 1178, s. 15; 1983, c. 585, s. 18; c. 625, ss. 6, 8; 1985, c. 552, ss. 12, 14-17; 1987 (Reg. Sess., 1988), c. 999, ss. 4, 5; 1989, c. 583, ss. 7-10, 15; c. 666; c. 707, s. 5; 1991, c. 219, s. 1; 1993, c. 122, s. 3; c. 343, ss. 2, 3; 1997-456, s. 27; 1998-212, s. 12.27A(p); 1999-196, s. 4; 2001-251, s. 2; 2003-220, ss. 1, 3, 6; 2009-101, ss. 2, 3; 2009-301, s. 3; 2009-506, s. 3; 2011-401, s. 2.15; 2012-134, s. 2(b); repealed by 2013-2, s. 2(a), effective July 1, 2013.

Editor’s Note.

Former G.S. 96-12.1 pertained to extended base periods for certain job related injuries. This provision has been repealed in its entirety and not revised. Former G.S. 96-13 pertained to benefit eligibility conditions. For present similar provisions, see G.S. 96-14.1 , 96-14.9, and G.S. 96-14.1 0. Former G.S. 96-14 pertained to disqualification for benefits. For present similar provisions, see G.S. 96-14.5 , 96-14.6, 96-14.7, 96-14.8, 96-14.11, 96-14.12, and G.S. 96-14.13 .

§ 96-14.1. Unemployment benefits.

Purpose. — The purpose of this Article is to provide temporary unemployment benefits as required by federal law to an individual who is unemployed through no fault on the part of the individual and who is able, available, and actively seeking work. Benefits are payable on the basis of service, to which section 3309(a)(1) of the Code applies, performed for a governmental entity, a nonprofit organization, and an Indian tribe in the same amount, on the same terms, and subject to the same conditions as compensation payable on the basis of other service.
Valid Claim. — To obtain benefits, an individual must file a valid claim for unemployment benefits, register for work, and have a weekly benefit amount calculated pursuant to G.S. 96-14.2(a) that equals or exceeds fifteen dollars ($15.00). An individual must serve a one-week waiting period for each claim filed, except no waiting period applies under this subsection to a claim for unemployment due directly to a disaster covered by a federal disaster declaration. A valid claim is one that meets the employment and wage standards in this subsection for the individual’s base period. A valid claim for a second benefit year is one that meets the employment and wage standards in this subsection since the beginning date of the prior benefit year and before the date the new benefit claim is filed:
1. Employment. — The individual has been paid wages in at least two quarters of the individual’s base period.
2. Wages. — The individual has been paid wages totaling at least six times the average weekly insured wage during the individual’s base period. If an individual lacks sufficient base period wages, then the wage standard for that individual is determined using the last four completed calendar quarters immediately preceding the first day of the individual’s benefit year. This alternative base period may not be used by an individual in making a claim for benefits in the next benefit year.
Qualification Determination. — An individual’s qualification for benefits is determined based on the reason for separation from employment from the individual’s bona fide employer. The individual’s bona fide employer is the most recent employer for whom the individual began employment for an indefinite duration or a duration of more than 30 consecutive calendar days, regardless of whether work was performed on all of those days. An individual who is disqualified has no right to benefits. An individual who is disqualified may have the disqualification removed if the individual files a valid claim based on employment with a bona fide employer that employed the individual subsequent to the employment that resulted in disqualification. An individual who had a prior disqualification removed may be determined to be disqualified based on the reason for separation from employment from the individual’s most recent bona fide employer, and the individual must be otherwise eligible for benefits.
Eligibility for Benefits. — The Division must calculate a weekly benefit amount and determine the duration of benefits for an individual who files a valid claim and qualifies for benefits. To receive the weekly benefit amount, the Division must find that the individual meets the work search eligibility requirements for each week of the benefit period. An individual who fails to meet the work search requirements for a given week is ineligible to receive a benefit until the condition causing the ineligibility ceases to exist.
Federal Restrictions. — Benefits are not payable for services performed by the following individuals, to the maximum extent allowed by section 3304 of the Code:
1. Instructional, research, or principal administrative employees of educational institutions.
2. Employees who provide services in any other capacity for an educational institution.
3. Individuals who performed services described in either subdivision (1) or (2) of this subsection in an educational institution while in the employ of an educational service agency. The term “educational service agency” has the same meaning as defined in section 3304 of the Code.
4. Professional athletes.
5. Aliens.

History. 2013-2, s. 5; 2013-224, ss. 12, 19; 2013-391, s. 3; 2015-238, s. 2.10(a); 2017-8, s. 1(c).

Effect of Amendments.

Session Laws 2013-224, s. 12, effective June 27, 2013, added a new subdivision (e)(2), and redesignated former subdivisions (e)(2) and (e)(3) as present subdivisions (e)(3) and (e)(4).

Session Laws 2013-391, s. 3, effective July 1, 2013, added the second sentence in subsection (a); added the last two sentences in subsection (c); substituted “maximum extent allowed” for “extent prohibited” in the introductory language of subsection (e); added “Employees who provide” in subdivision (e)(2); added subdivision (e)(3); and redesignated former subdivisions (e)(3) and (e)(4) as present subdivisions (e)(4) and (e)(5), respectively. For applicability, see Editor’s note.

Session Laws 2015-238, s. 2.10(a), effective September 10, 2015, substituted “benefits, register for work, and have a weekly benefit amount calculated pursuant to G.S. 96-14.2(a) that equals or exceeds fifteen dollars ($15.00)” for “benefits and register for work” in the first sentence of subsection (b). For applicability, see editor’s note.

Session Laws 2017-8, s. 1(c), effective October 1, 2016, inserted “except no waiting period applies under this subsection to a claim for unemployment due directly to a disaster covered by a federal disaster declaration” in the second sentence of subsection (b).

§ 96-14.2. Weekly benefit amount.

Weekly Benefit Amount. — The weekly benefit amount for an individual who is totally unemployed is an amount equal to the wages paid to the individual in the last two completed quarters of the individual’s base period divided by 52 and rounded to the next lower whole dollar. If this amount is less than fifteen dollars ($15.00), the individual is not eligible for benefits. The weekly benefit amount may not exceed three hundred fifty dollars ($350.00).
Partial Weekly Benefit Amount. — The weekly benefit amount for an individual who is partially unemployed or part-totally employed is the amount the individual would receive under subsection (a) of this section if the individual were totally unemployed, reduced by the amount of any wages earned by the individual in the benefit week in excess of twenty percent (20%) of the benefit amount applicable to total unemployment. If the amount so calculated is not a whole dollar, the amount must be rounded to the next lower whole dollar. Payments received by an individual under a supplemental benefit plan do not affect the computation of the individual’s partial weekly benefit.
Retirement Reduction. — The amount of benefits payable to an individual must be reduced as provided in section 3304(a)(15) of the Code. This subsection does not apply to social security retirement benefits.
Income Tax Withholding. — An individual may elect to have federal income tax deducted and withheld from the individual’s unemployment benefits in the amount specified in section 3402 of the Code. An individual may elect to have State income tax deducted and withheld from the individual’s unemployment benefits in an amount determined by the individual. The individual may change a previously elected withholding status. The amounts deducted and withheld from unemployment benefits remain in the Unemployment Insurance Fund until transferred to the appropriate taxing authority as a payment of income tax. The Division must advise an individual in writing at the time the individual files a claim for unemployment benefits that the benefits paid are subject to federal and State income tax, that requirements exist pertaining to estimated tax payments, and that the individual may elect to have the amounts withheld.
COVID-19 Increased Benefit Amount. — The weekly benefit amount calculated under this section shall be increased by fifty dollars ($50.00). The increased benefit amount is payable for weeks beginning on or after September 5, 2020. The increased benefit amount expires and will not be paid for weeks (i) beginning on or after December 26, 2020, or (ii) immediately following the week that fully expends the amount allocated by the General Assembly for this purpose under Section 3.3(75) of S.L. 2020-4, as amended by House Bill 1105, 2019 Regular Session, whichever occurs first.

History. 2013-2, s. 5; 2013-224, s. 19; 2013-391, s. 4; 2020-97, s. 1.6A; 2021-5, s. 3; 2021-16, s. 2.1.

Editor’s Note.

Session Laws 2020-71, s. 1, provides: “Payments received by precinct officials and assistants under G.S. 163-46 for work performed during the period from September 1, 2020, until November 5, 2020, do not affect the computation of the individual’s partial weekly benefit under G.S. 96-14.2(b).”

Session Laws 2020-97, s. 4.5, is a severability clause.

Session Laws 2021-5, s. 3, provided: “G.S. 96-14(b) reads as rewritten” and substituted “any wages earned by the individual” for “any wages the individual receives.” However, G.S. 96-14 is a repealed section, and therefore has no subsection (b). The apparent intent of the act was to amend subsection (b) of G.S. 96-14.2 . Subsequently, Session Laws 2021-16, s. 2.1, amended the introductory language of Session Laws 2021-5, s. 3, so that it now reads: “G.S. 96-14.2(b) reads as rewritten” and the amendment has been implemented in subsection (b) of this section.

Effect of Amendments.

Session Laws 2013-391, s. 4, effective July 1, 2013, added the second sentence in subsection (c). For applicability, see Editor’s note.

Session Laws 2020-97, s. 1.6A, effective September 4, 2020, added subsection (e).

Session Laws 2021-5, s. 3, as amended by Session Laws 2021-16, s. 2.1, effective March 30, 2021, inserted “earned by” and deleted “receives” preceding “in the benefit week” in subsection (b).

§ 96-14.3. Duration of benefits.

Duration. —
The number of weeks an individual is allowed to receive unemployment benefits depends on the seasonal adjusted statewide unemployment rate that applies to the six-month base period in which the claim is filed. One six-month base period begins on January 1 and one six-month base period begins on July 1. For the base period that begins January 1, the average of the seasonal adjusted unemployment rates for the State for the preceding months of July, August, and September applies. For the base period that begins July 1, the average of the seasonal adjusted unemployment rates for the State for the preceding months of January, February, and March applies. The Division must use the most recent seasonal adjusted unemployment rate determined by the U.S. Department of Labor, Bureau of Labor Statistics, and not the rate as revised in the annual benchmark.

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Total Benefits. — The total benefits paid to an individual equals the individual’s weekly benefit amount allowed under G.S. 96-14.2 multiplied by the number of weeks allowed under subsection (a) of this section.

Seasonal Adjusted Unemployment Rate Number of Weeks Less than or equal to 5.5% 12 Greater than 5.5% up to 6% 13 Greater than 6% up to 6.5% 14 Greater than 6.5% up to 7% 15 Greater than 7% up to 7.5% 16 Greater than 7.5% up to 8% 17 Greater than 8% up to 8.5% 18 Greater than 8.5% up to 9% 19 Greater than 9% 20

History. 2013-2, s. 5; 2013-224, ss. 13, 19; 2015-238, s. 2.8(b).

Effect of Amendments.

Session Laws 2013-224, s. 13, effective June 27, 2013, in the third sentence, inserted “average of the” and substituted “rates” for “rate” and “months of July, August, and September” for “month of October”; and in the fourth sentence, added “average of the” and substituted “rates‘ for “rate” and “months of January, February, and March” for “month of April.‘

Session Laws 2015-238, s. 2.8(b), effective July 1, 2015, in the catchline substituted “Duration of benefits” for “Minimum and maximum duration”; added subsection (a) designation, substituted “Duration. — The number” for “The minimum and maximum number”, deleted the last sentence which read: “The number of weeks allowed for an individual is determined in accordance with G.S. 96-14.4 .”; deleted the column for “Minimum Number of Weeks” and deleted “Maximum” from the present second column; and added subsection (b).

§ 96-14.4. [Repealed]

Repealed by Session Laws 2015-238, s. 2.8(a), effective July 1, 2015.

History. 2013-2, s. 5; 2013-224, s. 19; repealed by 2015-238, s. 2.8(a), effective July 1, 2015.

Editor’s Note.

Former G.S. 96-14.4 pertained to the duration of benefits for an individual claimant.

§ 96-14.5. Disqualification for good cause not attributable to the employer.

Determination. — The Division must determine the reason for an individual’s separation from work. An individual does not have a right to benefits and is disqualified from receiving benefits if the Division determines that the individual left work for a reason other than good cause attributable to the employer. When an individual leaves work, the burden of showing good cause attributable to the employer rests on the individual and the burden may not be shifted to the employer.
Reduced Work Hours. — When an individual leaves work due solely to a unilateral and permanent reduction in work hours of more than fifty percent (50%) of the customary scheduled full-time work hours in the establishment, plant, or industry in which the individual was employed, the leaving is presumed to be good cause attributable to the employer. The employer may rebut the presumption if the reduction is temporary or was occasioned by malfeasance, misfeasance, or nonfeasance on the part of the individual.
Reduced Rate of Pay. — When an individual leaves work due solely to a unilateral and permanent reduction in the individual’s rate of pay of more than fifteen percent (15%), the leaving is presumed to be good cause attributable to the employer. The employer may rebut the presumption if the reduction is temporary or was occasioned by malfeasance, misfeasance, or nonfeasance on the part of the individual.

History. 2013-2, s. 5; 2013-224, s. 19.

CASE NOTES

Analysis

I. General Consideration
II. Leaving Work Voluntarily Without Good Cause

I.General Consideration

Editor’s Note. —

Most of the cases below were decided under former G.S. 96-14, or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2. In addition, most of these cases were decided prior to the amendments made by Session Laws 2011-401, and references therein to the Employment Security Commission should be construed as references to the Division of Employment Security (DES) of the Department of Commerce.

Policy. —

The General Assembly has stated the policy of this State is that the compulsory reserves required under the Employment Security Law be used for the benefit of persons unemployed through no fault of their own. In order to carry out the intent of the act, its provisions should be liberally construed in favor of applicants. By contrast, our courts have said that sections of the act imposing disqualifications for its benefits should be strictly construed in favor of the claimant and should not be enlarged by implication. Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988).

Construction. —

The disqualifying provisions of this section must be strictly construed, since the main purpose of the law is to benefit eligible workers. The section must be construed to authorize benefits to one who becomes involuntarily unemployed, who is physically able to work, who is available for work at suitable employment and who, though actively seeking such employment, cannot find it through no fault of his own. Wright v. Bus Term. Restaurant, 71 N.C. App. 395, 322 S.E.2d 201, 1984 N.C. App. LEXIS 3855 (1984).

The disqualification rules must be applied strictly in favor of the claimant. This rule stems from the legislative policy behind the Employment Security Law, conceived during the Great Depression of the 1930’s, to provide support for persons who are able and willing to work, but who have become unemployed because of conditions of their former employment, and who continue to be unemployed because of generally depressed labor market conditions in their community. The meaning of this rule of construction and the policy behind it is that where a statutory term is vague, and the claimant is arguably covered, the claimant should be given the benefit of the doubt. Bunn v. North Carolina State Univ., 70 N.C. App. 699, 321 S.E.2d 32, 1984 N.C. App. LEXIS 3884 (1984).

Provisions of the Act which impose disqualifications for its benefits must be strictly construed in favor of the claimant. Poteat v. Employment Sec. Comm'n, 82 N.C. App. 138, 345 S.E.2d 238, 1986 N.C. App. LEXIS 2401 (1986), aff'd in part and rev'd in part, 319 N.C. 201 , 353 S.E.2d 219, 1987 N.C. LEXIS 1885 (1987).

G.S. 96-14(1) (now repealed) was not applicable to a former employee’s case because that section applied to cases in which an employee terminated an employment relationship and then sought unemployment benefits. However, the employee’s employment was terminated by the employer; therefore, the controlling statute was G.S. 96-14(2) (now repealed). James v. Lemmons, 177 N.C. App. 509, 629 S.E.2d 324, 2006 N.C. App. LEXIS 1075 (2006).

Superior court did not err in affirming the decision of the Employment Security Commission (ESC) that an employee left work with good cause attributable to the employer because the employee met his burden of showing that his acceptance of a voluntary early retirement package was valid and not indicative of an unwillingness to work and that such acceptance was a result of the employer’s actions; case law was favorable toward applicants for unemployment benefits under the Employment Security Act, G.S. 96-1 et seq., and the ESC’s unchallenged findings of fact were liberally in favor of the employee. Carolina Power & Light Co. v. Employment Sec. Comm'n, 192 N.C. App. 201, 665 S.E.2d 141, 2008 N.C. App. LEXIS 1526 (2008), rev'd, 363 N.C. 562 , 681 S.E.2d 776, 2009 N.C. LEXIS 721 (2009).

Provisions of This Section Prevail over General Policy of G.S. 96-2 . —

A specific ground for disqualifying an employee from unemployment benefits in this section, “when applicable,” prevails over the general policy in G.S. 96-2 of providing benefits to workers who are “unemployed through no fault of their own.” Lynch v. PPG Indus., 105 N.C. App. 223, 412 S.E.2d 163, 1992 N.C. App. LEXIS 37 (1992).

Disqualification statutes are to be strictly construed in favor of claimant, with the employer having the burden of proving that the claimant is disqualified. McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 368 S.E.2d 49, 1988 N.C. App. LEXIS 438 (1988).

Design of Employment Security Law. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

The Employment Security Law is designed to provide for the general welfare of North Carolina citizens. Bunn v. North Carolina State Univ., 70 N.C. App. 699, 321 S.E.2d 32, 1984 N.C. App. LEXIS 3884 (1984).

As to a person who must quit a job for health reasons but who is available for other employment, both reason and justice demand that such a claimant receive unemployment benefits. Milliken & Co. v. Griffin, 65 N.C. App. 492, 309 S.E.2d 733, 1983 N.C. App. LEXIS 3566 (1983).

Disqualification for Benefits Under This Section. —

Under this section, as amended effective July 1, 1985, a claimant may be disqualified for unemployment benefits, not only for the period of time prior to a scheduled separation, but also for that period of time after the date of a scheduled separation, unless the claimant proves that it was impracticable or unduly burdensome for the individual to work until the announced separation date. If the claimant proves this to the satisfaction of the Commission, the claimant is entitled to full benefits, with only a limited period of disqualification as provided in the closing provisions of subdivision (1). Seaberry v. W.T. Bridgers Contract Labor, 91 N.C. App. 499, 372 S.E.2d 348, 1988 N.C. App. LEXIS 826 (1988).

This section prevails over the provision of G.S. 96-2 stating the general policy of the statute to provide for benefits to workers who are “unemployed through no fault of their own.” In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941); In re Usery, 31 N.C. App. 703, 230 S.E.2d 585, 1976 N.C. App. LEXIS 2091 (1976), cert. denied, 292 N.C. 265 , 233 S.E.2d 396, 1977 N.C. LEXIS 1067 (1977); In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

Section Construed with G.S. 96-13. —

This section and G.S. 96-13 as cognate statutes provide the overall formula governing the right to unemployment compensation benefits. Being thus in pari materia, they are to be construed together. In re Miller, 243 N.C. 509 , 91 S.E.2d 241, 1956 N.C. LEXIS 377 (1956); In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

Burden of Proof. —

Each claimant is required to show to the satisfaction of the Commission that he is not disqualified for benefits under this section. In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941); State ex rel. Emp. Sec. Comm'n v. Jarrell, 231 N.C. 381 , 57 S.E.2d 403, 1950 N.C. LEXIS 466 (1950).

The claimant has the burden of proving that he is not disqualified from receiving unemployment benefits. Huggins v. Precision Concrete Forming, 70 N.C. App. 571, 320 S.E.2d 416, 1984 N.C. App. LEXIS 3734 (1984).

Ordinarily a claimant is presumed to be entitled to benefits under the Unemployment Compensation Act, but this is a rebuttable presumption, with the burden on the employer to show circumstances which disqualify the claimant, noting that the employer did not except to or attack the statement of the Commission in its decision that the employer had the responsibility to show that a claimant for benefits was discharged for misconduct within the meaning of the law. Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357, 1982 N.C. LEXIS 1273 (1982).

The burden is on the employer to show circumstances which disqualify the claimant. Umstead v. North Carolina Emp. Sec. Comm'n, 75 N.C. App. 538, 331 S.E.2d 218, 1985 N.C. App. LEXIS 3704 (1985).

A discharged employee is presumed to be entitled to unemployment compensation benefits and the employer has the burden of rebutting the presumption by proving disqualification, and taking additional evidence upon remand would allow employers repeated opportunities to meet their burden of proving that an employee should be disqualified. Dunlap v. Clarke Checks, Inc., 92 N.C. App. 581, 375 S.E.2d 171, 1989 N.C. App. LEXIS 5 (1989).

Ordinarily a claimant is presumed to be entitled to benefits under the Unemployment Compensation Act; the employer bears the burden of rebutting this presumption by showing circumstances which disqualify the claimant. Williams v. Davie County, 120 N.C. App. 160, 461 S.E.2d 25, 1995 N.C. App. LEXIS 703 (1995).

Effect of Filing Prematurely. —

While subdivision (1) of this section sets “the time such claim is filed” as determinative in assessing disqualification thereunder, the fact that a claim was filed during the four-day period during which employee could have continued to work for employer and thus was disqualified would not function to deny him benefits after that four-day period, when he was involuntarily unemployed through no fault of his own. Poteat v. Employment Sec. Comm'n, 319 N.C. 201 , 353 S.E.2d 219, 1987 N.C. LEXIS 1885 (1987).

Recovery of Both Workers’ Compensation and Unemployment Benefits. —

Unemployment Compensation Insurance Benefits Not Reduced by Amount of Pension Benefits Received. —

Superior court did not err in affirming the decision of the Employment Security Commission (ESC) that an employee’s benefits would not be reduced by the amount of pension benefits received under the Employment Security Act, G.S. 96-12(f) (now repealed) and G.S. 96-14(9) (now repealed), because the employee did not “receive” his lump sum that he had rolled over from the employer directly into an Individual Retirement Account; deference was given to the Federal Employment and Training Administration’s treatment of lump sum rollover distributions with regard to reductions in unemployment compensation insurance benefits, and the Administration stated that if a rollover from a qualified trust into an eligible retirement plan was not subject to federal income tax, it was not received for purposes of the Federal Unemployment Tax Act, 26 U.S.C.S. § 3304(a)(15). Carolina Power & Light Co. v. Employment Sec. Comm'n, 192 N.C. App. 201, 665 S.E.2d 141, 2008 N.C. App. LEXIS 1526 (2008), rev'd, 363 N.C. 562 , 681 S.E.2d 776, 2009 N.C. LEXIS 721 (2009).

The doctrine of res judicata is inapplicable to adjudication by unemployment compensation agencies. Roberts v. Wake Forest Univ., 55 N.C. App. 430, 286 S.E.2d 120, 1982 N.C. App. LEXIS 2222 (1982).

Sexual Harassment. —

Where employee was sexually harassed, she left employment for good cause attributable to her employer. Marlow v. North Carolina Emp. Sec. Comm'n, 127 N.C. App. 734, 493 S.E.2d 302, 1997 N.C. App. LEXIS 1182 (1997).

Employees’ failure to report sexual harassment pursuant to her employer’s grievance policy did not disqualify her from unemployment benefits eligibility. Marlow v. North Carolina Emp. Sec. Comm'n, 127 N.C. App. 734, 493 S.E.2d 302, 1997 N.C. App. LEXIS 1182 (1997).

II.Leaving Work Voluntarily Without Good Cause

“Work”. —

The labor, task, or duty that affords one his accustomed means of livelihood is the type of “work” to which subdivision (1) of this section applies. In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

Student’s Services as Research Assistant Are Not Work. —

The claimant’s services as a research assistant under a fellowship granted to students by The University of North Carolina are not “employment” within the meaning of the Act, nor did they constitute “work” within the meaning of subdivision (1) of this section. In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

“Voluntary”. —

An employee has not left his job voluntarily when events beyond the employee’s control or the wishes of the employer cause the termination. Eason v. Gould, Inc., 66 N.C. App. 260, 311 S.E.2d 372, 1984 N.C. App. LEXIS 2874 (1984), aff'd, 312 N.C. 618 , 324 S.E.2d 223, 1985 N.C. LEXIS 1484 (1985).

Later Wish to Rescind Resignation. —

Fact that claimant later wished to rescind her resignation does not negate the fact that it was voluntarily offered. Whicker v. High Point Pub. Schools, 56 N.C. App. 253, 287 S.E.2d 439, 1982 N.C. App. LEXIS 2355 (1982).

Notice to Employer That Employee Is Leaving with Expectation of Later Returning. —

Where an employee leaves employment because of a temporary disability with the expectation of later returning to work he is required to apply for a leave of absence, give a timely notice, or otherwise manifest an intention not to abandon the labor force. This is especially applicable where the leaving is an equivocal act, as where a pregnant woman leaves her employment and the leaving can be construed either as a temporary absence or an abandonment of the labor force. Sellers v. National Spinning Co., 64 N.C. App. 567, 307 S.E.2d 774, 1983 N.C. App. LEXIS 3320 (1983).

The termination of the claimant’s studies at The University of North Carolina and subsequently his research assistantship, which was part of a fellowship granted to students, did not constitute a voluntary abandonment of work within the meaning of subdivision (1) of this section. In re Scaringelli, 39 N.C. App. 648, 251 S.E.2d 728, 1979 N.C. App. LEXIS 2486 (1979).

When Resignation Is Involuntary. —

Employees who quit or resign employment because they are asked to do so by their employer do not leave “voluntarily” within the meaning of subdivision (1) of this section. Where the employer recommended that the employee resign, and clearly implied that the employee would be discharged if she failed to offer her resignation, this would constitute an involuntary separation. In re Werner, 44 N.C. App. 723, 263 S.E.2d 4, 1980 N.C. App. LEXIS 2572 (1980).

“Good Cause” Defined. —

“Good cause” is a reason which would be deemed by reasonable men and women valid and not indicative of an unwillingness to work. In re Clark, 47 N.C. App. 163, 266 S.E.2d 854, 1980 N.C. App. LEXIS 2993 (1980); Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357, 1982 N.C. LEXIS 1273 (1982); Huggins v. Precision Concrete Forming, 70 N.C. App. 571, 320 S.E.2d 416, 1984 N.C. App. LEXIS 3734 (1984); Ray v. Broyhill Furn. Indus., 81 N.C. App. 586, 344 S.E.2d 798, 1986 N.C. App. LEXIS 2334 (1986); Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988); McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 368 S.E.2d 49, 1988 N.C. App. LEXIS 438 (1988).

“Good cause,” as used in subdivision (1) of this section connotes a reason for rejecting work that would be deemed by reasonable men and women as valid and not indicative of an unwillingness to work. Sellers v. National Spinning Co., 64 N.C. App. 567, 307 S.E.2d 774, 1983 N.C. App. LEXIS 3320 (1983).

A good cause within the meaning of subdivision (1) of this section includes a reaction to requests or policies of the employer which would be considered valid by reasonable minds. Eason v. Gould, Inc., 66 N.C. App. 260, 311 S.E.2d 372, 1984 N.C. App. LEXIS 2874 (1984), aff'd, 312 N.C. 618 , 324 S.E.2d 223, 1985 N.C. LEXIS 1484 (1985).

Availability of Provision Establishing Good Cause Per Se. —

In suit brought upon employee’s separation for lack of available work, although some evidence in the record showed that claimant’s weight interfered with some of his employment duties, where the employer offered no evidence that the claimant’s weight interfered with all of claimant’s duties to the extent that there was “no available work” for him, that portion of subdivision (1) establishing the issue of good cause per se was not available to employer. Seaberry v. W.T. Bridgers Contract Labor, 91 N.C. App. 499, 372 S.E.2d 348, 1988 N.C. App. LEXIS 826 (1988).

Where the acts of the employer in removing the plant eleven miles caused plaintiff to be unable to continue her employment, since by moving its plant the company caused plaintiff’s commuting distance to be increased fifty percent (50%) and, in effect, destroyed plaintiff’s ability to go from her home to the job site, plaintiff’s leaving work was in response to the removal of the plant and not an act of her own free will, and therefore plaintiff left her work involuntarily. Barnes v. Singer Co., 324 N.C. 213 , 376 S.E.2d 756, 1989 N.C. LEXIS 99 (1989).

“Attributable to the Employer”. —

A cause is “attributable to the employer” under this section if it is produced, caused, or created as a result of actions by the employer. Huggins v. Precision Concrete Forming, 70 N.C. App. 571, 320 S.E.2d 416, 1984 N.C. App. LEXIS 3734 (1984); Bunn v. North Carolina State Univ., 70 N.C. App. 699, 321 S.E.2d 32, 1984 N.C. App. LEXIS 3884 (1984).

Cause “attributable to the employer” is one which is produced, caused, created or as a result of actions by the employer. It also includes inaction by the employer. Ray v. Broyhill Furn. Indus., 81 N.C. App. 586, 344 S.E.2d 798, 1986 N.C. App. LEXIS 2334 (1986).

“Attributable to the employer” means “produced, caused, created or as a result of actions by the employer.” Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988); McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 368 S.E.2d 49, 1988 N.C. App. LEXIS 438 (1988).

Respondent employer’s moving of its plant was “good cause attributable to the employer” for petitioner’s leaving her job, and she should not have been disqualified from receiving unemployment benefits. Watson v. Employment Sec. Comm'n, 111 N.C. App. 410, 432 S.E.2d 399, 1993 N.C. App. LEXIS 782 (1993).

Former employee was properly disqualified from receiving unemployment benefits because he failed to show that his leaving work was attributable to his employer, since the employer had offered the employee administrative positions to accommodate his health issues but the employee nonetheless left his job. In re Lennane, 2022-NCSC-21, 869 S.E.2d 243, 2022- NCSC-21, 2022 N.C. LEXIS 231 (N.C. 2022).

Findings. —

Trial court erred in affirming a ruling by the Employment Security Division Board of Review that a police officer left work for a reason other than good cause attributable to the employer and was not entitled to unemployment benefits because the Board made two conflicting, subjective findings: that the officer did not believe he had left work and that his employer believed he did; made a number of evidentiary findings that conflicted with its ultimate finding; and did not state that it made the finding that the officer “left work and was not discharged by the employer” by applying a reasonable person standard. Maness v. Vill. of Pinehurst, 269 N.C. App. 422, 838 S.E.2d 467, 2020 N.C. App. LEXIS 64 (2020).

Claimant’s Quitting Held Voluntary. —

Where there was no evidence that the notice of impending separation was offensive so as to embarrass or humiliate the claimant, and suitable work was available for seven more days, the quit by claimant prior to the date of scheduled separation was voluntary. Seaberry v. W.T. Bridgers Contract Labor, 91 N.C. App. 499, 372 S.E.2d 348, 1988 N.C. App. LEXIS 826 (1988).

When Claimant Disqualified. —

A claimant is disqualified from receiving unemployment compensation only if he voluntarily left his position and the leaving was without good cause attributable to the employer. Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988).

For an applicant to be disqualified from unemployment compensation benefits pursuant to subdivision (1) she must have voluntarily left her position and her leaving must be without good cause attributable to her employer. McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 368 S.E.2d 49, 1988 N.C. App. LEXIS 438 (1988).

If, under G.S. 96-14 (now repealed), an employee who has been told that he or she will be terminated on a certain date is disqualified from receiving benefits when he or she leaves before the stated date, then permitting the employee who has not been told that he or she will be terminated to leave and obtain unemployment benefits on the basis that the employee accepted the offer of enhanced early retirement would create an inconsistency and inequity in the law. Carolina Power & Light Co. v. Employment Sec. Comm'n of N.C. 363 N.C. 562 , 681 S.E.2d 776, 2009 N.C. LEXIS 721 (2009).

Claimant Properly Disqualified by Division. —

Claimant’s resignation upon the employer’s vehicle policy change was without good cause, such that the Division properly disqualified him from benefits, as he did not show that he suffered any financial injury or that the new policy had otherwise rendered his continued employment logistically impractical. King v. N.C. DOC, 228 N.C. App. 61, 743 S.E.2d 83, 2013 N.C. App. LEXIS 677 (2013).

In determining whether claimant left her position voluntarily, court must review external factors motivating employee. McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 368 S.E.2d 49, 1988 N.C. App. LEXIS 438 (1988).

Claimant voluntarily left work as a county social worker for good cause attributable to her employer and was thus entitled to unemployment compensation where she resigned her position because she was instructed by her supervisor to initiate custody proceedings for certain children after she had secured voluntary, revocable Board Home Agreements from the mothers to place their children in the temporary custody of others upon her assurances to the mothers that the children would be returned to the mothers upon request, and because she felt that the actions she was required to take violated the ethical standards of her profession. In re Clark, 47 N.C. App. 163, 266 S.E.2d 854, 1980 N.C. App. LEXIS 2993 (1980).

Had claimant left her job because of racial discrimination practiced against her by her employer, she would have had good cause attributable to her employer and so would not have been disqualified for unemployment compensation benefits. In re Boulden, 47 N.C. App. 468, 267 S.E.2d 397, 1980 N.C. App. LEXIS 3141 (1980).

Lack of Child Care as Good Cause. —

Depending on circumstances disclosed by the evidence, the lack of child care may or may not be “good cause” for an unexcused absence from work and is a matter for the factfinder to decide. Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357, 1982 N.C. LEXIS 1273 (1982).

Showing by Claimant Who Resigns for Health Reasons. —

A claimant who resigns for health reasons need not produce a physician’s note on or before the day she leaves. Rather, the claimant must only show by competent evidence that the health condition existed at the time of the leaving. Ray v. Broyhill Furn. Indus., 81 N.C. App. 586, 344 S.E.2d 798, 1986 N.C. App. LEXIS 2334 (1986).

Acceptance of Voluntary Early Retirement Does Not Constitute Good Cause. —

Unemployment claimant was disqualified from receiving benefits because he left his employment without good cause attributable to the employer, and although the Commission’s findings of fact pointed to three possible actions attributable to the employer that could have been factors in claimant’s acceptance of voluntary early retirement (VERP), none of those actions constituted good cause for claimant to accept the VERP and leave his employment; the mere offering of the VERP by the employer as part of its efforts to downsize could not be a good cause entitling claimant to benefits in that claimant had to submit a written application in order to accept the program, and claimant left work even though continued work was neither logistically impractical nor intolerable. Carolina Power & Light Co. v. Employment Sec. Comm'n of N.C. 363 N.C. 562 , 681 S.E.2d 776, 2009 N.C. LEXIS 721 (2009).

A reduction of hours does give good cause for voluntarily leaving a job. Couch v. North Carolina Emp. Sec. Comm'n, 89 N.C. App. 405, 366 S.E.2d 574, 1988 N.C. App. LEXIS 182 , aff'd, 323 N.C. 472 , 373 S.E.2d 440, 1988 N.C. LEXIS 621 (1988).

Hairdresser who had worked at salon during resort season each year for three years, being paid strictly on a commission basis, held to have left work voluntarily without good cause attributable to her employer. McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 368 S.E.2d 49, 1988 N.C. App. LEXIS 438 (1988).

An employee’s decision to leave work on ethical grounds is with good cause attributable to the employer. Bunn v. North Carolina State Univ., 70 N.C. App. 699, 321 S.E.2d 32, 1984 N.C. App. LEXIS 3884 (1984).

An employee who quits a job upon being informed that he will be terminated four days later, and who applies immediately for unemployment benefits, is disqualified for the four-day period during which he could have continued to work. Nothing else appearing, however, he is not thereby disqualified subsequent to the date on which his employment would in any event have terminated. Poteat v. Employment Sec. Comm'n, 319 N.C. 201 , 353 S.E.2d 219, 1987 N.C. LEXIS 1885 (1987).

Where employee quit working after being given notice of impending separation, but knowing that there was still work available for seven days, the employee was properly denied unemployment benefits for the period during which he could have continued to work, but was entitled to benefits after the date on which employment was scheduled to terminate. Seaberry v. W.T. Bridgers Contract Labor, 91 N.C. App. 499, 372 S.E.2d 348, 1988 N.C. App. LEXIS 826 (1988).

Where an employee is discharged and leaves a few days in advance of her final work day, the law is not so harsh that it would deny her benefits, either before or after the formal date of discharge. Bunn v. North Carolina State Univ., 70 N.C. App. 699, 321 S.E.2d 32, 1984 N.C. App. LEXIS 3884 (1984).

“Without Good Cause”. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

§ 96-14.6. Disqualification for misconduct.

Disqualification. — An individual who the Division determines is unemployed for misconduct connected with the work is disqualified for benefits. The period of disqualification begins with the first day of the first week the individual files a claim for benefits after the misconduct occurs.
Misconduct. — Misconduct connected with the work is either of the following:
1. Conduct evincing a willful or wanton disregard of the employer’s interest as is found in deliberate violation or disregard of standards of behavior that the employer has the right to expect of an employee or has explained orally or in writing to an employee.
2. Conduct evincing carelessness or negligence of such degree or recurrence as to manifest an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employer.
Examples. — The following examples are prima facie evidence of misconduct that may be rebutted by the individual making a claim for benefits:
1. Violation of the employer’s written alcohol or illegal drug policy.
2. Reporting to work significantly impaired by alcohol or illegal drugs.
3. Consumption of alcohol or illegal drugs on the employer’s premises.
4. Conviction by a court of competent jurisdiction for manufacturing, selling, or distributing a controlled substance punishable under G.S. 90-95(a)(1) or G.S. 90-95(a)(2) if the offense is related to or connected with an employee’s work for the employer or is in violation of a reasonable work rule or policy.
5. Termination or suspension from employment after arrest or conviction for an offense involving violence, sex crimes, or illegal drugs if the offense is related to or connected with the employee’s work for an employer or is in violation of a reasonable work rule or policy.
6. Any physical violence whatsoever related to the employee’s work for an employer, including physical violence directed at supervisors, subordinates, coworkers, vendors, customers, or the general public.
7. Inappropriate comments or behavior toward supervisors, subordinates, coworkers, vendors, customers, or to the general public relating to any federally protected characteristic that creates a hostile work environment.
8. Theft in connection with the employment.
9. Forging or falsifying any document or data related to employment, including a previously submitted application for employment.
10. Violation of an employer’s written absenteeism policy.
11. Refusal to perform reasonably assigned work tasks or failure to adequately perform employment duties as evidenced by no fewer than three written reprimands in the 12 months immediately preceding the employee’s termination.

History. 2013-2, s. 5; 2013-224, s. 19.

CASE NOTES

Editor’s Note. —

Most of the cases below were decided under former G.S. 96-14, or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2. Many of the cases annotated under those prior similar provisions pertain to the concept of substantial fault, which is no longer part of the law. In addition, most of these cases were decided prior to the amendments made by Session Laws 2011-401, and references therein to the Employment Security Commission should be construed as references to the Division of Employment Security (DES) of the Department of Commerce.

The term “misconduct” within the meaning of subdivision (2) is limited to conduct evincing such willful or wanton disregard of an employer’s interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer. In re Collingsworth, 17 N.C. App. 340, 194 S.E.2d 210, 1973 N.C. App. LEXIS 1354 (1973); Intercraft Indus. Corp. v. Morrison, 54 N.C. App. 225, 283 S.E.2d 555 (1981); In re Chavis, 55 N.C. App. 635, 286 S.E.2d 623, 1982 N.C. App. LEXIS 2244 (1982); Walter Kidde & Co. v. Bradshaw, 56 N.C. App. 718, 289 S.E.2d 571, 1982 N.C. App. LEXIS 2456 (1982); Butler v. J.P. Stevens & Co., 60 N.C. App. 563, 299 S.E.2d 672, 1983 N.C. App. LEXIS 2497 (1983); Douglas v. J.C. Penney Co., 67 N.C. App. 344, 313 S.E.2d 176, 1984 N.C. App. LEXIS 3066 (1984).

“Misconduct,” in the context of subdivision (2) of this section, is conduct which shows a wanton or willful disregard for the employer’s interest, a deliberate violation of the employer’s rules, or a wrongful intent. Hagan v. Peden Steel Co., 57 N.C. App. 363, 291 S.E.2d 308, 1982 N.C. App. LEXIS 2650 (1982); Miller v. Guilford County Schools, 62 N.C. App. 729, 303 S.E.2d 411, 1983 N.C. App. LEXIS 2972 (1983).

Misconduct sufficient to disqualify a discharged employee from receiving unemployment compensation is conduct which shows a wanton or willful disregard for the employer’s interest, a deliberate violation of the employer’s rules, or a wrongful intent. The obvious reasons for such a rule are to prevent benefits of the statute from going to persons who cause their unemployment by such callous, wanton, and deliberate misbehavior as would reasonably justify their discharge by an employer, and to prevent the dissipation of employment funds by persons engaged in such disqualifying acts. Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357, 1982 N.C. LEXIS 1273 (1982); Collins v. B & G Pie Co., 59 N.C. App. 341, 296 S.E.2d 809, 1982 N.C. App. LEXIS 3125 (1982); West v. Georgia-Pacific Corp., 107 N.C. App. 600, 421 S.E.2d 395, 1992 N.C. App. LEXIS 776 (1992).

“Misconduct” may consist in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee. Hagan v. Peden Steel Co., 57 N.C. App. 363, 291 S.E.2d 308, 1982 N.C. App. LEXIS 2650 (1982).

The term “misconduct” in connection with one’s work is limited to conduct evincing such willful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer. This definition of “misconduct” suffices to encompass an employee’s violation of the employer’s reasonable attendance rules, of which he has notice, and his failure to give the employer proper notice of absences for which good cause may exist. Butler v. J.P. Stevens & Co., 60 N.C. App. 563, 299 S.E.2d 672, 1983 N.C. App. LEXIS 2497 (1983).

Misconduct is conduct evincing a willful or wanton disregard for an employer’s interest, as demonstrated by the following types of conduct: (1) deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee; (2) carelessness or negligence of such degree or recurrence that it manifests equal culpability, wrongful intent, or evil design, or shows an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer. Douglas v. J.C. Penney Co., 67 N.C. App. 344, 313 S.E.2d 176, 1984 N.C. App. LEXIS 3066 (1984).

Definition of Disqualifying Misconduct Not Exclusive. —

The statutory language, “include but not be limited to” in the second paragraph of subdivision (2) of this section clearly indicates that the legislature did not intend an exclusive list; thus, the paragraph added to subdivision (2) in 1989 only illustrates and illuminates the more general language in the preceding paragraph of subdivision (2). Lynch v. PPG Indus., 105 N.C. App. 223, 412 S.E.2d 163, 1992 N.C. App. LEXIS 37 (1992).

Employer’s Burden to Prove Misconduct Disqualifying Employee from Benefits. —

Employee may be disqualified from receiving any benefits if she was fired for misconduct connected with her work. Employee may be disqualified for a period ranging from 4 to 13 weeks if employee was fired for substantial fault connected with her work. The employer has the burden of establishing disqualification. Guilford County v. Holmes, 102 N.C. App. 103, 401 S.E.2d 135, 1991 N.C. App. LEXIS 191 (1991).

Under subdivision (2) of this section, the employer has the burden of showing the employee’s disqualification from unemployment benefits on the basis of misconduct. Lynch v. PPG Indus., 105 N.C. App. 223, 412 S.E.2d 163, 1992 N.C. App. LEXIS 37 (1992).

Leaving Work Station in Pursuit of Job Duties. —

Where Commission made findings that receptionist employee continued to leave her work station after being requested not to do so, but that employee was not aware that her job was jeopardized by this conduct and employee was in pursuit of her job duties when she did deliver messages, competent evidence supported Employment Security Commission’s finding that terminated employee was not even partially disqualified from receiving benefits, as she was not discharged for misconduct or substantial fault connected with her work. Guilford County v. Holmes, 102 N.C. App. 103, 401 S.E.2d 135, 1991 N.C. App. LEXIS 191 (1991).

Discharge Under Occupational Safety and Health Act. —

Claimant’s discharge for willful refusal to wear ear protective devices as required by employer policy made mandatory by the Occupational Safety and Health Act of 1970 constituted a discharge for misconduct connected with his employment within the meaning of subdivision (2). In re Collingsworth, 17 N.C. App. 340, 194 S.E.2d 210, 1973 N.C. App. LEXIS 1354 (1973).

A discharge for “gross insolence” was a discharge for misconduct connected with the employee’s work such as to disqualify the employee for unemployment compensation. Hagan v. Peden Steel Co., 57 N.C. App. 363, 291 S.E.2d 308, 1982 N.C. App. LEXIS 2650 (1982).

Petitioner was discharged for misconduct connected with his work as a matter of law: Petitioner’s conduct evidenced a “willful or wanton disregard of his employer’s interest” and was in “deliberate violation or disregard of standards of behavior which the employer has a right to expect of his employee.” Furthermore, petitioner’s misconduct, “caused his unemployment,” and he therefore was disqualified from receiving benefits pursuant to the statute. West v. Georgia-Pacific Corp., 107 N.C. App. 600, 421 S.E.2d 395, 1992 N.C. App. LEXIS 776 (1992).

Where the petitioner reported to work smelling of alcohol and admitted to having consumed approximately five beers that day, and petitioner was offered participation in an alcohol treatment program as a condition of further employment, but refused to participate in the program despite the fact that he knew he would be terminated otherwise, the facts clearly supported the Commission’s conclusion that petitioner was discharged for “misconduct.” West v. Georgia-Pacific Corp., 107 N.C. App. 600, 421 S.E.2d 395, 1992 N.C. App. LEXIS 776 (1992).

Petitioner’s conviction for possession of cocaine with intent to sell or deliver, in violation of G.S. 90-95(a)(1) was misconduct within the meaning of subdivision (2) of this section, disqualifying him from drawing unemployment benefits. Lynch v. PPG Indus., 105 N.C. App. 223, 412 S.E.2d 163, 1992 N.C. App. LEXIS 37 (1992).

The use of marijuana on company property during working hours in violation of the employer’s rules constitutes “misconduct connected with his work” pursuant to subdivision (2) of this section. Hester v. Hanes Knitwear, 61 N.C. App. 730, 301 S.E.2d 508, 1983 N.C. App. LEXIS 2734 (1983).

Violation of Attendance Rules. —

The definition of “misconduct” suffices to encompass an employee’s violation of the employer’s reasonable attendance rules, of which he has notice, and his failure to give the employer proper notice of absences for which good cause may exist. Butler v. J.P. Stevens & Co., 60 N.C. App. 563, 299 S.E.2d 672, 1983 N.C. App. LEXIS 2497 (1983).

Where prior to the claimant’s going on leave, she was on probation due to absence from work and tardiness in reporting to work; the employer had a known, reasonable policy that provided that medical leaves of absence can be granted or extended only upon the request of the employee’s physician and the claimant was aware of this policy; and when the claimant reported back to work at the usual time she did not present a doctor’s excuse for the previous day’s absence, or to extend the leave of absence, the Commission could reasonably conclude that the claimant deliberately violated her employer’s attendance rules. Therefore, the Commission’s findings supported its conclusion that she had been discharged for “misconduct connected with her work.” Davis v. Corning Glass Works, 65 N.C. App. 379, 309 S.E.2d 258, 1983 N.C. App. LEXIS 3498 (1983).

While the mere violation of a work rule is not disqualifying misconduct where the evidence shows that the employee’s actions were reasonable and were taken with good cause, deliberate violation or disregard of standards of behavior which an employer has a right to expect of his employee, or carelessness or negligence manifesting equal culpability may constitute misconduct in connection with one’s employment sufficient to disqualify the employee to receive unemployment benefits. Collins v. B & G Pie Co., 59 N.C. App. 341, 296 S.E.2d 809, 1982 N.C. App. LEXIS 3125 (1982).

Most courts have held that persistent or chronic absences, at least where absences are without excuse or notice, and the employee has been given warnings by the employer, constitute misconduct within the meaning of the unemployment compensation laws. Obviously, when an employee is absent due to illness but fails to give proper notice the absence can amount to misconduct, not because of the illness per se but because the employee has an obligation to the employer to mitigate any damages an illness may cause the enterprise by giving appropriate notice. Butler v. J.P. Stevens & Co., 60 N.C. App. 563, 299 S.E.2d 672, 1983 N.C. App. LEXIS 2497 (1983).

When an employee who did not technically violate an employer’s attendance policy was fired for abusing that policy, the Employment Security Commission of North Carolina, in ruling on the employee’s claim for unemployment compensation benefits, had to decide if the employer had imposed a reasonable employee-specific policy on the employee with which she was able to conform and whether she violated that policy, before disqualifying the employee from the receipt of unemployment compensation benefits. Davis v. Britax Child Safety, Inc., 163 N.C. App. 277, 593 S.E.2d 97, 2004 N.C. App. LEXIS 379 (2004).

Decision that petitioner was qualified to receive unemployment benefits was affirmed as findings of fact by the Employment Security Commission of North Carolina (ESC) did not indicate there was “substantial fault” under G.S. 96-14(2a) (now repealed) for petitioner’s failure for failing to call in sick, as the ESC failed to enter specific findings of fact that the employer expressly warned him that failure to call in was a violation of employer’s rules, and that continued violation of the rule would result in discharge. Boyland v. Southern Structures, Inc., 172 N.C. App. 108, 615 S.E.2d 919, 2005 N.C. App. LEXIS 1434 (2005).

Former employee’s absenteeism from her employment could not rise to the level of substantial fault, under G.S. 96-14(2a) (now repealed), because the evidence did not establish that the employee could exercise reasonable control over her actions resulting from her stress related medical problems. James v. Lemmons, 177 N.C. App. 509, 629 S.E.2d 324, 2006 N.C. App. LEXIS 1075 (2006).

Excessive Tardiness. —

Where petitioner received three written warnings in a five-month period for excessive tardiness and absenteeism and testified that after his third warning and suspension he knew that he could be “let go” for more tardiness or absences, the evidence was enough to meet the statutory requirements under subdivision (2A). Doyle v. Southeastern Glass Laminates, Inc., 104 N.C. App. 326, 409 S.E.2d 732, 1991 N.C. App. LEXIS 1051 (1991), rev'd, 331 N.C. 748 , 417 S.E.2d 236, 1992 N.C. LEXIS 431 (1992).

Good Faith Effort to Comply with Notification of Absence Rule. —

Where claimant was absent four consecutive days after a twenty-month infraction-free period of employment, and a combination of unfortunate circumstances prevented claimant from meeting the strict requirements of his employer’s rule regarding notification of absence, but the evidence from the record was clear that claimant made a good faith effort to comply with the rule, the facts and circumstances did not support the Employment Security Commission’s finding of misconduct. Helmandollar v. M.A.N. Truck & Bus Corp., 74 N.C. App. 314, 328 S.E.2d 43, 1985 N.C. App. LEXIS 3447 (1985).

Chronic or persistent absenteeism, in the face of warnings, and without good cause may constitute willful misconduct. Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357, 1982 N.C. LEXIS 1273 (1982).

Refusal to Report to Work. —

A claimant’s deliberate and unjustifiable refusal to report to work, when the employer has the right to insist on the employee’s presence and when the claimant knows that his refusal would cause logistical problems for the employer, constitutes misconduct sufficient to disqualify claimant from receiving benefits under subdivision (2) of this section. In re Cantrell, 44 N.C. App. 718, 263 S.E.2d 1, 1980 N.C. App. LEXIS 2562 (1980).

Refusal to Work Overtime. —

Trial court erred in setting aside an agency’s disqualification of a worker from receiving unemployment insurance benefits pursuant to G.S. 96-14(2) (now repealed) based on the worker’s refusal to work overtime; the worker failed to preserve for review his claim that procedural omissions by the agency violated his due process rights as required by G.S. 96-15(h). Graves v. Culp, Inc., 166 N.C. App. 748, 603 S.E.2d 829, 2004 N.C. App. LEXIS 2019 (2004).

Inefficiency or unsatisfactory job performance does not amount to misconduct. Nor does violation of a work rule constitute misconduct if the evidence shows that the employee’s actions were reasonable and taken with good cause, good cause being that deemed by reasonable men and women valid and not indicative of an unwillingness to work. Douglas v. J.C. Penney Co., 67 N.C. App. 344, 313 S.E.2d 176, 1984 N.C. App. LEXIS 3066 (1984).

Harm to the employer is not an element of misconduct as defined by subdivision (2), which speaks only of conduct and does not mention consequences. In re Gregory v. North Carolina Dep't of Revenue, 93 N.C. App. 785, 379 S.E.2d 51, 1989 N.C. App. LEXIS 368 (1989).

An intent to violate a work rule is not equivalent to misconduct within the purview of subdivision (2) of this section as a matter of law. Kahl v. Smith Plumbing Co., 68 N.C. App. 287, 314 S.E.2d 574, 1984 N.C. App. LEXIS 3191 (1984).

Employee’s grumbling and his statement that he intended in the future to violate a work rule did not rise to the level of willful or wanton disregard of the employer’s standards such as to constitute misconduct connected with work. Kahl v. Smith Plumbing Co., 68 N.C. App. 287, 314 S.E.2d 574, 1984 N.C. App. LEXIS 3191 (1984).

When Violation of Work Rule Not Misconduct. —

A violation of a work rule is not willful misconduct if the evidence shows that the employee’s actions were reasonable and were taken with good cause. Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357, 1982 N.C. LEXIS 1273 (1982); Lancaster v. Black Mt. Center, 72 N.C. App. 136, 323 S.E.2d 760, 1984 N.C. App. LEXIS 3992 (1984).

A violation of a company rule will not be construed as misconduct within the meaning of subdivision (2) of this section, if the evidence shows that the action of the employee were reasonable and were taken with good cause. Good cause is a reason which would be deemed by reasonable men and women as valid and not indicative of an unwillingness to work. Helmandollar v. M.A.N. Truck & Bus Corp., 74 N.C. App. 314, 328 S.E.2d 43, 1985 N.C. App. LEXIS 3447 (1985).

Work Rule Unnecessary Where Conduct Forbidden by Statute. —

Where petitioner, a professional level employee of the North Carolina Department of Revenue responsible for the collection of delinquent taxes, was discharged for failing to timely file, or to request an extension of time in which to file his 1985 and 1986 individual state income tax returns, facts supported the Commission’s conclusion that petitioner was discharged for misconduct connected with his work under this section; petitioner argued that his failure to file his tax returns on time did not constitute misconduct under this statute because the department had no rule or policy requiring employees to file their returns on time; however, since petitioner’s conduct was forbidden by statute, a work rule to the same effect was unnecessary. In re Gregory v. North Carolina Dep't of Revenue, 93 N.C. App. 785, 379 S.E.2d 51, 1989 N.C. App. LEXIS 368 (1989).

The essence of subdivision (2A) is that if an employer establishes a reasonable job policy to which an employee can conform, her failure to do so constitutes substantial fault. Lindsey v. Qualex, Inc., 103 N.C. App. 585, 406 S.E.2d 609, 1991 N.C. App. LEXIS 866 (1991).

The reasonableness of an employer’s job requirements should be analyzed on a case-by-case basis in light of the totality of the circumstances surrounding the employee’s function within the employer’s business. Lindsey v. Qualex, Inc., 103 N.C. App. 585, 406 S.E.2d 609, 1991 N.C. App. LEXIS 866 (1991).

Where claimant’s conduct was not within the more liberal standard of a substantial fault analysis under subsection (2A) of this section, the court would not reach the question of whether his conduct fell within the stricter standard of misconduct under subsection (2) of this section. Department of Crime Control & Pub. Safety v. Featherston, 96 N.C. App. 102, 384 S.E.2d 306, 1989 N.C. App. LEXIS 926 (1989).

Substantial Fault Requires Violation After a Warning. —

Although claimant’s associations arguably placed him in violation of a departmental rule prohibiting dealings with criminals, such conduct would not rise to the level of substantial fault under subsection (2) of this section absent claimant’s repetition of the violation after a warning. Department of Crime Control & Pub. Safety v. Featherston, 96 N.C. App. 102, 384 S.E.2d 306, 1989 N.C. App. LEXIS 926 (1989).

An employee’s alteration of production records, resulting in overpayment to the employee, constitutes willful or wanton disregard of the employer’s interest, in disregard of standards of behavior which the employer has the right to expect of the employee. Williams v. SCM Proctor Silex, 60 N.C. App. 572, 299 S.E.2d 668, 1983 N.C. App. LEXIS 2491 (1983).

Absence Due to Incarceration. —

Absence from employment in violation of a work rule due to incarceration for a willful or legally unexcused probation violation amounts to “misconduct” in the context of this section. Collins v. B & G Pie Co., 59 N.C. App. 341, 296 S.E.2d 809, 1982 N.C. App. LEXIS 3125 (1982).

Conversion of Employer’s Surplus Property. —

Where the Commission found as facts that claimants had participated in a sale of their employer’s surplus property without specific approval or authorization by the employer, that claimants never attempted to see that the employer received the proceeds of the sale, and that claimants knew or should have known that converting their employer’s property to their own benefit was not permitted, the Commission logically concluded that claimants’ conduct was misconduct connected with their work as defined by case law and properly decided that claimants were disqualified from unemployment benefits. Vanhorn v. Bassett Furn. Indus., Inc., 76 N.C. App. 377, 333 S.E.2d 309, 1985 N.C. App. LEXIS 3883 (1985).

An employee’s conduct in not reporting directly to his supervisor, replying that he needed at least an hour to go over some papers on his desk, did not rise to the level of culpability required for a finding of “misconduct,” considering the supervisor’s admission that there was very little by way of information that he had to convey, that there was no urgent need for an immediate meeting, and that he could have conveyed the information by telephone. Umstead v. North Carolina Emp. Sec. Comm'n, 75 N.C. App. 538, 331 S.E.2d 218, 1985 N.C. App. LEXIS 3704 (1985).

Evidence that employee left work early and without permission three days in a row, on grounds that his job was finished and he did not wish to disturb his supervisor at home at an early hour, and that he falsified his time records for these days, was sufficient to support the referee’s conclusion that the employee was discharged for misconduct. Williams v. Burlington Indus., Inc., 318 N.C. 441 , 349 S.E.2d 842, 1986 N.C. LEXIS 2677 (1986).

Protective Reflex Action. —

Where student hit child care teacher in the stomach with a book bag, and teacher was pregnant at the time, and teacher’s immediate reaction was to hit student in the shoulder to keep her from further hitting the teacher with the book bag, the facts did not show teacher acted deliberately and her actions were more of a reflex. Smith v. Kinder Care Learning Centers, Inc., 326 N.C. 362 , 389 S.E.2d 30, 1990 N.C. LEXIS 114 (1990).

Assualt upon Co-Worker. —

Where worker’s assault on co-worker was purely retaliatory and combative, it was the type of misconduct which would disqualify an individual from employment benefits, even though petitioner reacted in the heat of anger. Fair v. St. Joseph's Hosp., 113 N.C. App. 159, 437 S.E.2d 875, 1993 N.C. App. LEXIS 1307 (1993).

Off-Duty Criminal Conduct. —

Where an employee has engaged in off-duty criminal conduct, the agency need not show actual harm to its interests to demonstrate just cause for an employee’s dismissal; however, it is well established that administrative agencies may not engage in arbitrary and capricious conduct. Eury v. North Carolina Emp. Sec. Comm'n, 115 N.C. App. 590, 446 S.E.2d 383, 1994 N.C. App. LEXIS 778 (1994), limited, Warren v. N.C. Dep't of Crime Control & Pub. Safety, 221 N.C. App. 376, 726 S.E.2d 920, 2012 N.C. App. LEXIS 770 (2012).

In determining whether a rational nexus exists between the type of off-duty criminal activity conducted by the employee and the employee’s future ability to do his job, the Commission may consider the following factors: (1) how the conduct may have adversely affected clients or colleagues; (2) the relationship between the work performed by the employee and the type of criminal conduct committed; (3) the likelihood of recurrence of the questioned conduct and how the conduct may affect work performance, work quality, and the agency’s good will and interests; (4) the proximity or remoteness in time of the conduct to the commencement of the disciplinary proceedings; (5) extenuating or aggravating circumstances; (6) the blameworthiness or praiseworthiness of the motives resulting in the conduct; and (7) the presence or absence of any relevant factors in mitigation. Eury v. North Carolina Emp. Sec. Comm'n, 115 N.C. App. 590, 446 S.E.2d 383, 1994 N.C. App. LEXIS 778 (1994), limited, Warren v. N.C. Dep't of Crime Control & Pub. Safety, 221 N.C. App. 376, 726 S.E.2d 920, 2012 N.C. App. LEXIS 770 (2012).

Substantial Fault Not Rising to Level of Misconduct. —

The personal financial mismanagement of claimant, a legal secretary, constituted substantial fault connected with her work not rising to the level of misconduct for which she could be terminated, as the actions of the claimant, though unintentional and occurring primarily away from her work, had the effect of posing a serious threat to the reputation of her employer, the integrity of his law practice, and his relationship with clients and associates. Smith v. Spence & Spence, Att'ys, 80 N.C. App. 636, 343 S.E.2d 256, 1986 N.C. App. LEXIS 2241 (1986) (affirming the decision of the Commission to disqualify the secretary from receiving unemployment benefits for a period of four weeks) .

An employee who does only what her employer previously approved and apparently never disapproved or forbade cannot be said to have acted improperly or to have deviated from prudence, rectitude or duty. Baxter v. Bowman Gray School of Medicine, 87 N.C. App. 409, 361 S.E.2d 109, 1987 N.C. App. LEXIS 3204 (1987).

The facts did not support a conclusion that in not recording on her timecard 45 minutes that she was dizzy and laid down petitioner was substantially at fault within the purview of subdivision (2A) of this section, and therefore precluded from collecting unemployment compensation. Baxter v. Bowman Gray School of Medicine, 87 N.C. App. 409, 361 S.E.2d 109, 1987 N.C. App. LEXIS 3204 (1987).

Failure to Meet Three Conditions of Section. —

Where claimant in 1984 was denied unemployment benefits for the duration of his unemployment for being discharged for misconduct connected with his work, and after obtaining subsequent employment in 1987, he again became unemployed, but through no fault of his own, he did not meet the three conditions of this section, and the Commission’s refusal to reduce his disqualification would be upheld. Josey v. Employment Sec. Comm'n, 322 N.C. 295 , 367 S.E.2d 675, 1988 N.C. LEXIS 280 (1988).

Removal of Computer Hard Drive Sufficient Misconduct. —

Employment Security Commission properly found that work-related misconduct was the basis of an employee’s termination and properly denied unemployment benefits because the employee removed the hard drive from the employee’s work computer and asserted a personal copyright interest in the employer’s catalogs and web site without seeking and receiving permission, evidencing a deliberate disregard of standards of behavior which the employer had the right to expect of an employee. Binney v. Banner Therapy Prods., 362 N.C. 310 , 661 S.E.2d 717, 2008 N.C. LEXIS 487 (2008).

Misconduct Not Shown. —

A worker’s failure to notify his employer why he is absent from work cannot be regarded as “misconduct” or “fault” under the Employment Security Law, when the worker is unable to give notice because he is in the hospital with a broken back, and when the employer already has knowledge of his whereabouts and condition anyway. Facet Enters., Inc. v. Deloatch, 83 N.C. App. 495, 350 S.E.2d 906, 1986 N.C. App. LEXIS 2727 (1986).

Claimant’s failure to inform the sheriff or chief deputy of the phone tap in lieutenant’s office was a violation of departmental policy; however, this violation did not rise to the level of misconduct. Rather, given the unusual circumstances, including instructions petitioner received from federal agents, petitioner’s failure to report to the sheriff the phone tap he had discovered was a reasonable response to the dilemma petitioner faced. Williams v. Davie County, 120 N.C. App. 160, 461 S.E.2d 25, 1995 N.C. App. LEXIS 703 (1995).

Decision that petitioner was qualified to receive unemployment benefits was affirmed as findings by the Employment Security Commission of North Carolina (ESC) did not indicate there was “substantial fault” under G.S. 96-14(2a) (now repealed) for petitioner’s failure to timely submit log notes; the ESC failed to enter specific findings that the employer expressly warned petitioner that failure to submit log notes was a violation of employer’s rules, and that petitioner continued to violate this requirement after being warned. Boyland v. Southern Structures, Inc., 172 N.C. App. 108, 615 S.E.2d 919, 2005 N.C. App. LEXIS 1434 (2005).

Commission erred in concluding that the former employee’s conduct in returning 15 minutes late to the former employee’s work area meant that the former employee was at substantial fault for tardiness that justified the former employee’s discharge and denial of unemployment benefits for nine weeks; the commission found as a fact that the former employee’s tardiness was due to the fact that the employee became ill and had to go to the bathroom as a result, and the former employee could not be at substantial fault for a matter over which the former employee did not have reasonable control, that of becoming ill. Applewhite v. Alliance One Int'l, Inc., 188 N.C. App. 271, 654 S.E.2d 764, 2008 N.C. App. LEXIS 98 (2008).

Claimant’s former employer failed to meet its burden of showing that the claimant was discharged for misconduct connected with the work because the claimant’s refusal to attest on a document that the employer had conducted a complete investigation into the claimant’s internal complaint and taken appropriate corrective actions in response did not rise to the level of misconduct sufficient to disqualify the claimant from receiving unemployment insurance benefits. Burroughs v. Green Apple, LLC, 267 N.C. App. 139, 832 S.E.2d 267, 2019 N.C. App. LEXIS 719 (2019).

§ 96-14.7. Other reasons to be disqualified from receiving benefits.

Failure to Supply Necessary License. — An individual is disqualified for benefits if the Division determines that the individual is unemployed for failure to possess a license, certificate, permit, bond, or surety that is necessary for the performance of the individual’s employment if it was the individual’s responsibility to supply the necessary documents and the individual’s inability to do so was within the individual’s control. The period of disqualification begins with the first day of the first week the individual files a claim for benefits after the individual’s failure occurs.
Labor Dispute. — An individual is disqualified for benefits if the Division determines the individual’s total or partial unemployment is caused by a labor dispute in active progress at the factory, establishment, or other premises at which the individual is or was last employed or by a labor dispute at another place within this State that is owned or operated by the employer that owns or operates the factory, establishment, or other premises at which the individual is or was last employed and that supplies materials or services necessary to the continued and usual operation of the premises at which the individual is or was last employed. An individual disqualified under the provisions of this subsection continues to be disqualified after the labor dispute has ceased to be in active progress for the period of time that is reasonably necessary and required to physically resume operations in the method of operating in use at the plant, factory, or establishment.

History. 2013-2, s. 5; 2013-224, s. 19.

CASE NOTES

Editor’s Note. —

In passing the 1961 amendment to former subdivision (5) the General Assembly acted within its constitutional powers. In re Abernathy, 259 N.C. 190 , 130 S.E.2d 292, 1963 N.C. LEXIS 521 , cert. denied, 375 U.S. 161, 84 S. Ct. 274, 11 L. Ed. 2d 261, 1963 U.S. LEXIS 134 (1963).

Former subdivision (5) of this section was in plain and unambiguous language, and needs only a literal interpretation to ascertain the legislative intent as expressed therein. In re Stevenson, 237 N.C. 528 , 75 S.E.2d 520, 1953 N.C. LEXIS 679 (1953).

The effect of the 1961 amendment was to eliminate from former subdivision (5) the means therein provided by which an employee might escape disqualification. In re Abernathy, 259 N.C. 190 , 130 S.E.2d 292, 1963 N.C. LEXIS 521 , cert. denied, 375 U.S. 161, 84 S. Ct. 274, 11 L. Ed. 2d 261, 1963 U.S. LEXIS 134 (1963).

Former subdivision (5) extended the disqualification to workers at a factory, establishment, or other premise which supplies necessary materials or services to the plant where the claimants were last employed. In re Abernathy, 259 N.C. 190 , 130 S.E.2d 292, 1963 N.C. LEXIS 521 , cert. denied, 375 U.S. 161, 84 S. Ct. 274, 11 L. Ed. 2d 261, 1963 U.S. LEXIS 134 (1963).

The disqualification contained in the 1961 amendment to former subdivision (5) involved a question of degree and not of principle. In re Abernathy, 259 N.C. 190 , 130 S.E.2d 292, 1963 N.C. LEXIS 521 , cert. denied, 375 U.S. 161, 84 S. Ct. 274, 11 L. Ed. 2d 261, 1963 U.S. LEXIS 134 (1963).

Employees who participate in, finance or who are directly interested in a labor dispute which results in stoppage of work, or who are members of a grade or class of workers which has members employed at the premises at which the stoppage occurs, any of whom, immediately before the stoppage occurs, participate in, finance or are directly interested in such labor dispute, are not entitled to unemployment compensation benefits during the stoppage of work, and each employee-claimant is required to show to the satisfaction of the Commission that he is not disqualified under the terms of this section. In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941).

Employees Need Not Support Dispute to Be Disqualified. —

Employee-claimants who are not directly interested in the labor dispute which brings about the stoppage of work, and who do not participate in, help finance or benefit from the dispute, are nevertheless disqualified from unemployment compensation benefits if they belong to a grade or class of workers employed at the premises immediately before the commencement of the stoppage, some of whom, immediately before the stoppage occurs, participate in, finance or are directly interested in such labor dispute. State ex rel. Unemployment Comp. Comm'n v. Martin, 228 N.C. 277 , 45 S.E.2d 385, 1947 N.C. LEXIS 330 (1947).

This section disqualifies for unemployment compensation benefits employees belonging to a grade or class of workers some of whom participated in and were directly interested in the strike which brought about a stoppage of work, notwithstanding the fact that the employee-claimants were not members of the union and did not participate in or help finance the strike, especially where the strike involved, in addition to a maintenance of membership clause in the contract of employment, a general increase in wages, from which the employee-claimants stood to benefit. State ex rel. Unemployment Comp. Comm'n v. Lunceford, 229 N.C. 570 , 50 S.E.2d 497, 1948 N.C. LEXIS 355 (1948).

Whether the unemployment is due to a labor dispute, or whether it is not, is a question to be determined in each case. The line of demarcation is not the end of the strike but the end of work stoppage due to the strike. That test is applied to all alike, and there is no discrimination. In re Stevenson, 237 N.C. 528 , 75 S.E.2d 520, 1953 N.C. LEXIS 679 (1953).

For the disqualification provisions of former subdivision (5) of this section to apply, the Employment Security Commission must find that “total or partial unemployment is caused by a labor dispute in active progress.” Thus, the only type of active labor dispute which keeps the idle worker disqualified for benefits is one which causes unemployment. In re Sarvis, 296 N.C. 475 , 251 S.E.2d 434, 1979 N.C. LEXIS 1187 (1979).

When Stoppage of Work Caused by Labor Dispute Begins and Ends. —

A stoppage of work commences at the plant of the employer when a definite check in production operations occurs, and a stoppage of work ceases when operations are resumed on a normal basis; but the stoppage of work caused by a labor dispute must not exceed the time which is reasonably necessary and required to physically resume normal operations in such plant or establishment. In re Stevenson, 237 N.C. 528 , 75 S.E.2d 520, 1953 N.C. LEXIS 679 (1953).

An abandonment of the strike and unconditional offer to return to work by employees who were replaced during the pendency of the strike lifts the labor dispute disqualification. In re Sarvis, 296 N.C. 475 , 251 S.E.2d 434, 1979 N.C. LEXIS 1187 (1979).

An employer’s inability to reinstate previously replaced employees after they abandoned their strike and unconditionally offered to return to work changed the cause of unemployment and lifted the disqualification for benefits. In re Sarvis, 296 N.C. 475 , 251 S.E.2d 434, 1979 N.C. LEXIS 1187 (1979).

Effect of NLRB Proceedings on Labor Dispute Disqualification. —

An election petition and an unfair labor practice charge pending before the National Labor Relations Board after the end of employees’ strike did not keep the labor dispute disqualification in effect after the conclusion of the strike. In re Sarvis, 296 N.C. 475 , 251 S.E.2d 434, 1979 N.C. LEXIS 1187 (1979).

A “labor dispute” includes work stoppage caused by management lockouts. In re Usery, 31 N.C. App. 703, 230 S.E.2d 585, 1976 N.C. App. LEXIS 2091 (1976), cert. denied, 292 N.C. 265 , 233 S.E.2d 396, 1977 N.C. LEXIS 1067 (1977).

Burden of Proof. —

Where the employer resists recovery of unemployment compensation on the ground that claimants’ unemployment was due to a work stoppage resulting from a labor dispute, each claimant is required to show to the satisfaction of the Commission that he is not disqualified for benefits. State ex rel. Emp. Sec. Comm'n v. Jarrell, 231 N.C. 381 , 57 S.E.2d 403, 1950 N.C. LEXIS 466 (1950).

Failure to Resume Work After Dispute. —

The evidence tended to show that employee-claimants not only did not work during the period of stoppage of work at the employer’s plant caused by a labor dispute but also that they did not resume work after operations at the plant were resumed, and after notification by the employer that jobs were available. There was also evidence on behalf of claimants that they did not return to their jobs because of the labor dispute. The Commission ruled that claimants were not entitled to benefits during the stoppage of work. It was held that the employer is not prejudiced by the further order of the Commission that the eligibility of claimants to benefits subsequent to the resumption of operations at the plant should be determined, since it must be presumed the Commission will determine eligibility of each claimant for such benefits in accordance with objective standards or criteria set up in this Chapter, but the existence and effect of a labor dispute may have an essential bearing upon the eligibility of claimants, the suitableness of work offered, and the disqualifications for benefits. In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941).

Notice That Due to Labor Dispute Employees Might Seek Other Employment. —

A finding that after a strike which closed the plant and after the employer’s attempt to resume operations had proved futile, the employer posted a notice stating that all operations at the mill would cease for an indefinite period and that employees were free to seek employment elsewhere, was held insufficient to support a conclusion of law by the Commission that subsequent to the posting of the notice the unemployment of claimants was not due to stoppage of work because of a labor dispute, since the notice merely signified the willingness of the employer to terminate its employment relationship with any worker who elected to withdraw from the existing labor dispute and seek work elsewhere, but did not alter the status of any employee who refrained from exercising this option. State ex rel. Emp. Sec. Comm'n v. Jarrell, 231 N.C. 381 , 57 S.E.2d 403, 1950 N.C. LEXIS 466 (1950).

§ 96-14.8. Military spouse relocation and domestic violence are good causes for leaving.

An individual is not disqualified for benefits for leaving work for one of the reasons listed in this section. Benefits paid on the basis of this section are not chargeable to the employer’s account:

Military spouse relocation. — Leaving work to accompany the individual’s spouse to a new place of residence because the spouse has been reassigned from one military assignment to another.
Domestic violence. — Leaving work for reasons of domestic violence if the individual reasonably believes that the individual’s continued employment would jeopardize the safety of the individual or of any member of the individual’s immediate family. For purposes of this subdivision, an individual is a victim of domestic violence if one or more of the following applies:
1. The individual has been adjudged an aggrieved party as set forth by Chapter 50B of the General Statutes.
2. There is evidence of domestic violence, sexual offense, or stalking. Evidence of domestic violence, sexual offense, or stalking may include any one or more of the following:
  1. Law enforcement, court, or federal agency records or files.
  2. Documentation from a domestic violence or sexual assault program if the individual is alleged to be a victim of domestic violence or sexual assault.
  3. Documentation from a religious, medical, or other professional from whom the individual has sought assistance in dealing with the alleged domestic violence, sexual abuse, or stalking.
3. The individual has been granted program participant status pursuant to G.S. 15C-4 as the result of domestic violence committed upon the individual or upon a minor child with or in the custody of the individual by another individual who has or has had a familial relationship with the individual or minor child.

History. 2013-2, s. 5; 2013-224, s. 19.

§ 96-14.9. Weekly certification.

Requirements. — An individual’s eligibility for a weekly benefit amount is determined on a week-to-week basis. An individual must meet all of the requirements of this section for each weekly benefit period. An individual who fails to meet one or more of the requirements is ineligible to receive benefits until the condition causing the ineligibility ceases to exist:
1. File a claim for benefits.
2. Report as requested by the Division and present valid photo identification meeting the requirements of subsection (k) of this section.
3. Meet the work search requirements of subsection (b) of this section.
Work Search Requirements. — The Division must find that the individual meets all of the following work search requirements:
1. The individual is able to work.
2. The individual is available to work.
3. The individual is actively seeking work.
4. The individual accepts suitable work when offered.
Able to Work. — An individual is not able to work during any week that the individual is receiving or is applying for benefits under any other state or federal law based on the individual’s temporary total or permanent total disability.
Available to Work. — An individual is not available to work during any week that one or more of the following applies:
1. The individual tests positive for a controlled substance. An individual tests positive for a controlled substance if all of the conditions of this subdivision apply. An employer must report an individual’s positive test for a controlled substance to the Division:
  1. The test is a controlled substance examination administered under Article 20 of Chapter 95 of the General Statutes.
  2. The test is required as a condition of hire for a job.
  3. The job would be suitable work for the individual.
2. The individual is incarcerated or has received notice to report to or is otherwise detained in a state or federal jail or penal institution. This subdivision does not apply to an individual who is incarcerated solely on a weekend in a county jail and who is otherwise available for work.
3. The individual is an alien and is not in satisfactory immigration status under the laws administered by the United States Department of Justice, Immigration and Naturalization Service.
4. The individual is on disciplinary suspension for 30 or fewer days based on acts or omissions that constitute fault on the part of the employee and are connected with the work.
Actively Seeking Work. — The Division’s determination of whether an individual is actively seeking work is based upon the following:
1. The individual is registered for employment services, as required by the Division.
2. The individual has engaged in an active search for employment that is appropriate in light of the employment available in the labor market and the individual’s skills and capabilities.
3. The individual has made at least three job contacts with potential employers during the week. An individual may satisfy one of the weekly job contacts by attending a reemployment activity offered by a local career center. The Division shall verify the suitability of the activity for the credit and the claimant’s attendance at the activity.
4. The individual has maintained a record of the individual’s work search efforts. The record must include the potential employers contacted, the method of contact, and the date contacted. The individual must provide the record to the Division upon request.
Suitable Work. — The Division’s determination of whether an employment offer is suitable must vary based upon the individual’s length of unemployment as follows:
1. During the first 10 weeks of a benefit period, the Division may consider all of the following:
  1. The degree of risk involved to the individual’s health, safety, and morals.
  2. The individual’s physical fitness and prior training and experience.
  3. The individual’s prospects for securing local work in the individual’s customary occupation.
  4. The distance of the available work from the individual’s residence.
  5. The individual’s prior earnings.
2. During the remaining weeks of a benefit period, the Division must consider any employment offer paying one hundred twenty percent (120%) of the individual’s weekly benefit amount to be suitable work.
Job Attachment. — An individual who is partially unemployed and for whom the employer has filed an attached claim for benefits has satisfied the work search requirements for any given week in the benefit period associated with the attached claim if the Division determines the individual is available for work with the employer that filed the attached claim.
Job Training. — An individual who is otherwise eligible may not be denied benefits for any week because of the application to any such week of requirements relating to availability for work, active search for work, or refusal to accept work if the individual is attending a training program approved by the Division.
Federal Labor Standards. — An otherwise eligible individual may not be denied benefits for a given week if the Division determines the individual refused to accept new work for one or more of the following reasons:
1. The position offered is vacant due directly to a strike, lockout, or other labor dispute.
2. The remuneration, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality.
3. The individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization as a condition of employment.
Trade Act of 1974. — An otherwise eligible individual may not be denied benefits for any week because the individual is in training approved under section 236(a)(1) of the Trade Act of 1974, nor may the individual be denied benefits by reason of leaving work to enter such training, provided the work left is not suitable employment, or because of the application to any such week in training of provisions in this law or of any applicable federal unemployment compensation law, relating to availability for work, active search for work, or refusal to accept work. For purposes of this subsection, the term “suitable employment” means with respect to an individual, work of a substantially equal or higher skill level than the individual’s past adversely affected employment, as defined for purposes of the Trade Act of 1974, and wages for such work at not less than eighty percent (80%) of the individual’s average weekly wage as determined for the purposes of the Trade Act of 1974.
Photo Identification. — The individual must present the Division one of the following documents bearing the individual’s photograph:
1. A drivers license, learner’s permit, provisional license, or nonoperator’s identification card issued by North Carolina, another state, the District of Columbia, United States territory, or United States commonwealth.
2. A United States passport.
3. A United States military identification card.
4. A Veterans Identification Card issued by the United States Department of Veterans Affairs.
5. A tribal enrollment card issued by a federally recognized tribe.
6. Any other document that the Division determines adequately identifies the individual and that is issued by the United States, any state, the District of Columbia, United States territory, or United States commonwealth.
7. A traveler card issued by the U.S. Department of Homeland Security, such as the NEXUS SENTRI and FAST CARDS.
Federal Disaster Declaration. — An individual who is unemployed due directly to a disaster covered by a federal disaster declaration has satisfied the work search requirements for any given week in the benefit period unless the Division requires the individual to conduct a work search.

History. 2013-2, s. 5; 2013-224, ss. 14, 19; 2013-391, s. 5; 2015-238, ss. 2.2(a), 2.6; 2017-8, s. 1(d); 2018-94, s. 3(a); 2020-3, s. 1.3(a).

Editor’s Note.

Session Laws 2020-3, s. 1.2(b), provides: “Notwithstanding G.S. 96-14.9 , an individual may meet the reporting requirements of that section by telephone or via the Internet for the period beginning March 10, 2020, and ending on the earlier of the following: (i) the date the Governor signs an executive order rescinding Executive Order No. 116, Declaration of a State of Emergency to Coordinate Response and Protective Actions to Prevent the Spread of COVID-19, or (ii) December 31, 2020.”

Session Laws 2020-3, s. 5, is a severability clause.

Effect of Amendments.

Session Laws 2013-224, s. 14, effective June 27, 2013, substituted “30 or fewer” for “more than 30” in subdivision (d)(4).

Session Laws 2013-391, s. 5, effective July 1, 2013, rewrote subsection (h). For applicability, see editor’s note.

Session Laws 2015-238, s. 2.2(a), effective January 1, 2016, rewrote subdivision (e)(3). For applicability, see editor’s note.

Session Laws 2015-238, s. 2.6, effective September 10, 2015, in subdivision (a)(2), substituted the present provisions for former provisions which read: “Report at an employment office as requested by the Division”; and added subsection (k).

Session Laws 2017-8, s. 1(d), effective October 1, 2016, added subsection ( l ).

Session Laws 2018-94, s. 3(a), substituted “three” for “five” in subdivision (e)(3). For effective date and applicability, see editor’s note.

Session Laws 2020-3, s. 1.3(a), effective July 1, 2020, added the second sentence in subdivision (e)(3).

CASE NOTES

Analysis

I. Decisions Under Former G.S. 96-13

I.Decisions Under Former G.S. 96-13

Editor’s Note. —

Most of the cases below were decided under former G.S. 96-13, or previous versions of the section, prior to the revision of Article 2 and addition of Articles 2A, 2B, and 2D by Session Laws 2013-2. In addition, most of these cases were decided prior to the amendments made by Session Laws 2011-401, and references therein to the Employment Security Commission should be construed as references to the Division of Employment Security (DES) of the Department of Commerce.

Design of Employment Security Law. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

The Employment Security Act was not designed to provide benefits to a person who is physically unable to work or who, for any other personal reason, would at no time be in a position to accept any employment if it were tendered to him, however capable and industrious such person may be. Milliken & Co. v. Griffin, 65 N.C. App. 492, 309 S.E.2d 733, 1983 N.C. App. LEXIS 3566 (1983).

A person who must quit a job for health reasons but who is available for other employment is clearly not a person envisioned by this language. Both reason and justice demand that such a claimant receive unemployment benefits. Milliken & Co. v. Griffin, 65 N.C. App. 492, 309 S.E.2d 733, 1983 N.C. App. LEXIS 3566 (1983).

Construction. —

This section and G.S. 96-14 (now repealed) as cognate statutes provide the overall formula governing the right to unemployment compensation benefits. Being thus in pari materia, they are to be construed together. In re Miller, 243 N.C. 509 , 91 S.E.2d 241, 1956 N.C. LEXIS 377 (1956); In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

Recovery of Both Workers’ Compensation and Unemployment Benefits. —

“Able to Work”. —

The terms “able to work”, “available for work”, and “suitable employment” are not precise terms capable of application with mathematical precision. In re Thomas, 13 N.C. App. 513, 186 S.E.2d 623, 1972 N.C. App. LEXIS 2274 , rev'd, 281 N.C. 598 , 189 S.E.2d 245, 1972 N.C. LEXIS 1116 (1972); In re Beatty, 22 N.C. App. 563, 207 S.E.2d 321, 1974 N.C. App. LEXIS 2385 , aff'd, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974). See also, In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

The words “available for work” in this section mean “available for suitable work” in the same sense as the words “suitable work” are used in G.S. 96-14 (now repealed). In re Miller, 243 N.C. 509 , 91 S.E.2d 241, 1956 N.C. LEXIS 377 (1956); In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965); McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

The phrase “available for work” is not susceptible of precise definition, and whether a person is available for work differs according to the facts of each individual case. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974); McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

Availability requirement is said to be satisfied when an individual is willing, able and ready to accept suitable work which he does not have good cause to refuse, that is, when he is generally attached to the labor market. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

To be available for work a person must be in such a position that prospective employers will hire him for work which he is capable of performing. In re Yarboro, 42 N.C. App. 684, 257 S.E.2d 658, 1979 N.C. App. LEXIS 2983 (1979).

For meaning of “available for work,” see In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

A petitioner is not required to be available for work at all times. McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

This section forbids denial of unemployment benefits solely because of school enrollment and attendance. McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

Where petitioner was both a full-time student and a full-time employee when she was laid off from work, she could not be denied unemployment benefits if she was “otherwise eligible” to receive those benefits, and in determining whether she was otherwise eligible for benefits, this section required that she not be denied benefits because of school enrollment and attendance. McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

A claimant refusing to consider employment during her Sabbath did not render herself unavailable for work within the meaning of this section. In re Miller, 243 N.C. 509 , 91 S.E.2d 241, 1956 N.C. LEXIS 377 (1956).

Large measure of administrative discretion must be granted to the Employment Security Commission in applying the terms “able to work”, “available for work”, and “suitable employment” to specific cases. In re Beatty, 22 N.C. App. 563, 207 S.E.2d 321, 1974 N.C. App. LEXIS 2385 , aff'd, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

Restrictions Claimant Places on His Employment. —

It is essentially a matter of degree to ascertain to what extent a claimant can impose restrictions and on what these restrictions must be based. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

The problem is whether or not the restrictions which the claimant places on his employment serve to limit the work which a claimant can accept to such a degree that he is no longer genuinely attached to the labor force. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

Labor Market to Be Described in Terms of Individual. —

Since, under unemployment compensation laws, it is the availability of an individual that is required to be tested, the labor market must be described in terms of the individual. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

Significance of Claimant’s Age in Determining Labor Market. —

For a case discussing the significance of the fact that employers in a locality do not customarily employ persons of claimant’s advanced age, see In re Thomas, 13 N.C. App. 513, 186 S.E.2d 623, 1972 N.C. App. LEXIS 2274 , rev'd, 281 N.C. 598 , 189 S.E.2d 245, 1972 N.C. LEXIS 1116 (1972).

Claimant’s Burden of Proof. —

A claimant in an appeals hearing has the burden of proving that he is not disqualified from receiving unemployment insurance benefits. Hoke v. Brinlaw Mfg. Co., 73 N.C. App. 553, 327 S.E.2d 254, 1985 N.C. App. LEXIS 3325 (1985).

Quantum of Proof of Availability for Work. —

The Commission erred in requiring a 70-year-old claimant to show by clear, cogent and convincing evidence that she had reentered the labor force after having voluntarily retired from her job as a laundry worker. Under former G.S. 143-318(1), the claimant had the burden to show that she was “available for work” only by the greater weight of the evidence. In re Thomas, 281 N.C. 598 , 189 S.E.2d 245, 1972 N.C. LEXIS 1116 (1972).

Duty to Assist Claimant Appearing Without Counsel. —

The Commission is not required to notify a claimant of the specific facts that he will be required to establish or to prove the claimant’s case for him. However, the Commission does have the responsibility to conduct its hearings in a manner that allows a party the opportunity to make the required showing. Especially in the case of an uncounseled claimant, the Commission’s responsibility involves asking the right questions. Hoke v. Brinlaw Mfg. Co., 73 N.C. App. 553, 327 S.E.2d 254, 1985 N.C. App. LEXIS 3325 (1985).

Improper to Disqualify Pro Se Claimant Where Referee Did Not Ask Relevant Questions. —

It was not appropriate for the Commission to disqualify a pro se claimant from receiving benefits because she failed to produce evidence of facts that case law from other states says she must establish when the appeals referee never even asked her the relevant questions. Hoke v. Brinlaw Mfg. Co., 73 N.C. App. 553, 327 S.E.2d 254, 1985 N.C. App. LEXIS 3325 (1985).

Where the Commission’s findings of fact are amply supported by the evidence in the record, the Supreme Court is bound by the Commission’s findings of fact. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

Evidence Showing Failure to Actively Seek Work. —

Evidence that during a period of six months claimant’s efforts to obtain employment, in addition to reporting to the employment service office, were limited to two occasions at one mill and one occasion at each of three other mills, is sufficient to sustain the Commission’s finding that he had failed to show that he had been actively seeking work within the purview of subdivision (3) of subsection (a) of this section. State ex rel. Emp. Sec. Comm'n v. Roberts, 230 N.C. 262 , 52 S.E.2d 890, 1949 N.C. LEXIS 615 (1949).

Vacation Periods. —

The statute does not prescribe; it merely limits the total vacation period for which an employee is ineligible for compensation to a total of two weeks. In re Southern, 247 N.C. 544 , 101 S.E.2d 327, 1958 N.C. LEXIS 559 (1958).

Plant Shut Down for Additional Week of Vacation. —

Where an employer, in addition to one week paid vacation provided for in the contract, shuts down its plant for an additional week of vacation during the Christmas period, its employees are not entitled to unemployment compensation for the additional week under this section. In re Southern, 247 N.C. 544 , 101 S.E.2d 327, 1958 N.C. LEXIS 559 (1958).

By their adherence to the terms of the guaranteed annual income provisions of their collective bargaining agreement, claimants placed themselves in a position which, for all practical purposes, eliminated their availability for work in contravention of the requirements of subdivision (a)(3) of this section. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

Commission erred in awarding unemployment benefits without making a finding as required by subdivisions (a)(1) and (a)(2) that claimant had registered for work and continued to report to an employment office and that he had made a claim for benefits in accordance with G.S. 96-15(a). The Commission’s finding that three separate claim series were started for claimant was insufficient to meet the statutory requirements. In re George, 42 N.C. App. 490, 256 S.E.2d 826, 1979 N.C. App. LEXIS 2779 (1979).

Claimant Not Available While Awaiting Sentencing. —

Where a claimant for unemployment compensation pleaded guilty to a charge of selling a controlled substance and testified that he was not hired because prospective employers were “waiting to see what my sentence will be,” the Commission could conclude from this that claimant was not in such a position that prospective employers would hire him and that he was not “available for work.” In re Yarboro, 42 N.C. App. 684, 257 S.E.2d 658, 1979 N.C. App. LEXIS 2983 (1979).

Employee of Project Headstart. —

Seasonal agricultural workers (SAW) are eligible to receive state unemployment insurance benefits. State ex rel. Emp. Sec. Comm'n v. Hopkins, 111 N.C. App. 437, 432 S.E.2d 703, 1993 N.C. App. LEXIS 791 (1993).

§ 96-14.10. Disciplinary suspension.

The disciplinary suspension of an employee for 30 or fewer consecutive calendar days does not constitute good cause for leaving work. An individual who is on suspension is not available for work and is not eligible for benefits for any week during any part of the disciplinary suspension. If the disciplinary suspension exceeds 30 days, the individual is considered to have been discharged from work because of the acts or omissions that caused the suspension and the issue is whether the discharge was for disqualifying reasons. During the period of suspension of 30 or fewer days, the individual is considered to be attached to the employer’s payroll, and the issue of separation from work is held in abeyance until a claim is filed for a week to which this section does not apply.

History. 2013-2, s. 5; 2013-224, ss. 15, 19.

Effect of Amendments.

Session Laws 2013-224, s. 15, effective June 27, 2013, substituted “of 30 or fewer” for “up to 30” in the last sentence.

CASE NOTES

Editor’s Note. —

Design of Employment Security Law. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

Construed with G.S. 96-14. —

Recovery of Both Workers’ Compensation and Unemployment Benefits. —

“Able to Work”. —

The words “available for work” mean “available for suitable work” in the same sense as the words “suitable work” are used in G.S. 96-14 (now repealed). In re Miller, 243 N.C. 509 , 91 S.E.2d 241, 1956 N.C. LEXIS 377 (1956); In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965); McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

For meaning of “available for work,” see In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

A petitioner is not required to be available for work at all times. McNeil v. Employment Sec. Comm'n, 89 N.C. App. 142, 365 S.E.2d 306, 1988 N.C. App. LEXIS 232 (1988).

Restrictions Claimant Places on His Employment. —

Labor Market to Be Described in Terms of Individual. —

Significance of Claimant’s Age in Determining Labor Market. —

Claimant’s Burden of Proof. —

Quantum of Proof of Availability for Work. —

Duty to Assist Claimant Appearing Without Counsel. —

Improper to Disqualify Pro Se Claimant Where Referee Did Not Ask Relevant Questions. —

Evidence Showing Failure to Actively Seek Work. —

Evidence that during a period of six months claimant’s efforts to obtain employment, in addition to reporting to the employment service office, were limited to two occasions at one mill and one occasion at each of three other mills, is sufficient to sustain the Commission’s finding that he had failed to show that he had been actively seeking work within the purview of this section. State ex rel. Emp. Sec. Comm'n v. Roberts, 230 N.C. 262 , 52 S.E.2d 890, 1949 N.C. LEXIS 615 (1949).

Vacation Periods. —

Plant Shut Down for Additional Week of Vacation. —

By their adherence to the terms of the guaranteed annual income provisions of their collective bargaining agreement, claimants placed themselves in a position which, for all practical purposes, eliminated their availability for work in contravention of the requirements of this section. In re Beatty, 286 N.C. 226 , 210 S.E.2d 193, 1974 N.C. LEXIS 1220 (1974).

Commission erred in awarding unemployment benefits without making a finding that claimant had registered for work and continued to report to an employment office and that he had made a claim for benefits in accordance with G.S. 96-15(a). The Commission’s finding that three separate claim series were started for claimant was insufficient to meet the statutory requirements. In re George, 42 N.C. App. 490, 256 S.E.2d 826, 1979 N.C. App. LEXIS 2779 (1979).

Claimant Not Available While Awaiting Sentencing. —

Employee of Project Headstart. —

§ 96-14.11. Disqualification for the remaining weeks of the benefit period.

Duration. — An individual may be disqualified from receiving benefits for the remaining weeks of the claim’s duration if one or more subsections of this section apply. The period of disqualification under this section begins with the first day of the first week after the disqualifying act occurs.
Suitable Work. — An individual is disqualified for any remaining benefits if the Division determines that the individual has failed, without good cause, to do one or more of the following:
1. Apply for available suitable work when so directed by the employment office of the Division.
2. Accept suitable work when offered.
3. Return to the individual’s customary self-employment when so directed by the Division.
Recall After Layoff. — An individual is disqualified for any remaining benefits if it is determined by the Division that the individual is unemployed because the individual, without good cause attributable to the employer and after receiving notice from the employer, refused to return to work for an employer under one or more of the following circumstances:
1. The individual was recalled within four weeks after a layoff. As used in this subdivision, the term “layoff” means a temporary separation from work due to no work available for the individual at the time of separation from work and the individual is retained on the employer’s payroll and is a continuing employee subject to recall by the employer.
2. The individual was recalled in a week in which the work search requirements were satisfied under G.S. 96-14.9(g) due to job attachment.

History. 2013-2, s. 5; 2013-224, ss. 19, 20(e); 2013-391, s. 6.

Effect of Amendments.

Session Laws 2013-224, s. 20(e), effective June 27, 2013, substituted “G.S. 96-14.9(g)” for “G.S. 96-14.7(g)” in subdivision (c)(2).

Session Laws 2013-391, s. 6, effective July 1, 2013, deleted “at the time a claim is filed” following “individual is” in subsection (c). For applicability, see Editor’s note.

CASE NOTES

Analysis

I. Decisions Under Former G.S. 96-14

I.Decisions Under Former G.S. 96-14

Editor’s Note. —

Generally. —

See In re Watson, 273 N.C. 629 , 161 S.E.2d 1, 1968 N.C. LEXIS 642 (1968).

Suitability is not a matter of rigid fixation. It depends upon circumstances and may change with changing circumstances. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

“Unsuitable” Work May Become “Suitable”. —

Work which may be deemed “unsuitable” at the inception of the claimant’s unemployment and for a reasonable time thereafter, because it pays less than his prior earning capacity, may thereafter become “suitable” work when consideration is given to the length of unemployment and the prospects for obtaining customary work at his prior earning capacity. What is a “reasonable time” is not rigid and inflexible and it must initially be determined as a question of fact under the peculiar circumstances of each individual case. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

Employment which may not be suitable while there is still a good present expectancy of obtaining other employment more nearly proportionate to the ability of the worker may become suitable if that expectancy is not realized within a reasonable time. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

A claimant is entitled to a reasonable length of time within which to find work at his higher skill before work calling for less competence and lower remuneration can be found to be suitable. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

But the longer a claimant is unemployed, the more he is obligated to take less desirable work and to make himself available to take it. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

Elements Which Must Be Considered in Determining “Suitable Work”. —

The skill and capacity of the worker, his accustomed remuneration, his expectancy of obtaining equivalent employment, and the time which he had had to obtain it may be taken into account in determining “suitable work.” In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

It may reasonably be thought that employment which requires a highly trained and skilled worker, who still has a fair prospect of securing work in his own line to step down into work of a substantially lower grade, at substantially less pay, before he has had a chance to look about him, is not truly “suitable.” Acceptance of such employment might conceivably condemn the worker permanently to a scale of employment lower than that to which his training, skill, and industry fairly entitled him. In re Troutman, 264 N.C. 289 , 141 S.E.2d 613, 1965 N.C. LEXIS 1166 (1965).

Distance from Residence Must Be Considered. —

The determination of whether the work offered a claimant is suitable requires a consideration of several factors, including the distance of the available work from the employee’s residence. Housecalls Nursing Servs., Inc. v. Lynch, 118 N.C. App. 275, 454 S.E.2d 836, 1995 N.C. App. LEXIS 174 (1995).

Distance from Residence Found Too Great. —

Employment Security Commission of North Carolina (ESC) correctly ordered that claimant certified nursing assistant was not disqualified from receiving unemployment benefits where evidence showed that claimant’s 1983 car had over 100,000 miles on it, and that employer offered her a job which consisted of three, two-hour sessions with a patient who lived forty-five miles from her residence. Housecalls Nursing Servs., Inc. v. Lynch, 118 N.C. App. 275, 454 S.E.2d 836, 1995 N.C. App. LEXIS 174 (1995).

Work which requires one to violate his moral standards is not ordinarily “suitable work” within the meaning of this section. In re Miller, 243 N.C. 509 , 91 S.E.2d 241, 1956 N.C. LEXIS 377 (1956).

§ 96-14.12. Limitations on company officers and spouses.

Disqualification for Benefits. — An individual is disqualified for benefits if the Division determines either of the following:
1. The individual is customarily self-employed and can reasonably return to self-employment.
2. The individual or the individual’s spouse is unemployed because the individual’s ownership share of the employer was voluntarily sold and, at the time of the sale, one or more of the following applied:
  1. The employer was a corporation and the individual held five percent (5%) or more of the outstanding shares of the voting stock of the corporation.
  2. The employer was a partnership, limited or general, and the individual was a limited or general partner.
  3. The employer was a limited liability company and the individual was a member.
  4. The employer was a proprietorship, and the individual was the proprietor.
Duration of Benefits. — This subsection applies to an individual and the spouse of an individual who is unemployed based on services performed for a corporation in which the individual held five percent (5%) or more of the outstanding shares of the voting stock of the corporation. The maximum number of weeks an individual or an individual’s spouse may receive benefits is six weeks.

History. 2013-2, s. 5; 2013-224, s. 19; 2015-238, s. 2.8(c).

Effect of Amendments.

Session Laws 2015-238, s. 2.8(c), effective July 1, 2015, substituted “six weeks” for “limited to the lesser of six weeks or the applicable weeks determined under G.S. 96-14.4 ” at the end of the second sentence of subsection (b).

§ 96-14.13. Limitation on benefits due to lump sum payments.

An individual is disqualified from receiving benefits for any week for which the individual receives any sum from the employer pursuant to an order of a court, the National Labor Relations Board, or another adjudicative agency or by private agreement, consent, or arbitration for loss of pay by reason of discharge. When the employer pays a lump sum that covers a period of more than one week, the amount paid is allocated to the weeks in the period on a pro rata basis as determined by the Division. If the amount prorated to a week would, if it had been earned by the individual during that week of unemployment, have resulted in a reduced benefit payment as provided in G.S. 96-14.2 , the individual is entitled to receive the reduced payment if the individual is otherwise eligible for benefits.

Benefits paid for weeks of unemployment for which back pay awards or other similar compensation are made constitutes an overpayment of benefits. The employer must deduct the overpayment from the award prior to payment to the employee and must send the overpayment to the Division within five days of the payment for application against the overpayment. Overpayments not remitted to the Division are subject to the same collection procedures as contributions. The removal of charges made against the employer’s account as a result of the previously paid benefits applies to the calendar year in which the Division receives the overpayment.

History. 2013-2, s. 5; 2013-224, s. 19.

Editor’s Note.

Session Laws 2013-2, s. 11, as amended by Session Laws 2013-224, s. 19, provides: “This act becomes effective July 1, 2013. Changes made by this act to unemployment benefits apply to claims for benefits filed on or after June 30, 2013. The requirements of G.S. 96-15(a1) apply to any week of an attached claim filed on or after June 30, 2013. Changes made by this act to require an account balance by an employer that is a governmental entity or a nonprofit organization and that elects to finance benefits by making reimbursable payments in lieu of contributions apply to advance payments payable for calendar quarters beginning on or after July 1, 2013. Changes made by this act to the determination and application of the contribution rate apply to contributions payable for calendar quarters beginning on or after January 1, 2014.”

§ 96-14.14. Extended benefits.

General Provisions. — Extended benefits payable under sub-subdivision (b)(5)a. of this section shall be paid as required under the Federal-State Extended Unemployment Compensation Act of 1970. Extended benefits payable under sub-subdivisions (b)(5)b. and (b)(5)c. of this section are not required under federal law and may be paid only if the federal government funds one hundred percent (100%) of the costs of providing them. Extended benefits are payable in the manner prescribed by this section.
Definitions. — As used in this section, unless the context clearly requires otherwise:
1. “Eligibility period” of an individual means the period consisting of the weeks in his benefit year which begin in an extended benefit period and if his benefit year ends within such extended benefit period, any weeks thereafter which begin in such period.
2. “Exhaustee” means an individual who, with respect to any week of unemployment in his eligibility period:
  1. Has received, prior to such week, all of the regular benefits that were available to him under this Chapter or any other State law (including dependents’ allowances and benefits payable to federal civilian employees and ex-servicemen under 5 U.S.C. Chapter 85) in his current benefit year that includes such week;Provided, that, for the purposes of this subdivision, an individual shall be deemed to have received all of the regular benefits that were available to him although (i) as a result of a pending appeal with respect to wages that were not considered in the original monetary determination in his benefit year, he may subsequently be determined to be entitled to added regular benefits, or (ii) he may be entitled to regular benefits with respect to future weeks of unemployment, but such benefits are not payable with respect to such week of unemployment by reason of the provisions in G.S. 96-16 ; or
  2. His benefit year having expired prior to such week, has no, or insufficient, wages on the basis of which he could establish a new benefit year that would include such week; and
  3. 1. Has no right to unemployment benefits or allowances, as the case may be, under the Railroad Unemployment Insurance Act, the Trade Expansion Act of 1962, the Automotive Products Trade Act of 1965 and such other federal laws as are specified in regulations issued by the United States Secretary of Labor; and 2. Has not received and is not seeking unemployment benefits under the unemployment compensation law of Canada; but if he is seeking such benefits and the appropriate agency finally determines that he is not entitled to benefits under such law, he is considered an exhaustee.
3. “Extended benefit period” means a period which:
  1. Begins the third week after a week for which there is an “on” indicator; and
  2. Ends with either of the following weeks, whichever occurs later:
    1. The third week after the first week for which there is an “off” indicator; or
    2. The 13th consecutive week of such period.
      Provided, that no extended benefit period may begin before the 14th week following the end of a prior extended benefit period which was in effect with respect to this State.
4. “Extended benefits” means benefits (including benefits payable to federal civilian employees and to ex-servicemen pursuant to 5 U.S.C. Chapter 85) payable to an individual under the provisions of this section for weeks of unemployment in his eligibility period.
5. There is an “on indicator” for this State for a week if the Division determines, in accordance with the regulations of the United States Secretary of Labor, that for the period consisting of such week and the immediate preceding 12 weeks, the rate of insured unemployment (not seasonally adjusted) under this Chapter:
  1. Equalled or exceeded one hundred twenty percent (120%) of the average of such rates for the corresponding 13-week period ending in each of the preceding two calendar years, and equalled or exceeded five percent (5%), or
  2. Equalled or exceeded six percent (6%), or
  3. With respect to benefits for weeks of unemployment in North Carolina beginning after May 1, 2002:
    1. The average rate of total unemployment (seasonally adjusted), as determined by the United States Secretary of Labor, for the period consisting of the most recent three months for which data for all states are published before the close of such week equals or exceeds a six and one-half percent (6.5%), and
    2. The average rate of total unemployment in the State (seasonally adjusted), as determined by the United States Secretary of Labor, for the three-month period referred to in [sub-]sub-subdivision c.1. of this subdivision, equals or exceeds one hundred ten percent (110%) of such average for either or both of the corresponding three-month periods ending in the two preceding calendar years.
    3. Expired effective January 1, 2013, pursuant to Session Laws 2011-145, s. 6.16(d), as amended by Session Laws 2012-134, s. 1(c).
  4. There is a State “off indicator” for a week with respect to sub-subdivision c. of this subdivision, only if, for the period consisting of such week and the immediately preceding 12 weeks, the option specified in sub-subdivision c. does not result in an “on indicator”.
  5. Total extended benefit amount —
    1. The total extended benefit amount payment to any eligible individual with respect to the applicable benefit year shall be the least of the following amounts:
      1. Fifty percent (50%) of the total amount of regular benefits which were payable to the individual under this Chapter in the individual’s applicable benefit year; or
      2. Thirteen times the individual’s weekly benefit amount that was payable to the individual under this Chapter for a week of total unemployment in the applicable benefit year.
      3. For purposes of [sub-sub-]sub-subdivision 2.I., the term “high unemployment period” means any period during which an extended benefit period would be in effect if sub-subdivision c. of this subdivision were applied by substituting “eight percent (8%)” for “six and one-half percent (6.5%)”.
        
        “Eighty percent (80%)” for “fifty percent (50%)” in [sub-sub-]sub-subdivision e.1.I., and
        
        “Twenty” for “thirteen” in [sub-sub-]sub-subdivision e.1.II.
    2. I. Effective with respect to weeks beginning in a high unemployment period, [sub-]sub-subdivision e.1. of this subdivision shall be applied by substituting:
    3. Expired effective January 1, 2013, pursuant to Session Laws 2011-145, s. 6.16(d), as amended by Session Laws 2012-134, s. 1(c).
      (6) There is an “off indicator” for this State for a week if the Division determines, in accordance with the regulations of the United States Secretary of Labor, that for the period consisting of such week and the immediately preceding 12 weeks, the rate of insured unemployment (not seasonally adjusted) under this Chapter:
      
      a. Was less than one hundred twenty percent (120%) of the average of such rates for the corresponding 13-week period ending in each of the preceding two calendar years, and was less than six percent (6%), or
      
      b. Was less than five percent (5%).
      
      (7) “Rate of insured unemployment,” for the purposes of subparagraphs [subdivisions] (5) and (6) of this subsection, means the percentage derived by dividing:
      
      a. The average weekly number of individuals filing claims for regular compensation in this State for weeks of unemployment with respect to the most recent 13 consecutive-week period, as determined by the Division, on the basis of its reports to the United States Secretary of Labor, by
      
      b. The average monthly employment covered under this Chapter for the first four of the most recent six completed calendar quarters ending before the end of such 13-week period.
      
      (8) “Regular benefits” means benefits payable to an individual under this Chapter or any other State law (including benefits payable to federal civilian employees and to ex-servicemen pursuant to 5 U.S.C. Chapter 85) other than extended benefits.
      
      (9) “State law” means the unemployment insurance law of any state approved by the United States Secretary of Labor under section 3304 of the Internal Revenue Code.
Effect of State Law Provisions Relating to Regular Benefits on Claims for, and for Payment of, Extended Benefits. — Except when the result would be inconsistent with the other provisions of this section and in matters of eligibility determination, as provided by rules adopted by the Division, the provisions of this Chapter which apply to claims for, or the payment of, regular benefits shall apply to claims for, and the payment of, extended benefits.
Eligibility Requirements for Extended Benefits. — An individual shall be eligible to receive extended benefits with respect to any week of unemployment in his eligibility period only if the Division finds that with respect to such week:
1. The individual is an “exhaustee” as defined in subsection [subdivision] (b)(2).
2. The individual has satisfied the requirements of this Chapter for the receipt of regular benefits that are applicable to individuals claiming extended benefits, including not being subject to a disqualification for the receipt of benefits. Provided, however, that for purposes of disqualification for extended benefits for weeks of unemployment beginning after March 31, 1981, the term “suitable work” means any work which is within the individual’s capabilities to perform if: (i) the gross average weekly remuneration payable for the work exceeds the sum of the individual’s weekly extended benefit amount plus the amount, if any, of supplemental unemployment benefits (as defined in section 501(C)(17)(D) of the Internal Revenue Code of 1954) payable to such individual for such week; and (ii) the gross wages payable for the work equal the higher of the minimum wages provided by section 6(a)(1) of the Fair Labor Standards Act of 1938 as amended (without regard to any exemption), or the State minimum wage; and (iii) the work is offered to the individual in writing and is listed with the State employment service; and (iv) the considerations contained in G.S. 96-14.9(f) for determining whether or not work is suitable are applied to the extent that they are not inconsistent with the specific requirements of this subdivision; and (v) the individual cannot furnish evidence satisfactory to the Division that his prospects for obtaining work in his customary occupation within a reasonably short period of time are good, but if the individual submits evidence which the Division deems satisfactory for this purpose, the determination of whether or not work is suitable with respect to such individual shall be made in accordance with G.S. 96-14.9(f) without regard to the definition contained in this subdivision. Provided, further, that no work shall be deemed to be suitable work for an individual which does not accord with the labor standard provisions set forth in this subdivision, but the employment service shall refer any individual claiming extended benefits to any work which is deemed suitable hereunder. Provided, further, that any individual who has been disqualified for voluntarily leaving employment, being discharged for misconduct or substantial fault, or refusing suitable work under G.S. 96-14.11 and who has had the disqualification terminated, shall have such disqualification reinstated when claiming extended benefits unless the termination of the disqualification was based upon employment subsequent to the date of the disqualification.
3. After March 31, 1981, he has not failed either to apply for or to accept an offer of suitable work, as defined in G.S. 96-14.14(d)(2), to which he was referred by an employment office of the Division, and he has furnished the Division with tangible evidence that he has actively engaged in a systematic and sustained effort to find work. If an individual is found to be ineligible hereunder, he shall be ineligible beginning with the week in which he either failed to apply for or to accept the offer of suitable work or failed to furnish the Division with tangible evidence that he has actively engaged in a systematic and sustained effort to find work and such individual shall continue to be ineligible for extended benefits until he has been employed in each of four subsequent weeks (whether or not consecutive) and has earned remuneration equal to not less than four times his weekly benefit amount.
4. Pursuant to section 202(a)(7) of the Federal-State Extended Unemployment Compensation Act of 1970 (P.L. 91-373), as amended by section 202(b)(1) of the Unemployment Compensation Amendments of 1992 (Public Law 102-318), for any week of unemployment beginning after March 6, 1993, and before January 1, 1995, the individual is an exhaustee as defined by federal law and has satisfied the requirements of this Chapter for the receipt of regular benefits that are applicable to individuals claiming extended benefits, including not being subject to a disqualification for the receipt of benefits. Provided, the terms and conditions of State law that apply to claims for regular compensation and to the payment thereof shall apply to claims for extended benefits and to the payment thereof.
5. An individual shall not be eligible for extended compensation unless the individual had 20 weeks of full-time insured employment, or the equivalent in insured wages, as determined by a calculation of base period wages based upon total hours worked during each quarter of the base period and the hourly wage rate for each quarter of the base period. For the purposes of this paragraph, the equivalent in insured wages shall be earnings covered by the State law for compensation purposes which exceed 40 times the individual’s most recent weekly benefit amount or one and one-half times the individual’s insured wages in that calendar quarter of the base period in which the individual’s insured wages were the highest.
Weekly Extended Benefit Amount. — The weekly extended benefit amount payable to an individual for a week of total unemployment in his eligibility period shall be an amount equal to the weekly benefit amount payable to him during his applicable benefit year. For any individual who was paid benefits during the applicable benefit year in accordance with more than one weekly benefit amount, the weekly extended benefit amount shall be the average of such weekly benefit amounts rounded to the nearest lower full dollar amount (if not a full dollar amount). Provided, that for any week during a period in which federal payments to states under Section 204 of the Federal-State Extended Unemployment Compensation Act of 1970, P.L. 91-373, are reduced under an order issued under Section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985, P.L. 99-177, the weekly extended benefit amount payable to an individual for a week of total unemployment in his eligibility period shall be reduced by a percentage equivalent to the percentage of the reduction in the federal payment. The reduced weekly extended benefit amount, if not a full dollar amount, shall be rounded to the nearest lower full dollar amount.
1. Total Extended Benefit Amount. — Except as provided in subdivision (2) hereof, the total extended benefit amount payable to any eligible individual with respect to his applicable benefit year shall be the least of the following amounts:
  1. Fifty percent (50%) of the total amount of regular benefits which were payable to him under this Chapter in his applicable benefit year; or
  2. Thirteen times his weekly benefit amount which was payable to him under this Chapter for a week of total unemployment in the applicable benefit year.
    Provided, that during any fiscal year in which federal payments to states under Section 204 of the Federal-State Extended Unemployment Compensation Act of 1970, P.L. 91-373, are reduced under an order issued under Section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985, P.L. 99-177, the total extended benefit amount payable to an individual with respect to his applicable benefit year shall be reduced by an amount equal to the aggregate of the reductions under G.S. 96-14.14(e) and the weekly amounts paid to the individual.
2. Notwithstanding any other provisions of this Chapter, if the benefit year of any individual ends within an extended benefit period, the remaining balance of extended benefits that such individual would, but for this subdivision, be entitled to receive in that extended benefit period, with respect to weeks of unemployment beginning after the end of the benefit year, shall be reduced (but not below zero) by the product of the number of weeks for which the individual received any amounts as trade readjustment allowances within that benefit year, multiplied by the individual’s weekly benefit amount for extended benefits.
Beginning and Termination of Extended Benefit Period. —
1. Whenever an extended benefit period is to become effective in this State as a result of an “on” indicator, or an extended benefit period is to be terminated in this State as a result of an “off” indicator, the Division shall make an appropriate public announcement; and
2. Computations required by the provisions of subsection (a)(6) [subdivision (b)(7)] shall be made by the Division, in accordance with regulations prescribed by the United States Secretary of Labor.All state portions of the extended benefits paid shall be charged to the account of governmental entities or other employers not liable for FUTA taxes who are the base period employers.
Prior to January 1, 1978, any extended benefits paid to any claimant under G.S. 96-14.14 shall not be charged to the account of the base period employer(s) who pay taxes as required by this Chapter. However, fifty percent (50%) of any such benefits paid shall be allocated as provided in G.S. 96-11.2 (except that G.S. 96-11.3 shall not apply), and the applicable amount shall be charged to the account of the appropriate employer paying on a reimbursement basis in lieu of taxes.On and after January 1, 1978, the federal portion of any extended benefits shall not be charged to the account of any employer who pays taxes as required by this Chapter but the State portion of such extended benefits shall be:
1. Charged to the account of such employer; or
2. Not charged to the account of the employer under the provisions of G.S. 96-11.3 .
Notwithstanding the provisions of G.S. 96-9.6 , G.S 96-14.14(h), or any other provision of this Chapter, any extended benefits paid which are one hundred percent (100%) federally financed shall not be charged in any percentage to any employer’s account.
For weeks of unemployment beginning on or after June 1, 1981, a claimant who is filing an interstate claim under the interstate benefit payment plan shall be eligible for extended benefits for no more than two weeks when there is an “off indicator” in the state where the claimant files.

History. Ex. Sess. 1936, c. 1, s. 3; 1937, c. 448, s. 1; 1939, c. 27, ss. 1-3, 14; c. 141; 1941, c. 108, s. 1; c. 276; 1943, c. 377, ss. 1-4; 1945, c. 522, ss. 24-26; 1947, c. 326, s. 21; 1949, c. 424, ss. 19-21; 1951, c. 332, ss. 10-12; 1953, c. 401, ss. 17, 18; 1957, c. 1059, ss. 12, 13; c. 1339; 1959, c. 362, ss. 12-15; 1961, c. 454, ss. 17, 18; 1965, c. 795, ss. 15, 16; 1969, c. 575, s. 9; 1971, c. 673, ss. 25, 26; 1973, c. 1138, ss. 3-7; 1975, c. 2, ss. 1-5; 1977, c. 727, s. 52; 1979, c. 660, ss. 18, 19; 1981, c. 160, ss. 17-23; 1981 (Reg. Sess., 1982), c. 1178, ss. 3-14; 1983, c. 585, ss. 12-16; c. 625, ss. 1, 7; 1985, c. 552, s. 9; 1985 (Reg. Sess., 1986), c. 918; 1987, c. 17, s. 8; 1993, c. 122, s. 2; 1993 (Reg. Sess., 1994), c. 680, ss. 1-3; 1995 (Reg. Sess., 1996), c. 646, s. 25(a); 1997-456, s. 27; 1999-340, ss. 4, 5; 2001-414, ss. 42, 43, 44; 2002-143, ss. 1, 1.1; 2011-145, s. 6.16(a), (b); 2011-401, s. 2.12; 2012-134, s. 1(c)-(e); 2013-2, s. 6; 2013-224, ss. 19, 20(f)-(j); 2021-5, s. 2.

Editor’s Note.

Former G.S. 96-12.01 was recodified as this section by Session Laws 2013-2, s. 6, effective July 1, 2013.

The definitions in this section were redesignated at the direction of the Revisor of Statutes to preserve alphabetical order.

The reference in subdivision (g)(2) to “subsection (a)(6)” appears to have been originally intended to be a reference to subdivision (a)(6), now subdivision (b)(7).

Session Laws 2012-134, s. 1(a) and (b), provide: “(a) The General Assembly finds that it enacted Section 6.16 of Session Law 2011-145 and, in so doing, validated the effects of the Governor’s Executive Order No. 113 with the stated intent to allow extended benefits to be paid under the Tax Relief Act of 2010 so long as payment of the extended benefits did not hinder the State’s ability to reduce its debt owed to the federal government for unemployment benefits.

“(b) It is deemed, therefore, to be in the best interest of the people of this State that the General Assembly now ratify and hereby validate the effects of the Governor’s Executive Order No. 113.”

Session Laws 2012-134, s. 1(f), provides: “To maintain the rule of law with respect to State and federal relations pertaining to employment security laws in North Carolina, any executive order issued by the Governor that purports to extend unemployment insurance benefits, whether those benefits will be paid from federal or State funds, is void ab initio, unless the executive order is issued upon authority that is conferred expressly by an act enacted by the General Assembly or granted specifically to the Governor by the Congress of the United States.”

Effect of Amendments.

Session Laws 2011-145, ss. 6.16(a) and 6.16(b), effective April 16, 2011, added subdivisions (a1)(4)c.3. and (a1)(4)e.3. For expiration date, see Editor’s note.

Session Laws 2011-401, s. 2.12, effective November 1, 2011, substituted “Division” for “Commission” throughout the section; substituted “by rules adopted by the Division” for “in the regulations of the Commission” in subsection (b); and made minor stylistic changes in subdivisions (c)(1) and (c)(2).

Session Laws 2012-134, ss. 1(d) and 1(e), effective June 29, 2012, substituted “December 31, 2012” for “December 31, 2011” in subdivisions (a1)(4)c.3. and (a1)(4)e.3. For applicability, see Editor’s note.

Session Laws 2013-2, s. 6, recodified G.S. 96-12.01 as G.S. 96-14.14 , and rewrote subsection (a). For effective date and applicability, see Editor’s note.

Session Laws 2013-224, s. 20(f)-(j), effective June 27, 2013, in subdivision (d)(2), substituted “G.S. 96-14.9(f)” for “G.S. 96-14(3)” twice, and substituted “G.S. 96-14.11” for “G.S. 96-14”; substituted “G.S. 96-14.14(d)(2)” for “G.S. 96-12.01(c)(2)” in subdivision (d)(3); substituted “G.S. 96-14.14(e)” for “G.S. 96-12.01(d)” in the last sentence of subdivision (f)(1); in subdivision (h), substituted “G.S. 96-14.14” for “G.S. 96-12.01” and “G.S. 96-11.2 (except that G.S. 96-11.3 shall not apply)” for “G.S. 96-9(c)(2) a (except that G.S. 96-9(c)(2) b shall not apply)”; and substituted “G.S. 96-9.6, G.S. 96-14(h)” for “G.S. 96-9(d)(1)a, 96-9(d)(2)c, 96-12.01(g)” in subsection (i).

Session Laws 2021-5, s. 2, effective March 30, 2021, substituted “sub-subdivisions (b)(5)b. and (b)(5)c.” for “sub-subdivision (b)(5)a.”; and made a minor stylistic change in subsection (a).

§ 96-14.15. Emergency unemployment benefits and tax credit to respond to the coronavirus emergency of 2020.

Benefits Payable. — Unemployment benefits are payable in response to the coronavirus emergency in any of the following circumstances:
1. An employer temporarily ceases operations due to the coronavirus, preventing the individual from going to work.
2. An employer reduces the hours of employment due to the coronavirus.
3. An individual has a current diagnosis of the coronavirus.
4. An individual is quarantined at the instruction of a health care provider or a local, State, or federal official.
Exceptions Allowed. — The provisions of this Chapter apply to benefits payable under this section except as follows:
1. Waiting week. — No waiting week applies to a claim for unemployment under this section.
2. Work search. — The work search requirements do not apply to an individual who is eligible for unemployment under this section.
3. Non-charging. — Benefits paid to an individual under this section are not charged to the account of any base period employer of the individual.
4. Attached claim. — An employer may file an attached claim for benefits allowed under this section. The restrictions for filing an attached claim under G.S. 96-15(a1) do not apply to an employer-filed claim under this section and a claim filed by an employer under this section is not an attached claim filed under G.S. 96-15(a1).
Tax Credit. — An employer is allowed a tax credit for a contribution to the Unemployment Insurance Fund payable under G.S. 96-9.2 for contributions due for the calendar year 2020. The amount of the credit is equal to the amount of contributions payable on the report filed by the employer on or before April 30, 2020.If an employer remitted the contributions payable with the report due on or before April 30, 2020, the credit will be applied to the contributions payable on the report due on or before July 31, 2020. An employer must file the report to receive the credit. If the amount of the credit exceeds the amount of contributions due on the report, the excess credit amount is considered an overpayment and will be refunded pursuant to G.S. 96-9.15(b).
Coronavirus. — For purposes of this section, the term “coronavirus” has the same meaning as defined in section 506 of the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020.
Applicability. — This section applies for unemployment benefits filed for periods beginning on or after March 10, 2020, and expires for unemployment benefits filed for periods beginning on or after the earlier of the following: (i) the date the Governor signs an executive order rescinding Executive Order No. 116, Declaration of a State of Emergency to Coordinate Response and Protective Actions to Prevent the Spread of COVID-19, or (ii) December 31, 2020.

History. 2020-3, s. 1.2(a).

Editor’s Note.

Session Laws 2020-3, s. 1.2(c), made this section effective May 4, 2020.

Session Laws 2020-3, s. 5, is a severability clause.

§ 96-14.16. Emergency unemployment benefits and tax rate reduction to respond to the coronavirus emergency of 2021.

Extended Benefit Period. — With respect to determining whether the State is in an extended benefits period beginning November 1, 2020, through December 31, 2021, the State shall disregard the requirement in G.S. 96-14.14(b)(3) that no extended period may begin before the fourteenth week following the end of a prior extended benefit period which was in effect with respect to this State.
Deferral of Regular Unemployment Compensation Payment. — The purpose of this subsection is to elect the option by which the State will coordinate the PEUC and regular unemployment compensation programs for individuals who meet the four criteria to be paid PEUC, as required by the Unemployment Insurance Program Letter 17-20, Change 2, issued by the U.S. Department of Labor on December 31, 2020. The State elects option one, which requires an individual whose benefit year has expired to file a regular unemployment initial claim in a new benefit year but defers payment of the new regular unemployment compensation claim until the individual’s PEUC claim has been exhausted or the PEUC program has expired, whichever occurs first. For purposes of this subsection, “PEUC” means the Pandemic Emergency Unemployment Compensation program.
Tax Rate Reduction. — For the calendar year 2021, the base contribution rate determined under G.S. 96-9.2(c) for an experience-rated employer will remain at one and nine-tenths percent (1.9%).
Applicability. — This section applies for unemployment benefits filed for periods beginning on or after March 10, 2020, and expires for unemployment benefits filed for periods beginning on or after the earlier of the following: (i) the date the Governor signs an executive order rescinding Executive Order No. 116, Declaration of a State of Emergency to Coordinate Response and Protective Actions to Prevent the Spread of COVID-19, or (ii) December 31, 2021.

History. 2021-5, s. 1.

Editor’s Note.

Session Laws 2021-5, s. 7 made this section effective March 30, 2021.

Article 2D. Administration of Benefits.

§ 96-15. Claims for benefits.

Generally. — Claims for benefits must be made in accordance with rules adopted by the Division. An employer must provide individuals providing services for it access to information concerning the unemployment compensation program. The Division must supply an employer with any printed statements and other materials that the Division requires an employer to provide to individuals without cost to the employer.
(a1) Attached Claims. — An employer may file claims for employees through the use of automation in the case of partial unemployment. An employer may file an attached claim for an employee only once during a benefit year, and the period of partial unemployment for which the claim is filed may not exceed six weeks. To file an attached claim, an employer must pay the Division an amount equal to the full cost of unemployment benefits payable to the employee under the attached claim at the time the attached claim is filed. The Division must credit the amounts paid to the Unemployment Insurance Fund.An employer may file an attached claim under this subsection only if the employer has a positive credit balance in its account as determined under Article 2B of this Chapter. If an employer does not have a positive credit balance in its account, the employer must remit to the Division an amount equal to the amount necessary to bring the employer’s negative credit balance to at least zero at the time the employer files the attached claim.

(a2) Federal Disaster Declaration. — An employer may file claims for employees through the use of automation in the case of unemployment due directly to a disaster covered by a federal disaster declaration.
1. Initial Determination. — A representative designated by the Division shall promptly examine the claim and shall determine whether or not the claim is valid. If the claim is determined to be not valid for any reason other than lack of base period earnings, the claim shall be referred to an Adjudicator for a decision as to the issues presented. If the claim is determined to be valid, a monetary determination shall be issued showing the week with respect to when benefits shall commence, the weekly benefit amount payable, and the potential maximum duration thereof. The claimant shall be furnished a copy of such monetary determination showing the amount of wages paid him by each employer during his base period and the employers by whom such wages were paid, his benefit year, weekly benefit amount, and the maximum amount of benefits that may be paid to him for unemployment during the benefit year. When a claim is not valid due to lack of earnings in his base period, the determination shall so designate. The claimant shall be allowed 10 days from the earlier of mailing or delivery of his monetary determination to him within which to protest his monetary determination and upon the filing of such protest, unless said protest be satisfactorily resolved, the claim shall be referred to the Assistant Secretary or designee for a decision as to the issues presented. All base period employers, as well as the most recent employer of a claimant on a temporary layoff, shall be notified upon the filing of a claim which establishes a benefit year.No claim for benefits may be withdrawn by a claimant except upon the filing of a notice of withdrawal within 10 days from the earlier of mailing or delivery of his monetary determination to him and a finding of good cause by the Assistant Secretary or designee.At any time within one year from the date of the making of an initial determination, the Division on its own initiative may reconsider such determination if it finds that an error in computation or identity has occurred in connection therewith or that additional wages pertinent to the claimant’s benefit status have become available, or if such determination of benefit status was made as a result of a nondisclosure or misrepresentation of a material fact.
2. Adjudication. — When a protest is made by the claimant to the initial or monetary determination, or a question or issue is raised or presented as to the eligibility of a claimant, or whether any disqualification should be imposed, or benefits denied or adjusted pursuant to G.S. 96-18 , the matter shall be referred to an adjudicator. The adjudicator may consider any matter, document or statement deemed to be pertinent to the issues, including telephone conversations, and after such consideration shall render a conclusion as to the claimant’s benefit entitlements. The adjudicator shall notify the claimant and all other interested parties of the conclusion reached. The conclusion of the adjudicator shall be deemed the final decision of the Division unless within 30 days after the date of notification or mailing of the conclusion, whichever is earlier, a written appeal is filed pursuant to rules adopted by the Division. The Division shall be deemed an interested party for such purposes and may remove to itself or transfer to an appeals referee the proceedings involving any claim pending before an adjudicator.Provided, any interested employer shall be allowed 10 days from the mailing or delivery of the notice of the filing of a claim against the employer’s account, whichever first occurs, to file with the Division its protest of the claim in order to have the claim referred to an adjudicator for a decision on the question or issue raised. Any protest filed must contain a basis for the protest and supporting statement of facts, and the protest may not be amended after the 10-day period from the mailing or delivery of the notice of filing of a claim has expired. No payment of benefits shall be made by the Division to a claimant until one of the following occurs:
  1. The employer has filed a timely protest to the claim.
  2. The 10-day period for the filing of a protest by the employer has expired.
  3. A determination under this subdivision has been made. Provided further, no question or issue may be raised or presented by the Division as to the eligibility of a claimant, or whether any disqualification should be imposed, after 45 days from the first day of the first week after the question or issue occurs with respect to which week an individual filed a claim for benefits. None of the provisions of this subsection shall have the force and effect nor shall the same be construed or interested as repealing any other provisions of G.S. 96-18 .An employer shall receive written notice of the employer’s appeal rights and any forms that are required to allow the employer to protest the claim. The forms shall include a section referencing the appropriate rules pertaining to appeals and the instructions on how to appeal.
Appeals. — Unless an appeal from the adjudicator is withdrawn, an appeals referee or hearing officer shall set a hearing in which the parties are given reasonable opportunity to be heard. The conduct of hearings shall be governed by suitable rules adopted by the Division. The rules need not conform to common law or statutory rules of evidence or technical or formal rules of procedure but shall provide for the conduct of hearings in such manner as to ascertain the substantial rights of the parties. The hearings may be conducted by conference telephone call or other similar means provided that if any party files with the Division prior written objection to the telephone procedure, that party will be afforded an opportunity for an in-person hearing at such place in the State as the Division by rule shall provide. The hearing shall be scheduled for a time that, as much as practicable, least intrudes on and reasonably accommodates the ordinary business activities of an employer and the return to employment of a claimant. The appeals referee or hearing officer may affirm or modify the conclusion of the adjudicator or issue a new decision in which findings of fact and conclusions of law will be set out or dismiss an appeal when the appellant fails to appear at the appeals hearing to prosecute the appeal after having been duly notified of the appeals hearing. The evidence taken at the hearings before the appeals referee shall be recorded and the decision of the appeals referee shall be deemed to be the final decision of the Division unless within 10 days after the date of notification or mailing of the decision, whichever is earlier a written appeal is filed pursuant to such rules as the Board of Review and the Division may adopt. No person may be appointed as an appeals referee or hearing officer unless he or she possesses the minimum qualifications necessary to be a staff attorney eligible for designation by the Division as a hearing officer under G.S. 96-4(q) . No appeals referee or hearing officer in full-time permanent status may engage in the private practice of law as defined in G.S. 84-2.1 while serving in office as appeals referee or hearing officer; violation of this prohibition shall be grounds for removal. Whenever an appeal is taken from a decision of the appeals referee or hearing officer, the appealing party shall submit a clear written statement containing the grounds for the appeal within the time allowed by law for taking the appeal, and if such timely statement is not submitted, the Board of Review may dismiss the appeal. (c1) Unless required for disposition of an ex parte matter authorized by law, the Division, appeals referee, or employee assigned to make a decision or to make findings of facts and conclusions of law in a case shall not communicate, directly or indirectly, in connection with any issue of fact, or question of law, with any person or party or his representative, except on notice and opportunity for parties to participate.
(c2) Whenever a party is notified of the Board of Review’s or a hearing officer’s decision by mail, G.S. 1A-1 , Rule 6(e) shall apply, and three days shall be added to the prescribed period to file a written appeal.
Repealed by Session Laws 1977, c. 727, s. 54.
(d1) No continuance shall be granted except upon application to the Division, the appeals referee, or other authority assigned to make the decision in the matter to be continued. A continuance may be granted only upon such terms and conditions as the Division by rule shall provide. Acceptable grounds for granting a continuance shall include, but not be limited to, those instances when a party to the proceeding, a witness, or counsel of record has an obligation of service to the State, such as service as a member of the North Carolina General Assembly, or an obligation to participate in a proceeding in a court of greater jurisdiction.
Review by the Board of Review. — The Board of Review may on its own motion affirm, modify, or set aside any decision of an appeals referee, hearing officer, or other employee assigned to make a decision on the basis of the evidence previously submitted in such case, or direct the taking of additional evidence, or may permit any of the parties to such decision to initiate further appeals before it, or may provide for group hearings in such cases as the Board of Review finds appropriate. The Board of Review may remove itself or transfer to an appeals referee, hearing officer, or other employee assigned to make a decision the proceedings on any claim pending before an appeals referee, hearing officer, or other employee assigned to make a decision. Interested parties shall be promptly notified of the findings and decision of the Board of Review.
Procedure. — The manner in which disputed claims shall be presented, the reports thereon required from the claimant and from employers, and the conduct of hearings and appeals shall be in accordance with rules adopted by the Division for determining the rights of the parties, whether or not such rules conform to common-law or statutory rules of evidence and other technical rules of procedure.All testimony at any hearing before an appeals referee upon a disputed claim shall be recorded unless the recording is waived by all interested parties. If the testimony is recorded, it need not be transcribed unless the disputed claim is further appealed and, one or more of the parties objects, under such rules as the Division may adopt, to being provided a copy of the tape recording of the hearing. Any other provisions of this Chapter notwithstanding, any individual receiving the transcript shall pay to the Division such reasonable fee for the transcript as the Division may by rule provide. The fee so prescribed by the Division for a party shall not exceed the lesser of sixty-five cents (65¢) per page or sixty-five dollars ($65.00) per transcript. The Division may by regulation provide for the fee to be waived in such circumstances as it in its sole discretion deems appropriate but in the case of an appeal in forma pauperis supported by such proofs as are required in G.S. 1-110 , the Division shall waive the fee.The parties may enter into a stipulation of the facts. If the appeals referee, hearing officer, or other employee assigned to make the decision believes the stipulation provides sufficient information to make a decision, then the appeals referee, hearing officer, or other employee assigned to make the decision may accept the stipulation and render a decision based on the stipulation. If the appeals referee, hearing officer, or other employee assigned to make the decision does not believe the stipulation provides sufficient information to make a decision, then the appeals referee, hearing officer, or other employee assigned to make the decision must reject the stipulation. The decision to accept or reject a stipulation must occur in a recorded hearing.
Witness Fees. — Witnesses subpoenaed pursuant to this section shall be allowed fees at a rate fixed by the Division. Such fees and all expenses of proceedings involving disputed claims shall be deemed a part of the expense of administering this Chapter.
Judicial Review. — A decision of the Board of Review becomes final 30 days after the date of notification or mailing of the decision, whichever is earlier, unless a party to the decision seeks judicial review as provided in this subsection. Judicial review is permitted only after a party claiming to be aggrieved by the decision has exhausted the remedies provided in this Chapter and has filed a petition for review in the superior court of the county in which the petitioner resides or the county in which the petitioner’s principal place of business is located. The petition for review must explicitly state what exceptions are taken to the decision or procedure and what relief the petitioner seeks. Within 10 days after the petition is filed with the court, the petitioner must serve copies of the petition by personal service or by certified mail, return receipt requested, upon the Division and upon all parties of record to the Division proceedings. The Division must furnish the petitioner, upon request, the names and addresses of the parties as found in the records of the Division. The Division is a party to any judicial action involving any of its decisions and may be represented in the judicial action by any qualified attorney who has been designated by it for that purpose. Any questions regarding the requirements of this subsection concerning the service or filing of a petition shall be determined by the superior court. Any party to the Division proceeding may become a party to the review proceeding by notifying the court within 10 days after receipt of the copy of the petition. Any person aggrieved may petition to become a party by filing a motion to intervene as provided in G.S. 1A-1 , Rule 24.Within 45 days after receipt of the copy of the petition for review or within such additional time as the court may allow, the Division must transmit to the reviewing court the original or a certified copy of the entire record of the proceedings under review. With the permission of the court the record may be shortened by stipulation of all parties to the review proceedings. Any party unreasonably refusing to stipulate to limit the record may be taxed by the court for the additional cost incurred by the refusal. The court may require or permit subsequent corrections or additions to the record when the court considers the changes desirable.
Review Proceedings. — If a timely petition for review has been filed and served as provided in G.S. 96-15(h), the court may make party defendant any other party it deems necessary or proper to a just and fair determination of the case. The Division may, in its discretion, certify to the reviewing court questions of law involved in any decision by it. In any judicial proceeding under this section, the findings of fact by the Division, if there is any competent evidence to support them and in the absence of fraud, shall be conclusive, and the jurisdiction of the court shall be confined to questions of law. Such actions and the questions so certified shall be heard in a summary manner and shall be given precedence over all civil cases. An appeal may be taken from the judgment of the superior court, as provided in civil cases. The Division shall have the right to appeal to the appellate division from a decision or judgment of the superior court and for such purpose shall be deemed to be an aggrieved party. No bond shall be required of the Division upon appeal. Upon the final determination of the case or proceeding, the Division shall enter an order in accordance with the determination. When an appeal has been entered to any judgment, order, or decision of the court below, no benefits shall be paid pending a final determination of the cause, except in those cases in which the final decision of the Division allowed benefits.
Repealed by Session Laws 1985, c. 197, s. 9.
Irrespective of any other provision of this Chapter, the Division may adopt minimum regulations necessary to provide for the payment of benefits to individuals promptly when due as required by section 303(a)(1) of the Social Security Act as amended (42 U.S.C.A., section 503(a)(1)).

History. Ex. Sess. 1936, c. 1, s. 6; 1937, c. 150; c. 448, s. 4; 1941, c. 108, s. 5; 1943, c. 377, ss. 9, 10; 1945, c. 522, ss. 30-32; 1947, c. 326, s. 23; 1951, c. 332, s. 15; 1953, c. 401, s. 19; 1959, c. 362, ss. 16, 17; 1961, c. 454, s. 21; 1965, c. 795, ss. 20-22; 1969, c. 575, ss. 13, 14; 1971, c. 673, ss. 30, 30.1; 1977, c. 727, s. 54; 1981, c. 160, ss. 27-32; 1983, c. 625, ss. 10-14; 1985, c. 197, s. 9; c. 552, ss. 18-20; 1987 (Reg. Sess., 1988), c. 999, s. 6; 1989, c. 583, ss. 11, 12; c. 707, s. 4; 1991, c. 723, ss. 1, 2; 1993, c. 343, ss. 4, 5; 1999-340, ss. 6, 7; 2004-124, s. 13.7B(c); 2005-122, s. 1; 2006-242, s. 1; 2011-401, s. 2.16; 2012-134, s. 2(c), (d); 2013-2, s. 7(b); 2013-224, ss. 16, 17, 19; 2015-238, ss. 2.3(a), 2.9; 2017-8, s. 3.2(a); 2017-203, s. 6; 2018-94, ss. 2, 5(a); 2020-3, s. 1.4(a); 2021-5, ss. 4, 5, 6(a).

Cross References.

As to the confidentiality of records, reports, and information obtained from claimants and employers, see now G.S. 96-4(x) .

Editor’s Note.

Session Laws 2013-2, s. 7(a), added Article 2D, which includes G.S. 96-15 through G.S. 96-19 .

Session Laws 2017-8, s. 3.2(b), as amended by Session Laws 2017-203, s. 6, and as amended by Session Laws 2018-94, s. 2, made the substitution of “10-day period” for “14-day period” and “10 days” for “14 days” throughout subdivision (b)(2) by Session Laws 2017-8, s. 3.2(a), effective January 1, 2019, and applicable to claims for benefits filed and tax calculations on or after that date.

Session Laws 2018-94, s. 5(b), made the amendment of subdivision (b)(1) of this section by Session Laws 2018-94, s. 5(a), effective July 1, 2018, applicable to claims for benefits filed on or after that date, and applicable to tax calculations on or after that date.

Session Laws 2020-3, s. 5, is a severability clause.

Session Laws 2021-5, s. 6(b), made the amendments to subsection (h) of this section by Session Laws 2021-5, s. 6(a), effective June 1, 2021, and applicable to decisions made on or after that date.

Effect of Amendments.

Session Laws 2004-124, s. 13.7B(c), effective July 20, 2004, substituted “the Commission may dismiss the appeal” for “an appeals referee may dismiss the appeal” at the end of subsection (c).

Session Laws 2005-122, s. 1, effective June 29, 2005, added the present fifth sentence, and made a minor stylistic change.

Session Laws 2006-242, s. 1, effective October 1, 2006, and applicable to claims filed on or after that date, in subdivision (b)(2), substituted “10 days” for “15 days” in the first sentence and added the second sentence in the second paragraph, and added the third paragraph.

Session Laws 2011-401, s. 2.16, effective November 1, 2011, rewrote the section.

Session Laws 2012-134, s. 2(c) and (d), effective November 1, 2012, in the first sentence of the second paragraph of subdivision (b)(2), substituted “10” for “30” and deleted “earlier of mailing or” preceding “delivery of the notice”; in subsection (f) in the first sentence, substituted “’the parties have waived the evidentiary hearing and entered into a stipulation resolving the issues pending before the appeals referee, hearing officer, or other employee assigned to make the decision, but” for “recording is waived by all interested parties. If the testimony is recorded it” and added the third paragraph.

Session Laws 2013-2, s. 7(b), rewrote subsection (a); added subsection (a1); and, in the first and second paragraphs of subdivision (b)(2), deleted “under G.S. 96-13” following “eligibility of a claimant” and deleted “under G.S. 96-14” following “should be imposed.” For effective date and applicability, see Editor’s note.

Session Laws 2013-224, ss. 16 and 17, effective June 27, 2013, substituted “benefit year” for “calendar year” in the second sentence of subsection (a1); in the second paragraph of subdivision (b)(2), substituted “14 days” for “10 days,” “account, whichever first occurs, to file with the Division its” for “account to” and “in order to” for “and,” and added “mailing or,” “of” preceding “the claim” and the second and fourth sentences; and added sub-subdivisions (b)(2)a. through (b)(2)c.

Session Laws 2015-238, s. 2.3(a), effective October 1, 2015, rewrote subsection (h). For applicability, see editor’s note.

Session Laws 2015-238, s. 2.9, effective September 10, 2015, deleted the third sentence of the second paragraph of subdivision (b)(2), which read, “A copy of the notice of the filing shall be sent contemporaneously to the employer by telefacsimile transmission if a fax number is on file”; in the second and third sentences of subsection (d1), substituted “upon such terms and conditions as the Division by rule shall provide. Acceptable grounds” for “for good cause shown and upon such terms and conditions as justice may require. Good cause”

Session Laws 2017-8, s. 3.2(a), substituted “10-day period” for “14-day period” and “10 days” for “14 days” throughout subdivision (b)(2). For effective date and applicability, see editor’s note.

Session Laws 2018-94, s. 5(a), added the penultimate paragraph of (b)(1). For effective date and applicability, see editor’s note.

Session Laws 2020-3, s. 1.4(a), effective May 4, 2020, added subsection (a2).

Session Laws 2021-5, ss. 4, 5, effective March 30, 2021, in subsection (c), made a punctuation change in the last sentence; and, in subsection (f), substituted “such rules” for “such regulations” near the end of the first paragraph, and substituted “by rule provide” for “by regulation provide” at the end of the third sentence in the second paragraph.

Session Laws 2021-5, s. 6(a), in subsection (h), substituted “notification or mailing of the decision, whichever is earlier” for “mailing” in the first sentence and “petitioner, upon request, the names and addresses of the parties as found in the records of the Division” for “petitioner the names and addresses of the parties upon request” in the fifth sentence. For effective date and applicability, see editor’s note.

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

For survey of 1977 law on employment regulation, see 56 N.C.L. Rev. 854 (1978).

For comment discussing unemployment compensation in light of Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357 (1982), see 18 Wake Forest L. Rev. 921 (1982).

CASE NOTES

Editor’s Note. —

The requirements of this section are mandatory and not directory. They are conditions precedent to obtaining a review by the courts and must be observed. Noncompliance therewith requires dismissal. In re State ex rel. Emp. Sec. Comm'n, 234 N.C. 651 , 68 S.E.2d 311, 1951 N.C. LEXIS 534 (1951).

In considering an appeal from a decision of the Employment Security Commission, the reviewing court must (1) determine whether there was evidence before the Commission to support its findings of fact and (2) decide whether the facts found sustain the Commission’s conclusions of law and its resulting decision. Miller v. Guilford County Schools, 62 N.C. App. 729, 303 S.E.2d 411, 1983 N.C. App. LEXIS 2972 (1983).

Appeal to Superior Court. —

Under subsection (a) of G.S. 96-4 the chairman of the Employment Security Commission is vested with all authority of the Commission, and where it appears that a claim was heard on appeal by the chairman, and that claimant appealed therefrom “to the full Commission or to the superior court,” the hearing of the appeal by the superior court was in accordance with the statute. State ex rel. Emp. Sec. Comm'n v. Roberts, 230 N.C. 262 , 52 S.E.2d 890, 1949 N.C. LEXIS 615 (1949).

Appeal by Commission. —

Under this section the exact status of the Commission as a party to an action is not defined and the part it is to play as such is left somewhat in the realm of speculation, and there is nothing which constitutes the Commission guardian or trustee for a claimant or which would warrant the conclusion that it is authorized to prosecute an appeal from a judgment against a claimant when the claimant is content. Nor may it do so for the purpose of adjudicating issues which are merely incidental to the claimant’s cause of action. In re Mitchell, 220 N.C. 65 , 16 S.E.2d 476, 1941 N.C. LEXIS 474 (1941). But see G.S. 96-15(h) and (i) .

ESC as Employer with Appeal Rights. —

The reasoning of the Court of Appeals erroneously treated Employment Security Commission (ESC) as an agency appealing its own agency decision rather than as an “aggrieved party” where ESC appealed to Superior Court not as an agency decision-maker, but as an employer aggrieved by the agency action. As ESC-employer was liable to pay for unemployment insurance benefits the same as any other employer and had the same rights of appeal as any other employer; thus ESC-employer had the status of “aggrieved party” under ESC Regulation 21.18(D) and had appeal rights as such. Employment Sec. Comm'n v. Peace, 341 N.C. 716 , 462 S.E.2d 222, 1995 N.C. LEXIS 526 (1995).

Scope of Superior Court’s Jurisdiction. —

The superior court’s jurisdiction in reviewing the Commission’s decisions is severely limited. In re Enoch, 36 N.C. App. 255, 243 S.E.2d 388, 1978 N.C. App. LEXIS 2461 (1978). See also, In re Boulden, 47 N.C. App. 468, 267 S.E.2d 397, 1980 N.C. App. LEXIS 3141 (1980).

The function of the superior court in reviewing a decision of the Employment Security Commission is twofold: (1) To determine whether there was evidence before the Commission to support its findings of fact; and (2) to decide whether the facts found sustain the conclusions of law and the resultant decision of the Commission. In re Enoch, 36 N.C. App. 255, 243 S.E.2d 388, 1978 N.C. App. LEXIS 2461 (1978); Hester v. Hanes Knitwear, 61 N.C. App. 730, 301 S.E.2d 508, 1983 N.C. App. LEXIS 2734 (1983).

The legislature, in granting jurisdiction under subsection (i) of this section to the superior court, intended the superior court to function as an appellate court. In re Enoch, 36 N.C. App. 255, 243 S.E.2d 388, 1978 N.C. App. LEXIS 2461 (1978).

The fact that the superior court accepted additional evidence in hearing claimant’s appeal from the decision of the Commission required a reversal of its decision. In re Enoch, 36 N.C. App. 255, 243 S.E.2d 388, 1978 N.C. App. LEXIS 2461 (1978).

Because the trial court did not rule on the merits of an employee’s claim for unemployment benefits, but found that the Employment Security Commission’s order did not address all of the relevant issues raised by the record, and the findings were incomplete and failed to set out the sequence of events regarding the timing and notification of the employee’s discharge, the order was clearly interlocutory; hence, without evidence that the employee’s substantial rights were affected, or that any criteria for an immediate appeal was required, the employee’s appeal was dismissed. Reeves v. Yellow Transp., Inc., 170 N.C. App. 610, 613 S.E.2d 350, 2005 N.C. App. LEXIS 1076 (2005).

Because a former employee made no exceptions to the findings made by the Employment Security Commission, the trial court lacked jurisdiction to consider that issue, and the trial court compounded its error by relying upon the appeals referee decision rendered in favor of a co-worker; the trial court erred in reversing the Commission. Woodle v. Onslow County ABC Bd., 178 N.C. App. 372, 631 S.E.2d 199, 2006 N.C. App. LEXIS 1415 (2006).

The scope of judicial review of appeals from decisions of the Employment Security Commission is a determination of whether the facts found by the Commission are supported by competent evidence and, if so, whether the findings support the conclusions of law. The reviewing court may not consider the evidence to find the facts itself. Baptist Children's Homes of N.C. Inc. v. Employment Sec. Comm'n, 56 N.C. App. 781, 290 S.E.2d 402, 1982 N.C. App. LEXIS 2545 (1982); Phillips v. Kincaid Furn. Co., 67 N.C. App. 329, 313 S.E.2d 19, 1984 N.C. App. LEXIS 3042 (1984).

The scope of appellate court review of decisions of the Commission is a determination of whether the facts found by the Commission are supported by competent evidence and, if so, whether the findings support the conclusions of law. Reco Transp., Inc. v. Employment Sec. Comm'n, 81 N.C. App. 415, 344 S.E.2d 294, 1986 N.C. App. LEXIS 2320 (1986).

Appeal Held Timely Despite Late Filing. —

Claimant’s appeal from ruling of Employment Security Commission denying unemployment compensation was timely where, although the 30-day period ended July 7 and claimant’s appeal was not filed until July 8, 1986, claimant received his copy of the petition, which was mailed on July 3, on July 5, 1986, and counsel for the employer received his copy on July 7, 1986; the failure of the petition to be marked “filed” in the clerk’s office was through no fault of petitioner and any neglect was excusable. Edwards v. Milliken & Co., 93 N.C. App. 744, 379 S.E.2d 82, 1989 N.C. App. LEXIS 387 (1989).

Superior court had authority to allow a late appeal from the adjudicator’s determination; since the Commission’s regulations allow it to grant extensions of time and to permit acts to be done after the expiration of the time allowed, the Commission’s rulings were fully reviewable on appeal. Riddick v. Atlantic Veneer, 94 N.C. App. 201, 379 S.E.2d 661, 1989 N.C. App. LEXIS 430 (1989).

The statement of the grounds of the appeal formerly required by subsection (i) had to be filed within the time allowed for appeal. Its purpose was to give notice to the Commission and adverse parties of the alleged errors committed by the Commission and limit the scope of the hearing in the superior court to the specific questions of law raised by the errors assigned it. It was intended, and had to be construed, as a condition precedent to the right of appeal. Noncompliance therewith was fatal. In re State ex rel. Emp. Sec. Comm'n, 234 N.C. 651 , 68 S.E.2d 311, 1951 N.C. LEXIS 534 (1951).

Conclusiveness of Findings of Fact on Appeal. —

Upon appeal to the superior court from any final decision of the Commission, the findings of the Commission as to the facts, if supported by evidence, and in the absence of fraud, are conclusive, the jurisdiction of the superior court on appeal being limited to questions of law. In re Steelman, 219 N.C. 306 , 13 S.E.2d 544, 1941 N.C. LEXIS 312 (1941); State ex rel. Emp. Sec. Comm'n v. Jarrell, 231 N.C. 381 , 57 S.E.2d 403, 1950 N.C. LEXIS 466 (1950); In re Abernathy, 259 N.C. 190 , 130 S.E.2d 292, 1963 N.C. LEXIS 521 , cert. denied, 375 U.S. 161, 84 S. Ct. 274, 11 L. Ed. 2d 261, 1963 U.S. LEXIS 134 (1963); In re Southern, 247 N.C. 544 , 101 S.E.2d 327, 1958 N.C. LEXIS 559 (1958).

The finding of the Commission that employee-claimants belonged to the same grade or class of workers as other employees, some of whom, immediately before the stoppage occurred, participated in and were directly interested in the labor dispute causing the stoppage, was supported by ample evidence and was therefore conclusive, there being no allegation or evidence of fraud. State ex rel. Unemployment Comp. Comm'n v. Martin, 228 N.C. 277 , 45 S.E.2d 385, 1947 N.C. LEXIS 330 (1947).

As the findings of fact made by the Commission, when supported by competent evidence, are conclusive and binding on the reviewing courts, which are to hear the appeal on questions of law only, the dismissal of the appeal in the court below for failure to file a statement of grounds as formerly required by subsection (i) deprived the claimants of no substantial right to which, otherwise, they might have been entitled. In re State ex rel. Emp. Sec. Comm'n, 234 N.C. 651 , 68 S.E.2d 311, 1951 N.C. LEXIS 534 (1951).

The reviewing court under subsection (i) of this section may determine upon proper exceptions whether the facts found by the Commission were supported by competent evidence and whether the findings so supported sustain the legal conclusions and the award made, but in no event may the reviewing court consider the evidence for the purpose of finding the facts for itself. In re Boulden, 47 N.C. App. 468, 267 S.E.2d 397, 1980 N.C. App. LEXIS 3141 (1980).

Findings of fact by the Commission which are supported by competent evidence in the record are conclusive on appeal. Yelverton v. Kemp Furn. Indus., Inc., 51 N.C. App. 215, 275 S.E.2d 553, 1981 N.C. App. LEXIS 2211 (1981); Vanhorn v. Bassett Furn. Indus., Inc., 76 N.C. App. 377, 333 S.E.2d 309, 1985 N.C. App. LEXIS 3883 (1985).

Even when findings are not supported by the evidence, where there is no exception taken to such findings they are presumed to be supported by the evidence and are binding on appeal. Hagan v. Peden Steel Co., 57 N.C. App. 363, 291 S.E.2d 308, 1982 N.C. App. LEXIS 2650 (1982).

Based on an employee’s own testimony and documentary evidence that his failure to comply with the reasonable requirements of his job, specifically load and unload materials as directed and keep proper records, and because these requirements were reasonable and within his own control, the Employment Security Commission did not err by concluding that the employee was discharged for substantial fault and the trial court did not err by upholding this Commission’s ruling. Reeves v. Yellow Transp., Inc., 170 N.C. App. 610, 613 S.E.2d 350, 2005 N.C. App. LEXIS 1076 (2005).

Superior and appellate courts, under G.S. 96-15(i), were bound by the North Carolina Employment Security Commission’s findings of fact because there was sufficient evidence to establish that the former employee missed work for medical reasons. James v. Lemmons, 177 N.C. App. 509, 629 S.E.2d 324, 2006 N.C. App. LEXIS 1075 (2006).

Superior court did not violate G.S. 96-15(i) by correcting an appeals referee’s finding of fact because the finding of fact contained a mere misstatement by the referee of no consequence to the ultimate determination that an employee’s discharge from employment with the employer was not due to substantial fault or misconduct in connection with the work. James v. Lemmons, 177 N.C. App. 509, 629 S.E.2d 324, 2006 N.C. App. LEXIS 1075 (2006).

Evidence of the former employee’s stress related medical problems was sufficient to permit the North Carolina Employment Security Commission to determine that the employee’s absences were for good cause and that she did give her employer appropriate notice regarding her absences; thereby defeating the employer’s argument that the employee’s absenteeism constituted misconduct under G.S. 96-14(2) (now repealed). James v. Lemmons, 177 N.C. App. 509, 629 S.E.2d 324, 2006 N.C. App. LEXIS 1075 (2006).

Division of Employment Security properly determined, for purposes of an employee’s claim for unemployment insurance benefits, that when the employer changed its vehicle policy for its employees, the employee had a personal vehicle that he could use to commute to work; the findings were supported by the evidence. King v. N.C. DOC, 228 N.C. App. 61, 743 S.E.2d 83, 2013 N.C. App. LEXIS 677 (2013).

Trial court erred as a matter of law in making conclusions of law which were not supported by the findings of fact adopted from the North Carolina Department of Commerce, Division of Employment Security and thus, the trial court should have affirmed the decision of Department, denying unemployment benefits. Bailey v. Div. of Empl. Sec., 232 N.C. App. 10, 753 S.E.2d 219, 2014 N.C. App. LEXIS 58 (2014).

Conclusion of Law. —

The conclusions of law of the North Carolina Department of Commerce, Division of Employment Security, are reviewed de novo. A determination that an employee’s unemployment is due to misconduct connected with the work is a conclusion of law, and is therefore reviewed de novo. Burroughs v. Green Apple, LLC, 267 N.C. App. 139, 832 S.E.2d 267, 2019 N.C. App. LEXIS 719 (2019).

Deliberate Violation of Attendance Rules. —

Good Faith Effort to Comply with Notification of Absence Rule. —

Remand by Deputy Commissioner. —

Where the findings of the referee and the record together were insufficient to resolve certain issues in either party’s favor, the deputy commissioner did not abuse his discretion in remanding for a new hearing. Williams v. Burlington Indus., Inc., 318 N.C. 441 , 349 S.E.2d 842, 1986 N.C. LEXIS 2677 (1986).

The Court of Appeals had authority to review deputy commissioner’s decision to remand case for a second hearing. Williams v. Burlington Indus., Inc., 318 N.C. 441 , 349 S.E.2d 842, 1986 N.C. LEXIS 2677 (1986).

Remand Where Findings of Fact Supported But Insufficient. —

If the findings of fact made by the Commission, even though supported by competent evidence in the record, are insufficient to enable the court to determine the rights of the parties upon the matters in controversy, the proceeding should be remanded to the end that the Commission make proper findings. In re Boulden, 47 N.C. App. 468, 267 S.E.2d 397, 1980 N.C. App. LEXIS 3141 (1980).

G.S. 1A-1 , Rule 6(e) does not apply to appeals from an Employment Security Commission adjudicator, so as to give the appealing party, in addition to the 10-day period prescribed by subdivision (b)(2) of this section, three additional days within which to file an appeal. Smith v. Daniels Int'l, 64 N.C. App. 381, 307 S.E.2d 434, 1983 N.C. App. LEXIS 3286 (1983).

§ 96-15.01. Establishing a benefit year.

Initial Unemployment. — An individual is unemployed for the purpose of establishing a benefit year if one of the following conditions is met:
1. Payroll attachment. — The individual has payroll attachment but because of lack of work during the payroll week for which the individual is requesting the establishment of a benefit year, the individual worked less than the equivalent of three customary scheduled full-time days in the establishment, plant, or industry in which the individual has payroll attachment as a regular employee.
2. No payroll attachment. — The individual has no payroll attachment on the date the individual files a claim for unemployment benefits.
Unemployed. — For benefit weeks within an established benefit year, a claimant is unemployed as provided in this subsection:
1. Totally unemployed. — The claimant’s earnings for the week, including payments in subsection (c) of this section, would not reduce the claimant’s weekly benefit amount as calculated in G.S. 96-14.2 .
2. Partially unemployed. — The claimant is payroll attached and both of the following apply:
  1. The claimant worked less than three customary scheduled full-time days in the establishment, plant, or industry in which the claimant is employed because of lack of work during the payroll week for which the claimant is requesting benefits.
  2. The claimant’s earnings for the payroll week for which the claimant is requesting benefits, including payments in subsection (c) of this section, would qualify the claimant for a reduced weekly benefit amount as calculated in G.S. 96-14.2 .
3. Part-totally unemployed. — The claimant has no payroll attachment during all or part of the week, and the claimant’s earnings for odd jobs or subsidiary work would qualify the claimant for a reduced weekly benefit amount as calculated in G.S. 96-14.2.
Separation Payments. — An individual is not unemployed if, with respect to the entire calendar week, the individual receives or will receive as a result of the individual’s separation from work remuneration in any form. Amounts paid to an individual for paid time off that was available, but unused, before the individual’s separation under a written policy in effect before the individual’s separation are not remuneration as a result of separation. If the remuneration is given in a lump sum, the amount must be allocated on a weekly basis as if it had been earned by the individual during a week of employment. An individual may be unemployed, as provided in subsection (b) of this section, if the individual is receiving payment applicable to less than the entire week.
Substitute School Personnel. — An individual that performs service in a school as a substitute is not unemployed for days or weeks when the individual is not called to work unless the individual was employed as a full-time substitute during the period of time for which the individual is requesting benefits. For purposes of this subsection, a full-time substitute is an employee that works for more than 30 hours a week for the school on a continual basis for a period of six months or more.

History. 2013-2, s. 7(b); 2013-224, s. 19; 2017-8, s. 2(a).

Effect of Amendments.

Session Laws 2017-8, s 2(a), in subsection (c), substituted “in any form” in the first sentence, added the second sentence, and deleted former subdivisions (c)(1)-(6), which read: “(1) Wages in lieu of notice. (2) Accrued vacation pay. (3) Terminal leave pay. (4) Severance pay. (5) Separation pay. (6) Dismissal payments or wages by whatever name.” For effective date and applicability, see editor’s note.

§ 96-15.1. Protection of witnesses from discharge, demotion, or intimidation.

No person may discharge, demote, or threaten any person because that person has testified or has been summoned to testify in any proceeding under the Employment Security Act.
Any person who violates the provisions of this section shall be liable in a civil action for reasonable damages suffered by any person as a result of the violation, and an employee discharged or demoted in violation of this section shall be entitled to be reinstated to his former position. The burden of proof shall be upon the party claiming a violation to prove a claim under this section.
The General Court of Justice shall have jurisdiction over actions under this section.
The statute of limitations for actions under this section shall be one year pursuant to G.S. 1-54 .

History. 1987, c. 532, s. 1.

Legal Periodicals.

For article, “North Carolina Employment Law After Coman : Reaffirming Basic Rights in the Workplace,” see 24 Wake Forest L. Rev. 905 (1989).

For note, “Coman v. Thomas Manufacturing Co.: Recognizing a Public Policy Exception to the At-Will Employment Doctrine,” see 68 N.C.L. Rev. 1178 (1990).

§ 96-15.2. Protection of witness before the Division of Employment Security.

If any person shall by threats, menace, or in any other manner intimidate or attempt to intimidate any person who is summoned or acting as a witness in any proceeding brought under the Employment Security Act, or prevent or deter, or attempt to prevent or deter any person summoned or acting as such witness from attendance upon such proceeding, he shall be guilty of a Class 1 misdemeanor.

History. 1987, c. 532, s. 2; 1993, c. 539, s. 673; 1994, Ex. Sess., c. 24, s. 14(c); 2011, c. 401, s. 5.1.

Editor’s Note.

Session Laws 2011-401, s. 5.1 provides: “The Revisor of Statutes may delete any reference in the General Statutes to the Employment Security Commission, or any derivative thereof, and substitute references to the Division of Employment Security (DES) of the Department of Commerce created by this act wherever conforming changes are necessary.” Pursuant to that provision, a conforming change has been made in the section catchline. “Employment Security Commission” was changed to “Division of Employment Security”.

Effect of Amendments.

Session Laws 2011-401, s. 5.1, effective November 1, 2011, substituted “Division of Employment Security” for “Employment Security Commission” in the section catchline.

§ 2D. Board of Review.

Purpose. — The Board of Review (BOR) is created to determine appeals policies and procedures and to hear appeals arising from the decisions and determinations of the Division. The Department of Commerce must assign staff to the BOR. The BOR and its staff must perform their job responsibilities independent of the Governor, the General Assembly, the Department, and the Division and in accordance with any written guidance promulgated and issued by the U.S. Department of Labor.
Members. — The BOR consists of three members appointed by the Governor and subject to confirmation by the General Assembly as provided in subsection (c) of this section. One member must be classified as representative of employees, one member must be classified as representative of employers, and one member must be classified as representative of the general public. The member appointed to represent the general public will serve as chair of the BOR and must be a licensed attorney in this State.Members of the BOR serve staggered four-year terms. A term begins on July 1 of the year of appointment and ends on June 30 of the fourth year. No individual may serve more than two terms on the BOR. In calculating the number of terms served, a partial term that is less than 24 months in length will not be included. The General Assembly must set the annual salaries of the BOR in the current Operations Appropriations Act.
Confirmation. — Appointments of members to serve on the BOR are subject to confirmation by the General Assembly by joint resolution. The Governor must submit the name of the individual the Governor wants to appoint to the BOR to the General Assembly for confirmation on or before May 1 of the year of the expiration of the term. If the General Assembly does not confirm the appointment by May 30, the office will be considered vacant and must be filled in accordance with subsection (d) of this section. The Governor may not resubmit the name of the nominee whom the General Assembly did not confirm for the office. If the Governor fails to timely submit a nomination, the General Assembly will appoint to fill the succeeding term as provided in subsection (e) of this section.
Vacancies. — For the purpose of this subsection, the General Assembly is not in session only (i) prior to convening of the regular session, (ii) during any adjournment of the regular session for more than 10 days, and (iii) after sine die adjournment of the regular session. A vacancy in an office of the BOR prior to the expiration of the term of office must be filled in accordance with this subsection:
1. During legislative session. — If a vacancy in an office arises or exists when the General Assembly is in session, the Governor must submit the name of the individual to be appointed to fill the vacancy for the remainder of the unexpired term within 30 days after the vacancy arises to the General Assembly for confirmation by the General Assembly. If the General Assembly does not confirm the appointment within 30 days after the General Assembly receives the nomination, the office will be considered vacant and must be filled in accordance with this subsection. The Governor may not resubmit the name of the nominee whom the General Assembly did not confirm for the vacancy. If the Governor fails to timely submit a nomination, the General Assembly will appoint to fill the vacancy as provided in subsection (e) of this section.
2. During legislative interim. — If a vacancy in an office arises or exists when the General Assembly is not in session, the Governor must appoint an individual to that office to serve on an interim basis pending confirmation by the General Assembly. The Governor must submit the name of the individual to be appointed to fill the vacancy for the remainder of the unexpired term to the General Assembly for confirmation within 14 days of the date the General Assembly convenes or reconvenes for the next regular session. If the Governor fails to timely submit a nomination, the General Assembly will appoint to fill the vacancy as provided in subsection (e) of this section.
Legislative Appointments. — If the Governor fails to timely submit the name of an individual to be appointed to the BOR as provided in this section, then the General Assembly may appoint an individual to fill the vacancy in accordance with G.S. 120-121 and the provisions of this subsection. If the vacancy occurs in an odd-numbered year, the appointment is made upon the recommendation of the President Pro Tempore of the Senate. If the vacancy occurs in an even-numbered year, the appointment is made upon the recommendation of the Speaker of the House of Representatives.

History. 2015-238, s. 3.3(b).

Editor’s Note.

Session Laws 2015-238, s. 5, made this section effective September 10, 2015.

Session Laws 2015-238, s. 3.1(b), provides: “Notwithstanding the appointment provisions in G.S. 96-15.3, as enacted by this act, Jeanette Doran, appointed by the Governor in December 2013 to serve on the Board of Review as the member that represents the general public, is confirmed to serve on the Board of Review for the term beginning July 1, 2015, and expiring on June 30, 2019.”

“(1) Decisions issued by the Assistant Secretary of Commerce for the Division of Employment Security or by the Secretary of Commerce’s designee.

“(2) Decisions issued by the three individuals appointed by the Governor in December 2013 to serve as members of the BOR.”

§ 96-16. Seasonal pursuits.

A seasonal pursuit is one which, because of seasonal conditions making it impracticable or impossible to do otherwise, customarily carries on production operations only within a regularly recurring active period or periods of less than an aggregate of 36 weeks in a calendar year. No pursuit shall be deemed seasonal unless and until so found by the Division; except that any successor under G.S. 96-11.7 to a seasonal pursuit shall be deemed seasonal unless such successor shall within 120 days after the acquisition request cancellation of the determination of status of such seasonal pursuit; provided further that this provision shall not be applicable to pending cases nor retroactive in effect.
Upon application therefor by a pursuit, the Division shall determine or redetermine whether such pursuit is seasonal and, if seasonal, the active period or periods thereof. The Division may, on its own motion, redetermine the active period or periods of a seasonal pursuit. An application for a seasonal determination must be made on forms prescribed by the Division and must be made at least 20 days prior to the beginning date of the period of production operations for which a determination is requested.
Whenever the Division has determined or redetermined a pursuit to be seasonal, such pursuit shall be notified immediately, and such notice shall contain the beginning and ending dates of the pursuit’s active period or periods. Such pursuits shall display notices of its seasonal determination conspicuously on its premises in a sufficient number of places to be available for inspection by its workers. Such notices shall be furnished by the Division.
A seasonal determination shall become effective unless an interested party files an application for review within 10 days after the beginning date of the first period of production operations to which it applies. Such an application for review shall be deemed to be an application for a determination of status, as provided in G.S. 96-4 , subsections (q) through (u) of this Chapter, and shall be heard and determined in accordance with the provisions thereof.
All wages paid to a seasonal worker during his base period shall be used in determining his weekly benefit amount; provided however, that all weekly benefit amounts so determined shall be rounded to the nearest lower full dollar amount (if not a full dollar amount).
1. A seasonal worker shall be eligible to receive benefits based on seasonal wages only for a week of unemployment which occurs, or the greater part of which occurs within the active period or periods of the seasonal pursuit or pursuits in which he earned base period wages.
2. A seasonal worker shall be eligible to receive benefits based on nonseasonal wages for any week of unemployment which occurs during any active period or periods of the seasonal pursuit in which he has earned base period wages provided he has exhausted benefits based on seasonal wages. Such worker shall also be eligible to receive benefits based on nonseasonal wages for any week of unemployment which occurs during the inactive period or periods of the seasonal pursuit in which he earned base period wages irrespective as to whether he has exhausted benefits based on seasonal wages.
3. The maximum amount of benefits which a seasonal worker shall be eligible to receive based on seasonal wages shall be an amount, adjusted to the nearest multiple of one dollar ($1.00), determined by multiplying the maximum benefits payable in his benefit year, as provided in G.S. 96-14.3 , by the percentage obtained by dividing the seasonal wages in his base period by all of his base period wages.
4. The maximum amount of benefits which a seasonal worker shall be eligible to receive based on nonseasonal wages shall be an amount, adjusted to the nearest multiple of one dollar ($1.00), determined by multiplying the maximum benefits payable in his benefit year, as provided in G.S. 96-14.3 , by the percentage obtained by dividing the nonseasonal wages in his base period by all of his base period wages.
5. In no case shall a seasonal worker be eligible to receive a total amount of benefits in a benefit year in excess of the maximum benefits payable for such benefit year, as provided in G.S. 96-14.3.
All benefits paid to a seasonal worker shall be charged in accordance with G.S. 96-11.2 .
The benefits payable to any otherwise eligible individual shall be calculated in accordance with this section for any benefit year which is established on or after the beginning date of a seasonal determination applying to a pursuit by which such individual was employed during the base period applicable to such benefit year, as if such determination had been effective in such base period.
Nothing in this section shall be construed to limit the right of any individual whose claim for benefits is determined in accordance herewith to appeal from such determination as provided in G.S. 96-15 of this Chapter.
As used in this section:
1. “Pursuit” means an employer or branch of an employer.
2. “Branch of an employer” means a part of an employer’s activities which is carried on or is capable of being carried on as a separate enterprise.
3. “Production operations” mean all the activities of a pursuit which are primarily related to the production of its characteristic goods or services.
4. “Active period or periods” of a seasonal pursuit means the longest regularly recurring period or periods within which production operations of the pursuit are customarily carried on.
5. “Seasonal wages” mean the wages earned in a seasonal pursuit within its active period or periods. The Division may prescribe by regulation the manner in which seasonal wages shall be reported.
6. “Seasonal worker” means a worker at least twenty-five percent (25%) of whose base period wages are seasonal wages.
7. “Interested party” means any individual affected by a seasonal determination.
8. “Inactive period or periods” of a seasonal pursuit means that part of a calendar year which is not included in the active period or periods of such pursuit.
9. “Nonseasonal wages” mean the wages earned in a seasonal pursuit within the inactive period or periods of such pursuit, or wages earned at any time in a nonseasonal pursuit.
10. “Wages” mean remuneration for employment.

History. 1939, c. 28; 1941, c. 108, s. 7; 1943, c. 377, s. 141/2; 1945, c. 522, s. 33; 1953, c. 401, ss. 20, 21; 1957, c. 1059, s. 14; 1959, c. 362, s. 18; 1983, c. 585, s. 19; 2011-401, s. 2.17; 2013-2, s. 9(c); 2013-224, ss. 19, 20(k), (l); 2013-391, s. 7; 2015-238, s. 2.8(d).

Effect of Amendments.

Session Laws 2011-401, s. 2.17, effective November 1, 2011, substituted “Division” for “Commission” throughout the section; and substituted “except” for “Provided however” in the last sentence of subsection (a).

Session Laws 2013-2, s. 9(c), in the second sentence of subsection (a), deleted “from March 27, 1953” following “Division; except that,” and substituted “G.S. 96-11.6” for “G.S. 96-8(5)b”; substituted “G.S. 96-14.4” for “G.S. 96-12(d) of this Chapter” in subdivisions (f)(3), (f)(4) and (f)(5); and deleted “as prescribed in G.S. 96-9(c)(2) of this Chapter” following “charged” in subdivisions (g)(1) and (g)(2). For effective date and applicability, see Editor’s note.

Session Laws 2013-224, s. 20(k), ( l ), effective June 27, 2013, substituted “G.S. 96-11.7” for “G.S. 96-11.6” in subsection (a); and substituted “subsections (q) through (u)” for “subsections (m) through (q)” in subsection (d).

Session Laws 2013-391, s. 7, effective July 1, 2013, rewrote subsection (g). For applicability, see Editor’s note.

Session Laws 2015-238, s. 2.8(d), effective July 1, 2015, substituted “G.S. 96-14.3” for “G.S. 96-14.4” in subdivisions (f)(3) through (f)(5).

§ 96-17. Protection of rights and benefits; attorney representation; prohibited fees; deductions for child support obligations.

Waiver of Rights Void. — Any agreement by an individual to waive, release, or commute his rights to benefits or any other rights under this Chapter shall be void. Any agreement by any individual in the employ of any person or concern to pay all or any portion of an employer’s contributions, required under this Chapter from such employer, shall be void. No employer shall directly or indirectly make or require or accept any deduction from the remuneration of individuals in his employ to finance the employer’s contributions required from him, or require or accept any waiver of any right hereunder by any individual in his employ. Any employer or officer or agent of an employer who violates any provision of this subsection shall, for each offense, be fined not less than one hundred dollars ($100.00) nor more than one thousand dollars ($1,000) or be imprisoned for not more than six months, or both.
Representation. — Any claimant or employer who is a party to any proceeding before the Division may be represented by (i) an attorney; or (ii) any person who is supervised by an attorney, however, the attorney need not be present at any proceeding before the Division.
(b1) Fees Prohibited. — Except as otherwise provided in this Chapter, no individual claiming benefits in any administrative proceeding under this Chapter shall be charged fees of any kind by the Division or its representative, and in any court proceeding under this Chapter each party shall bear its own costs and legal fees.
No Assignment of Benefits; Exemptions. — Except as provided in subsection (d) of this section, any assignment, pledge, or encumbrance of any right to benefits which are or may become due or payable under this Chapter shall be void; and such rights to benefits shall be exempt from levy, execution, attachment, or any other remedy whatsoever provided for the collection of debts; and benefits received by any individual, so long as they are not mingled with other funds of the recipient, shall be exempt from any remedy whatsoever for the collection of all debts except debts incurred for necessaries furnished to such individual or his spouse or dependents during the time when such individual was unemployed. Any waiver of any exemption provided for in this subsection shall be void.
1. Definitions. — For the purpose of this subsection and when used herein:
  1. “Unemployment compensation” means any compensation found by the Division to be payable to an unemployed individual under the Employment Security Law of North Carolina (including amounts payable by the Division pursuant to an agreement under any federal law providing for compensation, assistance or allowances with respect to unemployment) provided, that nothing in this subsection shall be construed to limit the Division’s ability to reduce or withhold benefits, otherwise payable, under authority granted elsewhere in this Chapter including but not limited to reductions for wages or earnings while unemployed and for the recovery of previous overpayments of benefits.
  2. “Child support obligation” includes only obligations which are being enforced pursuant to a plan described in section 454 of the Social Security Act which has been approved by the Secretary of Health and Human Services under Part D of Title IV of the Social Security Act.
  3. “State or local child support enforcement agency” means any agency of this State or a political subdivision thereof operating pursuant to a plan described in subparagraph b. above.
2. 1. An individual filing a new claim for unemployment compensation shall, at the time of filing such claim, disclose whether the individual owes child support obligations, as defined under subparagraph (1)b. of this subsection. If any such individual discloses that he or she owes child support obligations and is determined by the Division to be eligible for payment of unemployment compensation, the Division shall notify the State or local child support enforcement agency enforcing such obligation that such individual has been determined to be eligible for payment of unemployment compensation.
  2. Upon payment by the State or local child support enforcement agency of the processing fee provided for in paragraph (4) of this subsection and beginning with any payment of unemployment compensation that, except for the provisions of this subsection, would be made to the individual during the then current benefit year and more than five working days after the receipt of the processing fee by the Division, the Division shall deduct and withhold from any unemployment compensation otherwise payable to an individual who owes child support obligations:
    1. The amount specified by the individual to the Division to be deducted and withheld under this paragraph if neither subparagraph 2. nor subparagraph 3. of this paragraph is applicable; or
    2. The amount, if any, determined pursuant to an agreement submitted to the Division under section 454(20)(B)(i) of the Social Security Act by the State or local child support enforcement agency, unless subparagraph 3. of this paragraph is applicable; or
    3. Any amount otherwise required to be so deducted and withheld from such unemployment compensation pursuant to properly served legal process, as that term is defined in section 462(e) of the Social Security Act.
  3. Any amount deducted and withheld under paragraph b. of this subdivision shall be paid by the Division to the appropriate State or local child support enforcement agency.
  4. The Department of Health and Human Services and the Division are hereby authorized to enter into one or more agreements which may provide for the payment to the Division of the processing fees referred to in subparagraph b. and the payment to the Department of Health and Human Services of unemployment compensation benefits withheld, referred to in subparagraph c., on an open account basis. Where such an agreement has been entered into, the processing fee shall be deemed to have been made and received (for the purposes of fixing the date on which the Division will begin withholding unemployment compensation benefits) on the date a written authorization from the Department of Health and Human Services to charge its account is received by the Division. Such an authorization shall apply to all processing fees then or thereafter (within the then current benefit year) chargeable with respect to any individual name in the authorization. Any agreement shall provide for the reimbursement to the Division of any start-up costs and the cost of providing notice to the Department of Health and Human Services of any disclosure required by subparagraph a. Such an agreement may dispense with the notice requirements of subparagraph a. by providing for a suitable substitute procedure, reasonably calculated to discover those persons owing child support obligations who are eligible for unemployment compensation payments.
3. Any amount deducted and withheld under paragraph (2) of this subdivision shall, for all purposes, be treated as if it were paid to the individual as unemployment compensation and then paid by such individual to the State or local child support enforcement agency in satisfaction of the individual’s child support obligations.
4. 1. On or before April 1 of 1983 and each calendar year thereafter, the Division shall set and forward to the Secretary of Health and Human Services for use in the next fiscal year, a schedule of processing fees for the withholding and payment of unemployment compensation as provided for in this subsection, which fees shall reflect its best estimate of the administrative cost to the Division generated thereby.
  2. At least 20 days prior to September 25, 1982, the Division shall set and forward to the Secretary of Health and Human Services an interim schedule of fees which will be in effect until July 1, 1983.
  3. The provisions of this subsection apply only if arrangements are made for reimbursement by the State or local child support agency for all administrative costs incurred by the Division under this subsection attributable to child support obligations enforced by the agency.

History. Ex. Sess. 1936, c. 1, s. 15; 1937, c. 150; 1979, c. 660, s. 22; 1981, c. 762, ss. 1, 2; 1981 (Reg. Sess., 1982), c. 1178, ss. 1, 2; 1985, c. 552, s. 21; 1997-443, s. 11A.118(a); 1997-456, s. 27; 2011-401, s. 2.18.

Effect of Amendments.

Session Laws 2011-401, s. 2.18, effective November 1, 2011, substituted “Division” for “Commission” throughout the section.

Legal Periodicals.

For survey of 1982 administrative law, see 61 N.C.L. Rev. 961 (1983).

CASE NOTES

Editor’s Note. —

G.S. 6-19.1 Discussed. —

For discussion suggesting without deciding that G.S. 96-17 , rather than G.S. 6-19.1 , applies in cases involving unemployment benefits, see Doyle v. Southeastern Glass Laminates, Inc., 104 N.C. App. 326, 409 S.E.2d 732, 1991 N.C. App. LEXIS 1051 (1991), rev'd, 331 N.C. 748 , 417 S.E.2d 236, 1992 N.C. LEXIS 431 (1992).

Fees Prohibited. —

Appeal to Superior Court by Employment Security Commission (ESC) employer was a proper proceeding under chapter 96; therefore, subsection (b1) prohibited the Superior Court award of attorney’s fees. Employment Sec. Comm'n v. Peace, 341 N.C. 716 , 462 S.E.2d 222, 1995 N.C. LEXIS 526 (1995).

§ 96-18. Penalties.

1. It shall be unlawful for any person to make a false statement or representation knowing it to be false or to knowingly fail to disclose a material fact to obtain or increase any benefit under this Chapter or under an employment security law of any other state, the federal government, or of a foreign government, either for himself or any other person. Records, with any necessary authentication thereof, required in the prosecution of any criminal action brought by another state or foreign government for misrepresentation to obtain benefits under the law of this State shall be made available to the agency administering the employment security law of any such state or foreign government for the purpose of such prosecution. Photostatic copies of all records of agencies of other states or foreign governments required in the prosecution of any criminal action under this section shall be as competent evidence as the originals when certified under the seal of such agency, or when there is no seal, under the hand of the keeper of such records.
2. A person who violates this subsection shall be found guilty of a Class I felony if the value of the benefit wrongfully obtained is more than four hundred dollars ($400.00).
3. A person who violates this subsection shall be found guilty of a Class 1 misdemeanor if the value of the benefit wrongfully obtained is four hundred dollars ($400.00) or less.
Any employing unit or any officer or agent of an employing unit or any other person who makes a false statement or representation, knowing it to be false, or who knowingly fails to disclose a material fact to prevent or reduce the payment of benefits to any individual entitled thereto, or to avoid becoming or remaining subject hereto or to avoid or reduce any contributions or other payment required from an employing unit under this Chapter, or who willfully fails or refuses to furnish any reports required hereunder, or to produce or permit the inspection or copying of records as required hereunder, shall be guilty of a Class 1 misdemeanor; and each such false statement or representation or failure to disclose a material fact, and each day of such failure or refusal shall constitute a separate offense. (b1) Except as provided in this subsection, the penalties and other provisions in subdivisions (6), (7), (9a), and (11) of G.S. 105-236 apply to unemployment insurance contributions under this Chapter to the same extent that they apply to taxes as defined in G.S. 105-228.90(b)(7). The Division has the same powers under those subdivisions with respect to unemployment insurance contributions as does the Secretary of Revenue with respect to taxes as defined in G.S. 105-228.90(b)(7).G.S. 105-236(9a) applies to a “contribution tax return preparer” to the same extent as it applies to an income tax preparer. As used in this subsection, a “contribution tax return preparer” is a person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by this Chapter or any claim for refund of tax imposed by this Chapter. For purposes of this definition, the completion of a substantial portion of a return or claim for refund is treated as the preparation of the return or claim for refund. The term does not include a person merely because the person (i) furnishes typing, reproducing, or other mechanical assistance, (ii) prepares a return or claim for refund of the employer, or an officer or employee of the employer, by whom the person is regularly and continuously employed, (iii) prepares as a fiduciary a return or claim for refund for any person, or (iv) represents a taxpayer in a hearing regarding a proposed assessment.The penalty in G.S. 105-236 (7) applies with respect to unemployment insurance contributions under this Chapter only when one of the following circumstances exist in connection with the violation:
1. Any employing units employing more than 10 employees.
2. A contribution of more than two thousand dollars ($2,000) has not been paid.
3. An experience rating account balance is more than five thousand dollars ($5,000) overdrawn.If none of the circumstances set forth in subdivision (1), (2), or (3) of this subsection exist in connection with a violation of G.S. 105-236(7) applied under this Chapter, the offender is guilty of a Class 1 misdemeanor and each day the violation continues constitutes a separate offense.If the Division finds that any person violated G.S. 105-236(9a) and is not subject to a fraud penalty, the person shall pay a civil penalty of five hundred dollars ($500.00) per violation for each day the violations continue, plus the reasonable costs of investigation and enforcement.
Any person who shall willfully violate any provisions of this Chapter or any rule or regulation thereunder, the violation of which is made unlawful or the observance of which is required under the terms of this Chapter, or for which a penalty is neither prescribed herein nor provided by any other applicable statute, shall be guilty of a Class 1 misdemeanor, and each day such violation continues shall be deemed to be a separate offense.
Repealed by Session Laws 1983, c. 625, s. 15.
An individual shall not be entitled to receive benefits for a period of 52 weeks beginning with the first day of the week following the date that notice of determination or decision is mailed finding that he, or another in his behalf with his knowledge, has been found to have knowingly made a false statement or misrepresentation, or who has knowingly failed to disclose a material fact to obtain or increase any benefit or other payment under this Chapter.
Repealed by Session Laws 1983, c. 625, s. 15.
1. Repealed by Session Laws 2012-134, s. 4(b), effective October 1, 2012.
2. Any person who has received any sum as benefits under this Chapter by reason of the nondisclosure or misrepresentation by him or by another of a material fact (irrespective of whether such nondisclosure or misrepresentation was known or fraudulent) or has been paid benefits to which he was not entitled for any reason (including errors on the part of any representative of the Division) shall be liable to repay such sum to the Division as provided in subdivision (3) of this subsection.
3. The Division may collect the overpayments provided for in this subsection by one or more of the following procedures as the Division may, except as provided herein, in its sole discretion choose:
  1. If, after due notice, any overpaid claimant shall fail to repay the sums to which he was not entitled, the amount due may be collected by civil action in the name of the Division, and the cost of such action shall be taxed to the claimant. Civil actions brought under this section to collect overpayments shall be heard by the court at the earliest possible date and shall be entitled to preference upon the calendar of the court over all other civil actions except petitions for judicial review under this Chapter.
  2. If any overpayment recognized by this subsection shall not be repaid within 30 days after the claimant has received notice and demand for same, and after due notice and reasonable opportunity for hearing (if a hearing on the merits of the claim has not already been had) the Division, under the hand of the Assistant Secretary, may certify the same to the clerk of the superior court of the county in which the claimant resides or has property, and additional copies of said certificate for each county in which the Division has reason to believe such claimant has property located; such certificate and/or copies thereof so forwarded to the clerk of the superior court shall immediately be docketed and indexed on the cross index of judgments, and from the date of such docketing shall constitute a preferred lien upon any property which said claimant may own in said county, with the same force and effect as a judgment rendered by the superior court. The Division shall forward a copy of said certificate to the sheriff or sheriffs of such county or counties, or to a duly authorized agent of the Division, and when so forwarded and in the hands of such sheriff or agent of the Division, shall have all the force and effect of an execution issued to such sheriff or agent of the Division by the clerk of the superior court upon a judgment of the superior court duly docketed in said county. The Division is further authorized and empowered to issue alias copies of said certificate or execution to the sheriff or sheriffs of such county or counties, or a duly authorized agent of the Division in all cases in which the sheriff or duly authorized agent has returned an execution or certificate unsatisfied; when so issued and in the hands of the sheriff or duly authorized agent of the Division, such alias shall have all the force and effect of an alias execution issued to such sheriff or duly authorized agent of the Division by the clerk of the superior court upon a judgment of the superior court duly docketed in said county. Provided, however, that notwithstanding any provision of this subsection, upon filing one written notice with the Division, the sheriff of any county shall have the sole and exclusive right to serve all executions and make all collections mentioned in this subsection and in such case, no agent of the Division shall have the authority to serve any executions or make any collections therein in such county. A return of such execution or alias execution, shall be made to the Division, together with all monies collected thereunder, and when such order, execution or alias is referred to the agent of the Division for service, the said agent of the Division shall be vested with all the powers of the sheriff to the extent of serving such order, execution or alias and levying or collecting thereunder. The agent of the Division to whom such order or execution is referred shall give a bond not to exceed three thousand dollars ($3,000) approved by the Division for the faithful performance of such duties. The liability of said agent shall be in the same manner and to the same extent as is now imposed on sheriffs in the service of execution. If any sheriff of this State or any agent of the Division who is charged with the duty of serving executions shall willfully fail, refuse or neglect to execute any order directed to him by the said Division and within the time provided by law, the official bond of such sheriff or of such agent of the Division shall be liable for the overpayments and costs due by the claimant. Additionally, the Division or its designated representatives in the collection of overpayments shall have the powers enumerated in G.S. 96-10(b)(2) and (3).
  3. Any person who has been found by the Division to have been overpaid under subparagraph (2) above due to fraudulent nondisclosure or misrepresentation shall be liable to have the sums deducted from future benefits payable to the person under this Chapter. The amount deducted may be up to one hundred percent (100%) of that person’s weekly benefit amount.
  4. Any person who has been found by the Division to have been overpaid under subparagraph (2) above due to nonfraudulent reasons shall be liable to have the sums deducted from future benefits payable to the person under this Chapter but the amount deducted for any week shall be reduced by no more than fifty percent (50%) of that person’s weekly benefit amount.
  5. To the extent permissible under the laws and Constitution of the United States, the Division is authorized to enter into or cooperate in arrangements or reciprocal agreements with appropriate and duly authorized agencies of other states or the United States Secretary of Labor, or both, whereby: (1) Overpayments of unemployment benefits as determined under subparagraphs (1) and (2) above shall be recovered by offset from unemployment benefits otherwise payable under the unemployment compensation law of another state, and overpayments of unemployment benefits as determined under the unemployment compensation law of such other state shall be recovered by offset from unemployment benefits otherwise payable under this Chapter; and, (2) Overpayments of unemployment benefits as determined under applicable federal law, with respect to benefits or allowances for unemployment provided under a federal program administered by this State under an agreement with the United States Secretary of Labor, shall be recovered by offset from unemployment benefits otherwise payable under this Chapter or any such federal program, or under the unemployment compensation law of another state or any such federal unemployment benefit or allowance program administered by such other state under an agreement with the United States Secretary of Labor if such other state has in effect a reciprocal agreement with the United States Secretary of Labor as authorized by Section 303(g)(2) of the federal Social Security Act, if the United States agrees, as provided in the reciprocal agreement with this State entered into under such Section 303(g)(2) of the Social Security Act, that overpayments of unemployment benefits as determined under subparagraphs (1) and (2) above, and overpayment as determined under the unemployment compensation law of another state which has in effect a reciprocal agreement with the United States Secretary of Labor as authorized by Section 303(g)(2) of the Social Security Act, shall be recovered by offset from benefits or allowances for unemployment otherwise payable under a federal program administered by this State or such other state under an agreement with the United States Secretary of Labor.
  6. The Division may in its discretion decline to collect overpayments to claimants if the claimant has deceased after the payment was made. In such a case the Division may remove the debt of the deceased claimant from its records.
Mandatory Federal Penalty. — A person who has been held ineligible for benefits under subsection (e) of this section and who, because of those same acts or omissions, has received any sum as benefits under this Chapter to which the person is not entitled shall be assessed a penalty in an amount equal to fifteen percent (15%) of the amount of the erroneous payment. The penalty amount shall be payable to the Unemployment Insurance Fund. The penalty applies to an erroneous payment made under any State program providing for the payment of unemployment compensation as well as an erroneous payment made under any federal program providing for the payment of unemployment compensation. The notice of determination or decision advising the person that benefits have been denied or adjusted pursuant to subsection (e) of this section must include the reason for the finding of an erroneous payment, the penalty amount assessed under this subsection, and the reason the penalty has been applied.The penalty amount may be collected in any manner allowed for the recovery of the erroneous payment, except that the penalty amount may not be recovered through offsets of future benefits. When a recovery with respect to an erroneous payment is made, any recovery applies first to the principal of the erroneous payment, then to the federally mandated penalty amount imposed under this subsection, and finally to any other amounts due.

History. Ex. Sess. 1936, c. 1, s. 16; 1943, c. 319; c. 377, ss. 29, 30; 1945, c. 552, s. 34; 1949, c. 424, s. 26; 1951, c. 332, s. 16; 1953, c. 401, ss. 1, 22; 1955, c. 385, s. 9; 1959, c. 362, ss. 19, 20; 1965, c. 795, ss. 23, 24; 1971, c. 673, s. 31; 1977, c. 727, s. 55; 1979, c. 660, ss. 23-25; 1981, c. 160, s. 33; 1983, c. 625, s. 15; 1985, c. 552, s. 22; 1987, c. 103, s. 4; 1989, c. 583, ss. 13, 14; 1993, c. 343, s. 7; c. 539, ss. 674-676; 1994, Ex. Sess., c. 24, s. 14(c); 2003-67, s. 2; 2005-410, s. 6; 2011-401, s. 2.19; 2012-134, ss. 3(d), 4(a)-(c); 2013-2, s. 9(d); 2013-224, s. 19.

Editor’s Note.

The former introductory paragraph of subsection (a), as amended by Session Laws 2012-134, s. 4(a), was redesignated as subdivision (a)(1); and subdivisions (a)(1) and (a)(2) were redesignated as subdivisions (a)(2) and (a)(3) at the direction of the Revisor of Statutes.

Session Laws 2012-134, s. 3(f), made subsection (h) effective October 1, 2013, and applicable to an erroneous payment determined under G.S. 96-18(e) to be a fraudulent overpayment on or after that date.

Session Laws 2012-134, s. 4(d) provides: “The Department of the Treasury, Financial Management Service, is the federal government’s central debt collection agency. It develops and maintains a centralized offset program known as the Treasury Offset Program (TOP), by which payments are offset to collect delinquent debts owed to federal agencies and states. State Unemployment Compensation debts are now eligible for referral to the Program, pursuant to Public Law 110-32 and Public Law 111-291.

“It is the desire of the General Assembly for the State to participate in the Unemployment Insurance Compensation Debt Program on or before January 1, 2013. The Division of Employment Security is required to report to the House Unemployment Fraud Task Force by September 1, 2012, November 1, 2012, and January 1, 2013, on the implementation of the TOP. The report should contain, at a minimum, the following:

“(1) An implementation time line, including a go-live date and status update on where the Division is in the process.

“(2) A detailed list of implementation requirements. For each requirement, the Division is to provide any barriers and proposed solutions to each barrier.

“(3) An itemized accounting of the cost to implement TOP, including the source of funds used. Recurring and nonrecurring costs shall be broken out accordingly.

“(4) For the September 1 report, the Division is to provide an estimate of how much it anticipates recovering annually through TOP. The report should include the methodology used to arrive at this estimate.”

Session Laws 2012-134, s. 4(e) provides: “Subsection (a) of this section becomes effective December 1, 2012, and applies to offenses committed on or after that date. Subsections (b) and (c) of this section become effective October 1, 2012, and apply to an overpayment established on or after that date.”

At the direction of the Revisor of Statutes, the spelling of the word “moneys” was changed to “monies” in subdivision (g)(3)b.

Effect of Amendments.

Session Laws 2005-410, s. 6, effective December 1, 2005, added the last two paragraphs to subsection (b1).

Session Laws 2011-401, s. 2.19, effective November 1, 2011, throughout subsections (b1) and (g), substituted “Division” for “Commission”; and made a minor stylistic change in subdivision (g)(1).

Session Laws 2012-134, s. 3(d), effective October 1, 2013, added subsection (h). For applicability, see editor’s note.

Session Laws 2012-134, s. 4(a), effective December 1, 2012, in the first sentence of subdivision (a)(1), substituted “It shall be unlawful for any person to make a false statement or representation knowing it to be false or to knowingly fail” for “Any person who makes a false statement or representation knowing it to be false or knowingly fails” at the beginning and deleted “shall be guilty of a Class 1 misdemeanor, and each such false statement or representation or failure to disclose a material fact shall constitute a separate offense” at the end; and added subdivisions (a)(1) and (a)(2). For applicability, see editor’s note.

Session Laws 2012-134, s. 4(b) and (c), effective Ocotber 1, 2012, repealed subdivision (g)(1), regarding persons held ineligible for benefits; in subdivision (g)(2), deleted “other than subparagraph (1) above” following the second parenthetical and substituted “subdivision (3) of this section” for “subparagraph (3) below, provided no such recovery or recoupment of such sum may be initiated after three years from the last day of the year in which the overpayment occurred.” For applicability, see editor’s note.

Session Laws 2013-2, s. 9(d), made minor stylistic and gender neutral changes throughout sub-subdivisions (g)(3)c and (g)(3)d; in sub-subdivision (g)(3)c, substituted “subparagraph (2)” for “subparagraph (1)” and inserted “due to fraudulent nondisclosure or misrepresentation” in the first sentence, and added the last sentence; in sub-subdivision (g)(3)d, inserted “due to nonfraudulent reasons,” substituted “but the amount deducted” for “in such amounts as the Division may by regulation prescribe but no such benefit payable,” and inserted “no” preceding “more than fifty percent.” For effective date and applicability, see Editor’s note.

§ 96-18.1. Attachment and garnishment of fraudulent overpayment.

Applicability. — This section applies to an individual who has been provided notice of a determination or an appeals decision finding that the individual, or another individual acting in the individual’s behalf and with the individual’s knowledge, has knowingly done one or more of the following to obtain or increase a benefit or other payment under this Chapter:
1. Made a false statement or misrepresentation.
2. Failed to disclose a material fact.
Attachment and Garnishment. — Intangible property that belongs to an individual, is owed to an individual, or has been transferred by an individual under circumstances that would permit it to be levied upon if it were tangible property is subject to attachment and garnishment in payment of a fraudulent overpayment that is due from the individual and is collectible under this Article. Intangible personal property includes bank deposits, rent, salaries, wages, property held in the Escheat Fund, and any other property incapable of manual levy or delivery.A person who is in possession of intangible property that is subject to attachment and garnishment is the garnishee and is liable for the amount the individual owes. The liability applies only to the amount of the individual’s property in the garnishee’s possession, reduced by any amount the individual owes the garnishee.The Secretary may submit to a financial institution, as defined in G.S. 53B-2 , information that identifies an individual who owes a fraudulent overpayment that is collectible under this section and the amount of the overpayment. The Secretary may submit the information on a quarterly basis or, with the agreement of the financial institution, on a more frequent basis. A financial institution that receives the information must determine the amount, if any, of intangible property it holds that belongs to the individual and must inform the Secretary of its determination. The Secretary must reimburse a financial institution for its costs in providing the information, not to exceed the amount payable to the financial institution under G.S. 110-139 for providing information for use in locating a noncustodial parent.No more than ten percent (10%) of an individual’s wages or salary is subject to attachment and garnishment. The wages or salary of an employee of the United States, the State, or a political subdivision of the State are subject to attachment and garnishment.
Notice. — Before the Secretary attaches and garnishes intangible property in payment of a fraudulent overpayment, the Secretary must send the garnishee a notice of garnishment. The notice must be sent either in person, by certified mail with a return receipt requested, or with the agreement of the garnishee, by electronic means. The notice must contain all of the following information:
1. The individual’s name.
2. The individual’s social security number or federal identification number.
3. The amount of fraudulent overpaid benefits the individual owes.
4. An explanation of the liability of a garnishee for fraudulent overpayment of unemployment insurance benefits owed by an overpaid individual.
5. An explanation of the garnishee’s responsibility concerning the notice.
Action. — A garnishee must comply with a notice of garnishment or file a written response to the notice within the time set in this subsection. A garnishee that is a financial institution must comply or file a response within 20 days after receiving a notice of garnishment. All other garnishees must comply or file a response within 30 days after receiving a notice of garnishment. A written response must explain why the garnishee is not subject to garnishment and attachment.Upon receipt of a written response, the Department must contact the garnishee and schedule a conference to discuss the response or inform the garnishee of the Department’s position concerning the response. If the Department does not agree with the garnishee on the garnishee’s liability, the Department may proceed to enforce the garnishee’s liability for the fraudulent overpayment of unemployment benefits by civil action.

History. 2013-2, s. 7(b); 2013-224, s. 19.

§ 96-19. Enforcement of Employment Security Law discontinued upon repeal or invalidation of federal acts; suspension of enforcement provisions contested.

It is the purpose of this Chapter to secure for employers and employees the benefits of Title III and Title IX of the Federal Social Security Act, approved August 14, 1935, as to credit on payment of federal taxes, of State contributions, the receipt of federal grants for administrative purposes, and all other provisions of the said Federal Social Security Act; and it is intended as a policy of the State that this Chapter and its requirements for contributions by employers shall continue in force only so long as such employers are required to pay the federal taxes imposed in said Federal Social Security Act by a valid act of Congress. Therefore, if Title III and Title IX of the said Federal Social Security Act shall be declared invalid by the United States Supreme Court, or if such law be repealed by congressional action so that the federal tax cannot be further levied, from and after the declaration of such invalidity by the United States Supreme Court, or the repeal of said law by congressional action, as the case may be, no further levy or collection of contributions shall be made hereunder. The enactment by the Congress of the United States of the Railroad Retirement Act and the Railroad Unemployment Insurance Act shall in no way affect the administration of this law except as herein expressly provided.All federal grants and all contributions theretofore collected, and all funds in the treasury by virtue of this Chapter, shall, nevertheless, be disbursed and expended, as far as may be possible, under the terms of this Chapter: Provided, however, that contributions already due from any employer shall be collected and paid into the said fund, subject to such distribution; and provided further, that the personnel of the Division of Employment Security shall be reduced as rapidly as possible.The funds remaining available for use by the Division of Employment Security shall be expended, as necessary, in making payment of all such awards as have been made and are fully approved at the date aforesaid, and the payment of the necessary costs for the further administration of this Chapter, and the final settlement of all affairs connected with same. After complete payment of all administrative costs and full payment of all awards made as aforesaid, any and all moneys remaining to the credit of any employer shall be refunded to such employer, or his duly authorized assignee: Provided, that the State employment service, created by Chapter 106, Public Laws of 1935, and transferred by Chapter 1, Public Laws of 1936, Extra Session, and made a part of the former Employment Security Commission of North Carolina, and that is now part of the Division of Employment Security of the North Carolina Department of Commerce, shall in such event return to and have the same status as it had prior to enactment of Chapter 1, Public Laws of 1936, Extra Session, and under authority of Chapter 106, Public Laws of 1935, shall carry on the duties therein prescribed; but, pending a final settlement of the affairs of the Division, the said State employment service shall render such service in connection therewith as shall be demanded or required under the provisions of this Chapter or the provisions of Chapter 1, Public Laws of 1936, Extra Session.
The Division of Employment Security may, upon receiving notification from the U.S. Department of Labor that any provision of this Chapter is out of conformity with the requirements of the federal law or of the U.S. Department of Labor, suspend the enforcement of the contested section or provision until the North Carolina Legislature next has an opportunity to make changes in the North Carolina law. The Division shall, in order to implement the above suspension:
1. Notify the Governor’s office and provide that office with a copy of the determination or notification of the U.S. Department of Labor;
2. Advise the Governor’s office as to whether the contested portion or provision of the law would, if not enforced, so seriously hamper the operations of the agency as to make it advisable that a special session of the legislature be called;
3. Take all reasonable steps available to obtain a reprieval from the implementation of any federal conformity failure sanctions until the State legislature has been afforded an opportunity to consider the existing conflict.

History. 1937, c. 363; 1939, c. 52, s. 8; 1947, c. 598, s. 1; 1977, c. 727, s. 56; 2011-401, s. 2.20.

Effect of Amendments.

Session Laws 2011-401, s. 2.20, effective November 1, 2011, in subsection (a), in the second paragraph, substituted “Division of Employment Security” for “State Employment Security Commission” at the end, in the third paragraph, in the first paragraph, substituted “Division of Employment Security” for “North Carolina Employment Security Commission,” and in the last sentence, inserted “former” and “and that is now part of the Division of Employment Security of the North Carolina Department of Commerce,” and substituted “Division” for “Employment Commission of North Carolina”; and in the introductory paragraph of subsection (b), substituted “Division of Employment Security” and “Division” for “Employment Security Commission.”

Legal Periodicals.

For survey of 1977 law on employment regulation, see 56 N.C.L. Rev. 854 (1978).

Article 3. Employment Service Division.

§ 96-20. Duties of Division; conformance to Wagner-Peyser Act; organization; director; employees.

The Employment Security Section of the Division of Employment Security, Department of Commerce, shall establish and maintain free public employment offices in such number and in such places as may be necessary for the proper administration of this Chapter, and for the purpose of performing such duties as are within the purview of the act of Congress entitled “An act to provide for the establishment of a national employment system and for cooperation with the states in the promotion of such system and for other purposes,” approved June 6, 1933, (48 Stat., 113; U.S.C., Title 29, section 49(c), as amended). The said Division shall be administered by a full-time salaried director. The Division shall be charged with the duty to cooperate with any official or agency of the United States having powers or duties under the provisions of the said act of Congress, as amended, and to do and perform all things necessary to secure to this State the benefits of the said act of Congress, as amended, in the promotion and maintenance of a system of public employment offices. The provisions of the said act of Congress, as amended, are hereby accepted by this State, in conformity with section 4 of said act, and this State will observe and comply with the requirements thereof. The Division is hereby designated and constituted the agency of this State for the purpose of said act. The Secretary is directed to appoint the head, other officers, and employees of the Employment Security Section.

History. Ex. Sess. 1936, c. 1, s. 12; 1941, c. 108, s. 11; 1947, c. 326, s. 24; 2011-401, s. 2.21.

Effect of Amendments.

Session Laws 2011-401, s. 2.21, effective November 1, 2011, in the first sentence, substituted “Employment Security Section of the Division of Employment Security, Department of Commerce” for “Employment Service Division of the Employment Security Commission,” in the third and fifth sentences, substituted “Division” for “Employment Security Commission,” and in the last sentence, substituted “Secretary” for “Commission,” “head” for “director,” and “Security Section” for “Service Division.”

§ 96-21. Duties concerning veterans and worker profiling.

The duties of the Employment Security Section include the following:

To cooperate with all State and federal agencies in attempting to secure suitable employment and fair treatment for military veterans and disabled veterans.
To establish and use a worker profiling system that complies with 42 U.S.C. § 503(a)(10) to identify claimants for benefits whom the Section must refer to reemployment services in accordance with that law.

History. 1921, c. 131, s. 3; C.S., s. 7312(c); Ex. Sess. 1936, c. 1, s. 12; 1979, c. 660, s. 26; 1993 (Reg. Sess., 1994), c. 680, s. 6; 2011-401, s. 2.22.

Effect of Amendments.

Session Laws 2011-401, s. 2.22, effective November 1, 2011, substituted “Employment Security Section” for “Employment Service Division” in the introductory paragraph; and substituted “Section” for “Division” in subdivision (2).

§ 96-22. Employment of and assistance to minors.

The Employment Security Section shall have jurisdiction over all matters contemplated in this Article pertaining to securing employment for all minors who avail themselves of the free employment service. The Employment Security Section shall have power to so conduct its affairs that at all times it shall be in harmony with laws relating to child labor and compulsory education; to aid in inducing minors over 16, who cannot or do not for various reasons attend day school, to undertake promising skilled employment; to aid in influencing minors who do not come within the purview of compulsory education laws, and who do not attend day school, to avail themselves of continuation or special courses in existing night schools, vocational schools, part-time schools, trade schools, business schools, library schools, university extension courses, etc., so as to become more skilled in such occupation or vocation to which they are respectively inclined or particularly adapted, including assisting those minors who are interested in securing vocational employment in agriculture and to aid in the development of good citizenship and in the study and development of vocational rehabilitation capabilities for handicapped minors.

History. 1921, c. 131, s. 4; C.S., s. 7312(d); Ex. Sess. 1936, c. 1, s. 12; 1979, c. 660, s. 27; 2011-401, s. 2.23.

Effect of Amendments.

Session Laws 2011-401, s. 2.23, effective November 1, 2011, in the first and second sentences, substituted “The Employment Security Section” for “The Employment Service Division.”

§ 96-23. [Repealed]

Repealed by Session Laws 1985, c. 197, s. 8.

Cross References.

As to job service information, see now G.S. 96-4(t)(2).

§ 96-24. Local offices; cooperation with United States service; financial aid from United States.

Agreement. — The Department of Commerce is authorized to enter into agreement with the governing authorities of any municipality, county, township, or school corporation in the State for such period of time as may be deemed desirable for the purpose of establishing and maintaining local free employment offices, and for the extension of vocational guidance in cooperation with the United States Employment Service, and under and by virtue of any such agreement as aforesaid to pay, from any funds appropriated by the State for the purposes of this Article, any part or the whole of the salaries, expenses or rent, maintenance, and equipment of offices and other expenses.
Location. — The Department of Commerce must take into consideration all of the following factors when determining the appropriate number and location of local offices:
1. Location of the population served.
2. Staff availability.
3. Proximity of local offices to each other.
4. Use of automation products to provide services.
5. Services and procedural efficiencies.
6. Any other factors the Division considers necessary in determining the appropriate number and location of local offices.

History. 1921, c. 131, s. 6; C.S., s. 7312(f); 1931, c. 312, s. 3; 1935, c. 106, s. 4; Ex. Sess. 1936, c. 1, s. 12; 2011-401, s. 2.24; 2013-2, s. 8; 2013-224, s. 19.

Effect of Amendments.

Session Laws 2011-401, s. 2.24, effective November 1, 2011, substituted “The Employment Security Section” for “The Employment Service Division.”

Session Laws 2013-2, s. 8, designated the existing provisions of this section as present subsection (a), and therein, added the subsection heading, and substituted “The Department of Commerce” for “The Employment Security Section”; and added subsection (b). For effective date and applicability, see Editor’s note.

§ 96-25. Acceptance and use of donations.

It shall be lawful for the Employment Security Section to receive, accept, and use, in the name of the people of the State, or any community or municipal corporation, as the donor may designate, by gift or devise, any moneys, buildings, or real estate for the purpose of extending the benefits of this Article and for the purpose of giving assistance to handicapped citizens through vocational rehabilitation.

History. 1921, c. 131, s. 7; C.S., s. 7312(g); 1931, c. 312, s. 3; Ex. Sess. 1936, c. 1, s. 12; 1979, c. 660, s. 28; 2011-401, s. 2.25.

Effect of Amendments.

Session Laws 2011-401, s. 2.25, effective November 1, 2011, substituted “Employment Security Section” for “Employment Service Division.”

§ 96-26. Cooperation of towns, townships, and counties with Division.

It shall be lawful for the governing authorities of any municipality, county, township, or school corporation in the State to enter into cooperative agreement with the Employment Security Section and to appropriate and expend the necessary money upon such conditions as may be approved by the Employment Security Section and to permit the use of public property for the joint establishment and maintenance of such offices as may be mutually agreed upon, and which will further the purpose of this Article.

History. 1921, c. 131, s. 8; C.S., s. 7312(h); 1931, c. 312, s. 3; 1935, c. 106, s. 5; Ex. Sess. 1936, c. 1, s. 12; 2011-401, s. 2.26.

Effect of Amendments.

Session Laws 2011-401, s. 2.26, effective November 1, 2011, twice substituted “Employment Security Section” for “Employment Service Division.”

§ 96-27. Method of handling employment service funds.

All federal funds received by this State under the Wagner-Peyser Act (48 Stat. 113; Title 29, U.S.C., section 49) as amended, and all State funds appropriated or made available to the Employment Security Section shall be paid into the Employment Security Administration Fund, and said moneys are hereby made available to the State employment service to be expended as provided in this Article and by said act of Congress. For the purpose of establishing and maintaining free public employment offices, the Section is authorized to enter into agreements with any political subdivision of this State or with any private, nonprofit organization, and as a part of any such agreement the Division may accept moneys, services, or quarters as a contribution to the Employment Security Administration Fund.

History. 1935, c. 106, s. 7; Ex. Sess. 1936, c. 1, s. 12; 1941, c. 108, s. 11; 1947, c. 598, s. 1; 2011-401, s. 2.27.

Editor’s Note.

Session Laws 2001-410, s. 3, effective September 15, 2001, indicated that it was rewriting G.S. 96-27 (b). However, Session Laws 2001-413, s. 8.2(a), effective the same date, amended this reference to indicate that G.S. 97-26 (b) was being amended.

Effect of Amendments.

Session Laws 2011-401, s. 2.27, effective November 1, 2011, substituted “Employment Security Section” for “Employment Service Division,” “the Section” for “said Division,” and “Division” for “Commission.”

§ 96-28. [Repealed]

Repealed by Session Laws 1951, c. 332, s. 17.

§ 96-29. Openings listed by State agencies.

Every State agency shall list with the Division of Employment Security every job opening occurring within the agency which opening the agency wishes filled and which will not be filled solely by promotion or transfer from within the existing State government work force. The listing shall include a brief description of the duties and salary range and shall be filed with the Division within 30 days after the occurrence of the opening. The State agency may not fill the job opening for at least 21 days after the listing has been filed with the Division. The listing agency shall report to the Division the filling of any listed opening within 15 days after the opening has been filled.

The Division may act to waive the 21-day listing period for job openings in job classifications declared to be in short supply by the State Human Resources Commission, upon the request of a State agency, if the 21-day listing requirement for these classifications hinders the agency in providing essential services.

History. 1973, c. 715, s. 1; c. 1341; 1985, c. 358; 1989, c. 583, s. 16; 1991, c. 357, s. 1; 2011-401, s. 2.28; 2013-382, s. 9.1(c).

Editor’s Note.

Session Laws 2013-382, s. 9.1(b), provides: “The following entities and positions created by Chapter 126 of the General Statutes are hereby renamed by this act:

“(1) The State Personnel Commission is renamed the ‘North Carolina Human Resources Commission.’

“(2) The Office of State Personnel is renamed the ‘North Carolina Office of State Human Resources.’

“(3) The State Personnel Director is renamed the ‘Director of the North Carolina Office of State Human Resources.’ ”

Session Laws 2013-382, s. 9.1.(c), provides in part: “Modification of References. — The Revisor of Statutes shall delete any references in the General Statutes to the State Personnel Act, State Personnel Commission, the State Personnel Director, and the Office of State Personnel (or any derivatives thereof) and substitute references to the North Carolina Human Resources Act, the State Human Resources Commission, the Director of the Office of State Human Resources, and the Office of Human Resources (or the appropriate derivative thereof) to effectuate the renaming set forth in this section wherever conforming changes are necessary.”

Session Laws 2013-382, s. 9.2, provides: “No action or proceeding pending on the effective date of this section, brought by or against the State Personnel Commission, the Director of the Office of State Personnel, or the Office of State Personnel, shall be affected by any provision of this section, but the same may be prosecuted or defended in the new name of the Commission, Director, and Office. In these actions and proceedings, the renamed Commission, Director, or Office shall be substituted as a party upon proper application to the courts or other public bodies.”

Session Laws 2013-382, s. 9.3, provides: “Any business or other matter undertaken or commanded by the former State Personnel Commission, State Personnel Director, or Office of State Personnel regarding any State program, office, or contract or pertaining to or connected with their respective functions, powers, obligations, and duties that are pending on the date this act becomes effective may be conducted and completed by the Commission, Director, or Office in the same manner and under the same terms and conditions and with the same effect as if conducted and completed by the formerly named commission, director, or office.”

Effect of Amendments.

Session Laws 2011-401, s. 2.28, effective November 1, 2011, substituted “Division” for “Commission” throughout the section; and substituted “Division of Employment Security” for “Employment Security Commission of North Carolina” at the beginning.

Session Laws 2013-382, s. 9.1(c), effective August 21, 2013, substituted “State Human Resources Commission‘ for “State Personnel Commission‘ in the last paragraph.

Legal Periodicals.

For survey of 1979 administrative law, see 58 N.C.L. Rev. 1185 (1980).

Article 4. Labor and Economic Analysis Division: Job Training, Education, and Placement Information Management.

§ 96-30. Findings and purpose.

The General Assembly finds it in the best interests of this State that the establishment, maintenance, and funding of State job training, education, and placement programs be based on current, comprehensive information on the effectiveness of these programs in securing employment for North Carolina citizens and providing a well-trained workforce for business and industry in this State. To this end, it is the purpose of this Article to require the establishment of an information system that maintains up-to-date job-related information on current and former participants in State job training and education programs.

History. 1995, c. 507, s. 25.6(a).

Editor’s Note.

Session Laws 2012-134, s. 5(a), effective June 29, 2012, rewrote the title of Article 4 of Chapter 96 by adding “Labor and Economic Analysis Division” preceding “Job Training.”

§ 96-31. Definitions.

As used in this Article, unless the context clearly requires otherwise, the term:

“CFS” means the common follow-up information management system developed by the Labor and Economic Analysis Division under this Article.
Repealed by Session Laws 2012-134, s. 5(b), effective June 29, 2012.
Repealed by Session Laws 2000, c. 140, s. 93.1(d).
“State job training, education, and placement program” or “State-funded program” means a program operated by a State or local government agency or entity and supported in whole or in part by State or federal funds, that provides job training and education or job placement services to program participants. The term does not include on-the-job training provided to current employees of the agency or entity for the purposes of professional development.

History. 1995, c. 507, s. 25.6(a); 2000-140, s. 93.1(d); 2011-401, s. 2.29; 2012-134, s. 5(b).

Effect of Amendments.

Session Laws 2011-401, s. 2.29, effective November 1, 2011, substituted “DES” for “the Employment Security Commission of North Carolina as authorized” in subdivision (1); and rewrote subdivision (2), which formerly read: “’ESC’ means the Employment Security Commission of North Carolina.”

Session Laws 2012-134, s. 5(b), effective June 29, 2012, in subdivision (1), substituted “the Labor and Economic Analysis Division” for “DES”; and deleted subdivision (2), which read: “ ‘DES’ means the Division of Employment Security.”

§ 96-32. Common follow-up information management system created.

The Department of Commerce, Labor and Economic Analysis Division (LEAD), shall develop, implement, and maintain a common follow-up information management system for tracking the performance measures related to current and former participants in State job training, education, and placement programs. The system shall provide for the automated collection, organization, dissemination, and analysis of data obtained from State-funded programs that provide job training and education and job placement services to program participants. In developing the system, LEAD shall ensure that data and information collected from State agencies is confidential, not open for general public inspection, and maintained and disseminated in a manner that protects the identity of individual persons from general public disclosure.
LEAD shall adopt procedures and guidelines for the development and implementation of the CFS authorized under this section.
Based on data collected under the CFS, the LEAD shall evaluate the effectiveness of job training, education, and placement programs to determine if specific program goals and objectives are attained, to determine placement and completion rates for each program, and to make recommendations regarding the continuation of State funding for programs evaluated.
The LEAD shall do the following:
1. Collaborate with the NCWorks Commission to develop common performance measures across workforce programs in the Department of Commerce, the Department of Health and Human Services, the Community Colleges System Office, the Department of Administration, and the Department of Public Instruction that can be tracked through the CFS in order to assess and report on workforce development program performance.
2. Determine whether other workforce development programs not participating in CFS should be required to report information and data.
3. Provide information from CFS to reporting agencies annually.
4. Provide training for participating agencies to ensure data quality and consistency.
5. Develop common data definitions that are shared across agencies contributing information to the system.
The Department of Commerce shall ensure that funding and staff resources for the CFS are not diverted to other programs or systems managed by the Department of Commerce.

History. 1995, c. 507, s. 25.6(a); 2000-140, s. 93.1(e); 2001-424, ss. 12.2(b), 20.17(a); 2011-401, s. 2.30; 2012-131, s. 4(a); 2012-134, s. 5(c); 2013-391, s. 8; 2015-241, s. 15.11(d).

Editor’s Note.

This section was amended by Session Laws 2012-131, s. 4(a), and Session Laws 2012-134, s. 5(c), in the coded bill drafting format provided by G.S. 120-20.1 . Neither amendment accounted for the changes made to this section by the other. The section has been set out in the form above at the direction of the Revisor of Statutes.

Session Laws 2012-131, s. 4(b), provides: “Beginning March 15, 2013, the Department of Commerce shall report quarterly to the Joint Legislative Workforce Development System Reform Oversight Committee on its efforts to strengthen the common follow-up information management system, with a final report due by December 15, 2014.”

Session Laws 2013-360, s. 15.8(a), (b), provides: “(a) The Department of Commerce, Labor and Economic Analysis Division (LEAD), shall conduct a continuation review of the Common Follow-Up Information Management System (hereinafter ‘Common Follow-Up’) created pursuant to G.S. 96-32 . LEAD shall report the preliminary findings of the continuation review to the Fiscal Research Division no later than December 1, 2013, and shall submit a final report to the Joint Legislative Commission on Governmental Operations, the Senate Appropriations Committee on Natural and Economic Resources, and the House Appropriations Subcommittee on Natural and Economic Resources no later than March 1, 2014.

“(b) The continuation review report required by subsection (a) of this section shall include the following information:

“(1) A description of Common Follow-Up and the goals of the program.

“(2) The statutory objectives for Common Follow-Up and the problem or need addressed.

“(3) The extent to which the objectives of Common Follow-Up have been achieved.

“(4) Any functions or programs of Common Follow-Up performed without specific statutory authority.

“(5) The performance measures for Common Follow-Up and the process by which the performance measures determine efficiency and effectiveness.

“(6) Recommendations for statutory, budgetary, or administrative changes needed to improve efficiency and effectiveness of services delivered to the public.

“(7) The consequences of discontinuing funding.

“(8) Recommendations for improving services or reducing costs or duplication.

“(9) The identification of policy issues that should be brought to the attention of the General Assembly.”

Session Laws 2013-360, s. 1.1, provides: “This act shall be known as the ‘Current Operations and Capital Improvements Appropriations Act of 2013.’ ”

Session Laws 2013-360, s. 38.2, provides: “Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2013-2015 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2013-2015 fiscal biennium.”

Session Laws 2013-360, s. 38.5, is a severability clause.

Session Laws 2013-391, s. 9, provides in part: “Changes made by this act to unemployment benefits apply to claims for benefits filed on or after June 30, 2013. Changes made by this act to the determination and application of the contribution rate apply to contributions payable for calendar quarters beginning on or after January 1, 2014.”

Session Laws 2015-241, s. 1.1, provides: “This act shall be known as ‘The Current Operations and Capital Improvements Appropriations Act of 2015.’ ”

Session Laws 2015-241, s. 33.6, is a severability clause.

Effect of Amendments.

Session Laws 2011-401, s. 2.30, effective November 1, 2011, substituted “DES” for “ESC” throughout the section; and substituted “DES” for “Employment Security Commission of North Carolina” in the first sentence of subsection (a).

Session Laws 2012-131, s. 4(a), effective July 1, 2012, in the first sentence of subsection (a), substituted “Department of Commerce, Division of Labor and Economic Analysis (DLEA)” for “DES” and substituted “performance measures related to” for “employment status of”; in subsections (a), (b), and (c), replaced the remaining occurrences of “DES” with “DLEA”; and added subsections (d) and (e).

Session Laws 2012-134, s. 5(c), effective June 29, 2012, in subsection (a), replaced the first instance of “DES” with “Labor and Economic Analysis Division” and replaced the second instance of “DES” with “Division”; and in subsections (b) and (c), replaced “DES” with “Labor and Economic Analysis Division.”

Session Laws 2013-391, s. 8, effective July 1, 2013, in subsection (a), substituted “Labor and Economic Analysis Division (LEAD)” for “Division of Labor and Economic Analysis (Labor and Economic Analysis Division) (DLEA)” and “LEAD” for “the Division, DLEA”; substituted “LEAD” for “The Labor and Economic Analysis Division, DLEA” in subsections (b) and (c); and substituted “LEAD” for “DLEA” in subsection (d). For applicability, see Editor’s note.

Session Laws 2015-241, s. 15.11(d), effective July 1, 2015, substituted “NCWorks Commission” for “Commission on Workforce Development” in subdivision (d)(1).

§ 96-33. State agencies required to provide information and data.

Every State agency and local government agency or entity that receives State or federal funds for the direct or indirect support of State job training, education, and placement programs shall provide to the Labor and Economic Analysis Division all data and information available to or within the agency or entity’s possession requested by the Division for input into the common follow-up information management system authorized under this Article and for such other official functions as are performed by the Division. The Division of Employment Security shall provide all information in its possession and control requested by the Division in order for the Division to accomplish the purpose set forth in this Article and such other official functions performed by it.
(a1) Local school administrative units shall not be required to report directly to the Labor and Economic Analysis Division. The Department of Public Instruction shall be responsible for the collection of information from local school administrative units for input into the common follow-up information management system authorized under this Article and for such other official functions as are performed by the Division.
Each agency or entity required to report information and data to the Labor and Economic Analysis Division under this Article shall maintain true and accurate records of the information and data requested by the Division. The records shall be open to the Division for inspection and copying at reasonable times and as often as necessary. Each agency or entity shall further provide, upon request by the Division, sworn or unsworn reports with respect to persons employed or trained by the agency or entity, as deemed necessary by the Division to carry out the purposes of this Article. Information obtained by the Division from the agency, entity, or the Division of Employment Security shall be held by the Division as confidential, subject to the State and federal laws governing treatment of such information, and shall not be published or open to public inspection other than in a manner that protects the identity of individual persons and employers.

History. 1995, c. 507, s. 25.6(a); 2011-401, s. 2.31; 2012-134, s. 5(d); 2013-226, s. 7.

Editor’s Note.

Session Laws 2013-226, s. 12, made subsection (a1), as added by Session Laws 2013-226, s. 7, applicable beginning with the 2013-2014 school year.

Effect of Amendments.

Session Laws 2011-401, s. 2.31, effective November 1, 2011, substituted “DES” for “ESC” throughout the section; and substituted the first occurrence of “DES” for “Employment Security Commission of North Carolina” in subsection (a).

Session Laws 2012-134, s. 5(d), effective June 29, 2012 in subsection (a), in the first sentence substituted “Labor and Economic Analysis Division” for the first occurrence and “Division” for the second occurrence of “DES” and added “and for such other official functions as are performed by the Division” at the end and added the second sentence; in subsection (b), substituted “Labor and Economic Analysis Division” for the first occurrence and “Division” for the remaining occurrences of “DES” throughout, and in the third sentence substituted “agency, entity, or the Division of Employment Security” for “agency or entity” and inserted “subject to the State and federal laws governing treatment of such information” and made related changes.

Session Laws 2013-226, s. 7, effective July 3, 2013, added subsection (a1). For applicability, see Editor’s note.

§ 96-34. Prohibitions on use of information collected.

Data and information reported, collected, maintained, disseminated, and analyzed may not be used by any State or local government agency or entity for purposes of making personal contacts with current or former students or their employers or trainers.

History. 1995, c. 507, s. 25.6(a).

§ 96-35. Reports on common follow-up system activities.

The Secretary shall present annually by May 1 to the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources, and the Joint Legislative Economic Development and Global Engagement Oversight Committee and to the Governor a report of CFS activities for the preceding calendar year. The report shall include information on and evaluation of job training, education, and placement programs for which data was reported by State and local agencies subject to this Article. Evaluation of the programs shall be on the basis of fiscal year data.
The Secretary shall report to the Governor and to the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources, and the Joint Legislative Economic Development and Global Engagement Oversight Committee upon the convening of each biennial session, its evaluation of and recommendations regarding job training, education, and placement programs for which data was provided to the CFS.

History. 1995, c. 507, s. 25.6(a); 2000-140, s. 93.1(a); 2001-424, ss. 12.2(b), 20.17(b); 2011-401, s. 2.32; 2012-134, s. 5(e); 2017-57, s. 14.1(q); 2018-142, s. 13(a).

Effect of Amendments.

Session Laws 2011-401, s. 2.32, effective November 1, 2011, substituted “DES” for “Employment Security Commission of North Carolina” in subsection (a; and substituted “DES” for “ESC” in subsection (b).

Session Laws 2012-134, s. 5(e), effective June 29, 2012, substituted “Secretary” for “DES” in subsections (a) and (b).

Session Laws 2017-57, s. 14.1(q), effective July 1, 2017, substituted “the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources, and the Joint Legislative Economic Development and Global Engagement Oversight Committee” for “General Assembly” in subsections (a) and (b).

Session Laws 2018-142, s. 13(a), effective December 14, 2018, substituted “the chairs” for “the the chairs” throughout the section.

§§ 96-36 through 96-39.

Reserved for future codification purposes.

Article 5. Miscellaneous Provisions.

§ 5. Unemployment insurance program integrity; reporting.

Findings and Purpose. — The General Assembly finds that program integrity measures have been implemented by the Division to maximize the efficiency and effectiveness of the State’s unemployment insurance program. The purpose of this section is to assure that these efforts shall include the rigorous and consistent use of business intelligence and data analytics for enhanced unemployment insurance program integrity.
Required Activities. — To achieve the program integrity enhancements required by this section, at a minimum, the Division shall do all of the following:
1. Prioritize Division program integrity efforts that maximize utilization of and information sharing with or between these projects and initiatives in order to prevent, detect, and reduce unemployment insurance fraud, improper payments, overpayments, and other programmatic irregularities:
  1. Government Data Analytics Center (GDAC);
  2. Southeast Consortium Unemployment Insurance Benefits Initiative (SCUBI); and
  3. Any other program integrity capabilities identified by the Division.
2. Coordinate efforts with the Office of Information Technology Services to ensure that the Division identifies and integrates into its operations and procedures the most effective and accurate processes and scalable tools available to prevent payment of fraudulent, suspicious, or irregular claims.
3. Coordinate efforts with the Department of Revenue to enhance alerts indicating circumvention of the payment of unemployment insurance taxes.
4. Coordinate efforts with the Department of Health and Human Services to facilitate claims cross-matching and other appropriate steps to enhance program integrity.
5. Coordinate efforts with the Office of State Controller to facilitate cross-matching and other appropriate steps using BEACON (Building Enterprise Access for North Carolina’s Core Operation Needs).
Quarterly Reporting. — Beginning October 1, 2015, and then quarterly thereafter, the Division shall make detailed written progress reports on its efforts to carry out all of the directives in this section to the chairs of the Joint Legislative Oversight Committee on Unemployment Insurance, the chairs of the Joint Legislative Oversight Committee on Information Technology, the chairs of the House Appropriations Committee on Agriculture and Natural and Economic Resources, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the Fiscal Research Division. At a minimum, the quarterly report shall include all of the following:
1. Metrics regarding unemployment benefits overpayments, improper payments, and fraudulent payments, in terms of both percentage and dollar amount.
2. Information on fraud perpetrator metrics, in terms of percent and value, by type (whether by employer or claimant), and activity subcategory, such as employee misclassification, unemployment insurance tax rate manipulation (SUTA dumping), fictitious employers, fictitious claimants, deceased claimants, incarcerated claimants, work and earn, and similar activities.
3. Quantified investigation activity, including the following:
  1. Type and subcategory of investigations.
  2. Number of alerts received during the quarter.
  3. Number of alerts investigated during the quarter.
  4. Number of false positives.
  5. Number of dispositions entered.
Annual Reporting. — Beginning January 1, 2016, the Division shall make an annual report to the chairs of the Joint Legislative Oversight Committee on Unemployment Insurance, the chairs of the Joint Legislative Oversight Committee on Information Technology, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, the chairs of the House Appropriations Committee on Agriculture and Natural and Economic Resources, and the Fiscal Research Division on its efforts to carry out all of the directives in this section. At a minimum, each annual report shall include all of the following information:
1. The methodology used by the Division to determine analytic priorities for unemployment insurance program integrity investigation.
2. A report on the State’s Benefit Accuracy Measurement (BAM) as required by the U.S. Department of Labor, including how North Carolina’s BAM has changed over time and how its current rate compares to other states. The report shall also include an update on BAM methodology and information regarding how it might be modified.
3. An explanation of the Division’s unemployment insurance program integrity activities in coordination with the Office of Information Technology Services, the Department of Health and Human Services, the Department of Revenue, and the Office of State Controller as required by subsection (b) of this section.
4. Division workflows, both intra-agency and interagency, to address process problems and program integrity issues, including identification of tools, resources, and plans for continued improvement of unemployment insurance program integrity efforts.
5. An analysis of the information required by subsection (c) of this section, along with an explanation of how that information will be used to augment the State’s business intelligence and data analytics capabilities to prevent, detect, and reduce unemployment insurance fraud, improper payments, overpayments, and other programmatic irregularities.

History. 2015-238, s. 1; 2017-57, s. 14.1(v).

Editor’s Note.

Session Laws 2015-238, s. 5, made this Article 5 effective September 10, 2015.

Session Laws 2017-57, s. 1.1, provides: “This act shall be known as the ‘Current Operations Appropriations Act of 2017.’ ”

Session Laws 2017-57, s. 39.6, is a severability clause.

Effect of Amendments.

Session Laws 2017-57, s. 14.1(v), effective July 1, 2017, in subsection (c), substituted “House Appropriations Committee on Agriculture and” for “House Appropriations Subcommittee on” and “Senate Appropriations Committee on Agriculture, Natural” for “Senate Appropriations Committee on Natural”; substituted “chairs of the Joint Legislative Oversight Committee on Unemployment Insurance, the chairs of the Joint Legislative Oversight Committee on Information Technology, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, the chairs of the House Appropriations Committee on Agriculture and Natural and Economic Resources, and the Fiscal Research Division” for “General Assembly” in subsection (d).