Client Bulletin #522
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As Constangy reported earlier this week, the federal Trade Adjustment Assistance Extension Act of 2011 requires all states to adopt measures designed to ensure that employers respond to unemployment claims promptly and "adequately." The following is a summary of North Carolina's rule, adopted in response.
Please note that the changes may require you to provide more information to the N.C. Department of Employment Security than you have done in the past, even when you do not intend to contest unemployment claims.
Employers in North Carolina are now required to respond to the "Request for Separation Information from Employer" form (500AB) within 14 calendar days. The 14-day period runs from the date that the form is sent, not the date that it is received by the employer.
To be "adequate," the employer's response must provide the "who, what, where, why and how" of the termination – in short, "sufficient facts to enable the DES to make a correct determination under the law without having to contact the employer to obtain any additional information."
If the DES determines that the employer has a "pattern" of non-compliance (that is, untimely or inadequate responses), the employer's account "may not be relieved of charges for benefits erroneously paid to the individual." This could affect the employer's UI rating.
The North Carolina rule defines "pattern" as the lesser of the following during the prior year:
*Two or more untimely or inadequate responses, or
*Untimely or inadequate responses in more than 2 percent of the total requests sent to the employer or its agent.
As noted in our earlier Client Bulletin (see first link, above), employers who use third-party administrators to handle their unemployment claims will need to ensure that the TPAs are aware of the new requirements and are responding to claims in a timely manner. Some TPAs have been untimely in the past, even to the point of missing scheduled hearings.
The new requirements may not be too significant as applied to employees whose claims are being contested. However, many employers who had elected not to contest unemployment claims were accustomed to providing minimal information to the DES to avoid disqualifying the employee. Now, the safest course in that event may be to provide the details in a timely manner to the DES while noting that they do not contest the claim. At that point, the DES would have timely and "adequate" information but of course would make the decision as to whether the employee could receive benefits. It is possible that, in some cases, the details will result in a disqualification regardless of the employer's desire. It is hoped that the DES will provide more specific guidance in the future, or that the General Assembly will enact a statute that complies with the TAAEA but allows sufficient flexibility for employers and employees.
If you would like to discuss the impact of North Carolina's unemployment insurance integrity provisions on your company, please contact any attorney in our Winston-Salem or Asheville offices, or the Constangy attorney of your choice.
About Constangy, Brooks
& Smith, LLP
Constangy, Brooks & Smith, LLP has counseled employers on labor and employment law matters, exclusively, since 1946. A "Go To" Law Firm in Corporate Counsel and Fortune Magazine, it represents Fortune 500 corporations and small companies across the country. Its attorneys are consistently rated as top lawyers in their practice areas by sources such as Chambers USA, Martindale-Hubbell, and Top One Hundred Labor Attorneys in the United States, and the firm is top-ranked by the U.S. News & World Report/Best Lawyers Best Law Firms survey. More than 140 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Alabama, California, Florida, Georgia, Illinois, Massachusetts, Missouri, New Jersey, North Carolina, South Carolina, Tennessee, Texas, Virginia and Wisconsin. For more information, visit www.constangy.com.