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N.C. Allows Employer Support Payments on Top of Unemployment Benefits

    Client Alerts
  • April 30, 2020

The coronavirus pandemic has proven catastrophic to the economy and many households across the globe. Ripple effects from the virus have caused significant worry and decreased employee morale as many employers have had to furlough employees to sustain their businesses. These furloughs have resulted in record numbers of unemployment filings over the past month. To ease some of the anxieties across North Carolina, Governor Roy Cooper issued Executive Order No. 118 mandating that certain unemployment insurance application requirements be waived during this state of emergency, such as the one-week waiting period and the work search requirement.

On April 20, Governor Cooper issued Executive Order No. 134 to further combat the financial impacts of COVID-19. This order allows temporarily furloughed employees to receive certain employer payments under the reasoning that the payments are for services from prior weeks rather than payment for services currently rendered. Employees receiving these payments can still be considered unemployed, making them eligible for unemployment benefits.

The order authorizes employers to make “support payments” defined as payments that:

  1. Are voluntarily made by an employer to an employee in response to furloughing the employee.
  2. Are for services rendered by the employee in the past.
  3. Hold no obligation for the employee to repay.
  4. Are provided without obligation for the employee to perform or not perform any act in connection with the individual’s status as an employee.
  5. Are made pursuant to a “COVID-19 Support Payment Plan” provided to the Division of Employment Security (DES) using the division’s form.

Employers electing to provide these support payments to employees must submit their payment plan to DES, but these plans need not be approved before implementing. The payment plan must:

  1. Detail the anticipated length of the furlough.
  2. State the amount of the COVID-19 support payments.
  3. Identify the names of the employees receiving the COVID-19 support payments.
  4. Include a promise that the employer is not making the COVID-19 support payments as a form of remuneration for the employees’ performance of personal services during the furlough.
  5. Include a promise that employees are not required to return or repay the COVID-19 support payments.

Even though these payment plans are required to be submitted with a certain level of detail, DES does allow employers to retain the flexibility to stop payments before the scheduled end of the plan. Employees who accept the payments are also permitted to retain the flexibility to accept other employment after receiving the payments. The text of Executive Order No. 134, effective immediately and remaining in effect until further notice, can be found here.

You can find our additional COVID-19 alerts here