Changes to North Carolina’s Unemployment Insurance Laws are Good News for Terminated Workers

A frequently litigated North Carolina employment issue is the question of whether a terminated employee should be disqualified from unemployment compensation benefits due to misconduct.  North Carolina employment law recently saw statutory changes in this important area that arguably increase the burden that an employer must carry in order to deny a terminated employee unemployment compensation benefits on this ground.

Under North Carolina law, a terminated employee is disqualified from receiving unemployment compensation if the employee was terminated due to misconduct connected with the employee's work. Employee misconduct, sufficient to disqualify an employee from benefits, was previously defined as intentional misconduct that shows a disregard of the employee's job responsibilities or carelessness so extreme as to manifest an equal level of disregard by the employee.  This important disqualifying definition was found in North Carolina General Statute 96-14(2).

In its 2011 session, the North Carolina General Assembly enacted amendments to this statute through Senate Bill 828.  In so doing, the General Assembly rewrote the statute’s definition of the phrase, “misconduct connected with the work.”  Under the amended definition, which became effective November 1, 2012, the pivotal phrase now means:

conduct evincing a willful or wanton disregard of the employer's interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of an employee or has explained orally or in writing to an employee or 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.

While this newly implemented definition, on an initial reading, may not appear to significantly change its predecessor, the new language goes to some additional length to underscore the level of employee culpability needed to preclude benefits.  The amended definition, for example, speaks of “willful or wanton disregard,” as opposed to a mere disregard of employer interest or standards.  Similarly, the new definition now refers to “intentional and substantial disregard” in defining the previously unspecified degree of employee carelessness or negligence that can support disqualification. 

The General Assembly went on to amend a portion of the same statute, which previously listed a number of non-exclusive examples of employee misconduct that constitute a sufficient level of misconduct.  The amended statute now states that the examples listed constitute prima facie evidence of misconduct, which may be rebutted by the employee.  Previously, the statute made no provision for employee rebuttal.

Finally, the General Assembly added to the list of potential disqualifying grounds the following:

Refusing to perform reasonably assigned work tasks or failing to adequately perform employment duties as evidenced by no fewer than three written reprimands in the 12 months immediately preceding the employee's termination.

The first portion of this newly added basis for disqualification is nothing new, as insubordination has long been considered a sufficient ground for denying benefits.  The additional language, however, appears significant because of the level of employee fault that must be proven in order to disqualify an employee from benefits due to inadequate work performance.  Under the added language, failure to perform work duties adequately is grounds for denial if evidenced by at least three written reprimands during the 12 months before termination.

Taken as a whole, the above changes to North Carolina General Statute 96-14(2) appear to raise the bar for employers wishing to deny unemployment compensation benefits to terminated employees.  The amendments to the statute evidence that a heightened level of employee fault will be required and that, in the case of inadequate work performance, multiple written warnings will be required in order to substantiate the employer’s claim of poor performance.