On Tuesday, Governor McCrory signed into law sweeping changes to North Carolina's unemployment benefits system. The legislation resulted from a desire by the Republican controlled General Assembly to accelerate repayment of $2.5 billion borrowed from the federal government to fund extended unemployment benefits over the past four years. It includes a small increase in unemployment premiums for businesses in return for a slowdown in otherwise anticipated increases in FUTA rates required to repay the debt. The law projects final repayment in 2016 as opposed to 2019 without the changes.

The most drastic changes in the legislation involve benefits paid to unemployed workers. The maximum weekly benefit will fall from $535 to $350. Unemployment benefits will expire after a maximum of 20 weeks as opposed to the current 26 weeks. The legislation ends unemployment eligibility for (non-charging) claims based on worker illness or family issues.

The new law requires a one week waiting period before unemployment claims may be made and also significantly adjusts the grounds for disqualification from receiving benefits. These changes continue beyond repayment of the federal debt and should result in increased standards for unemployment eligibility. North Carolina employers have complained for years that the current system unfairly awards benefits to employees terminated for serious performance or conduct issues.

The new law takes effect July 1 and affects claimants who qualified for benefits prior to the effective date of the legislation.