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Sweeping Reform Impacts Defense of Unemployment Claims

Sweeping Reform Impacts Defense of Unemployment Claims

The Inside Perspective
(May 6, 2013)

North Carolina owes the federal government more than $2.5 billion for benefits paid out on prior unemployment compensation claims. Determined to relieve the debt, the General Assembly passed House Bill 4, a.k.a. "An Act to Address the Unemployment Insurance Debt and to Focus North Carolina’s Unemployment Insurance Program on Putting Claimants Back to Work."  The law was signed by Governor McCrory on April 30, 2013, and is effective for any claim for unemployment compensation filed on or after July 1, 2013.

What Does This Mean?

  • The maximum weekly benefit has been reduced (to $350) and the maximum duration has been reduced (from 12-20 weeks, depending on the State unemployment rate), but tax rates for many employers will go up.
  • The widely used "substantial fault" defense has been eliminated.
  • The recently expanded "misconduct" defense is still available for defending against claims filed by employees discharged for cause. An employee disqualified due to misconduct recovers no unemployment compensation.
  • To prove "misconduct" an employer must prove that the former employee deliberately violated or disregarded standards of behavior that it had the right to expect or had explained orally or in writing to an employee. Carelessness, if severe or frequent, can sometimes be misconduct.
  • Examples of misconduct included in the statute are:
    • Violation of a written alcohol or drug policy
    • Termination as a result of arrest or conviction of a criminal offense involving violence, sex crimes or illegal drugs (if the offense is connected to work or violates a reasonable work rule or policy)
    • Any physical violence whatsoever
    • Inappropriate comments or behavior relating to a federally protected characteristic (e.g. race, gender, national origin) that creates a hostile work environment
    • Theft
    • Forging or falsifying documents (including application)
    • Violation of a written absenteeism policy
  • "Misconduct" also includes this catch-all: 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.

TIP: Careful attention to written work expectations and standards of conduct along with consistent use of written warnings is key to the defense of unemployment compensation claims.

Julianna Theall Earp
T (336) 378-5256
F (336) 378-5400
Associated Attorneys

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