Pre-Employ Blog

NC bill cuts unemployment benefits

Posted by admin on February 26, 2013

With an unemployment rate that is still toeing the line around 8 percent, U.S. employers are having to pay out for jobless benefits in increased numbers. That's especially true for firms in North Carolina, home to the nation's fifth-highest unemployment rate. Recent legislation enacted by the state's governor might have cut the maximum amount in benefits jobless workers can claim, but it will come at a cost to local business.

Aimed at reducing debt
Governor Pat McCrory, a Republican, recently signed a bill into law that would cut benefits for the unemployed by one-third, as well as decrease the amount of time that they can collect aid from the state's unemployment insurance pool.

McCrory said unemployment insurance reform would enable North Carolina to start paying down a $2.5 billion debt it owes to the federal government at a quicker pace.

The law, which takes effect July 1, would cut the maximum weekly benefits extended to the unemployed to $350 from $535. Additionally, it would limit the time period in which the jobless can receive benefits; under the legislation, the unemployed could claim benefits for 12 to 20 weeks instead of the current 26 weeks.

"This bipartisan solution will protect our small businesses from continued over-taxation, ensure our citizens' unemployment safety net is secure and financially sound for future generations, and help provide an economic climate that allows job creators to start hiring again," McCrory said in a statement.

While McCrory said the legislation will help business in the state, the bill won't be doing them much of a favor. The law would raise state unemployment taxes on North Carolina employers, partly through the termination of a zero-percent rate applied to the payments of approximately 30,000 firms. There will continue to be a $21 per year per employee rise in federal tax rates until the federal debt is repaid.

NC's trouble with unemployment
The legal measure brought on by the governor is just the latest in a series of fixes to repair North Carolina's employment situation.

According to data from the U.S. Bureau of Labor Statistics, North Carolina has the fifth-highest unemployment rate at 9.2 percent, topped only by New Jersey, California, Nevada and Rhode Island. It was also one of the 19 states to see an increase in the federal unemployment tax (FUTA) rate this year because of its outstanding debt to the government. North Carolina's FUTA rate increased to 1.2 percent.

Businesses in North Carolina have to keep an eye out for changes in unemployment, as do other employers in states with rising FUTA rates because of debt. Working with an HR service provider will keep any firm up to date on its obligations to unemployment insurance if anything changes.

Topics: North Carolina