With North Carolina owing over $2.5 billion to the federal government, Gov. Pat McCrory signed a bill reforming the state’s unemployment insurance system shortly after he took office in January. The law applies to new unemployment claims filed on or after July 1, 2013.
The law lowers the maximum weekly unemployment benefit to $350. Currently, it’s $535 and varies from year to year, based on a statutory formula. The new reforms base benefits on the claimant’s average wage during the last two quarters of a base period.
The law also significantly reduces the number of weeks that the jobless may receive benefits. The new law sets a maximum of 20 weeks, down from the current 26.
However, that may change depending on the state’s unemployment rate. For example, when the unemployment rate hits 5.5% or lower, benefits last just 12 weeks. The duration of benefits grows by one week for each 0.5% increase in the unemployment rate.
The maximum duration of 20 weeks kicks in only if the unemployment rate is greater than 9.0%.
The unemployment law eliminates “substantial fault” as a reason to partially disqualify claimants from receiving unemployment benefits. Observers believe the “substantial fault” elimination will lead to greater emphasis on workplace “misconduct” as the principal employer defense.
The reform law increases the tax contribution rates employers pay—an increase of 0.06%. Employees may no longer use a health exclusion—a provision that allowed workers who left a job because of the disability or poor health of the claimant’s minor child, parent or immediate family member.
The new law also redefines “suitable work.” Claimants who have received 10 weeks of unemployment benefit payments must accept any “suitable work,” now defined as any employment offer paying at least 120% of a claimant’s weekly benefit amount. Failure to accept suitable work leads to disqualification from unemployment benefits.