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Employers Beware: Challenging Unemployment Claims and Reporting Under the Revised North Carolina Employment Security Law

Posted | by Rendi L. Mann-Stadt Rendi L. Mann-Stadt

Employers routinely process unemployment benefit claim notices and frequently contest awards of unemployment benefits to former employees during Department of Employment Security ("DES") hearings. Since the 2013 revisions to the North Carolina Employment Security Law ("Law"), however, employers must now become familiar with not only the new categories for conduct that will disqualify a claimant from obtaining benefits and avoid charges to the employer's account, but also new reporting standards.

New Disqualification Category

The Law eliminates the "substantial fault" category for disqualification, and the "misconduct" category is now the only conduct-based reason for disqualifying a claimant from receiving unemployment benefits. The new category encompasses conduct that shows that an employee either willfully or wantonly disregarded the employer's interest, or engaged in negligent or careless conduct or conduct 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." The Law provides 11 examples of misconduct that range from certain arrests and convictions, to physical violence against a co-worker, to violation of the employer's written absenteeism policy. Employers should familiarize themselves with the new category and the examples contained in the Law to understand the facts and documentation necessary to substantiate the reason for separation and to challenge a charge to the employer's account.

Limited Non-Charging Reasons

In addition to revising the basis for disqualification from benefits, the Law eliminates all but two of the specific "non-charging" reasons for which an employee could voluntarily leave work and still qualify for benefits. These reasons are called "non-charging" because the employee will qualify for benefits, but the employer's account will not be charged. The only two remaining non-charging reasons are domestic violence and military spouse relocation. The Law eliminates the prior disability, illness, and family hardship reasons.

Adequate and Timely Reporting

A new provision in the Law requires employers to "timely" and "adequately" respond to written requests for information from DES, specifically the "Request for Separation Information from Employer" contained in Form NCUI 500AB. To avoid penalties, employers must respond to Form NCUI 500AB within 14 days after the date DES issues the request and must provide "adequate" information in response. DES defines adequate information as facts that are sufficient to allow DES to make a correct initial determination under the Law.

If an employer's account is charged erroneously because the employer did not respond timely or adequately to Form NCUI 500AB, or the employer is determined to have a pattern of failing to respond timely or adequately to any written request for separation information, the employer will be penalized by not being able to have its account relieved of charges for benefits erroneously paid.

Employers must read and heed these new changes to successfully minimize charges to an employer's account.

Resources

Employers may enroll for electronic notice access and response through the DES website https://www.ncesc1.com/business/. The website also contains guidance explaining the reporting requirements and possible penalties.

This post is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this post without obtaining the advice of an attorney. If you have questions concerning this post, please contact Rendi Mann-Stadt at rms@wardandsmith.com.

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