North Carolina § 96-1 - Title and definitions.

§ 96-1. Title and definitions.

Title. - This Chapter shall be known and may be cited as the "Employment Security Law." Definitions. - The following definitions apply in this Chapter: Agricultural labor. - Defined in section 3306 of the Code. Average weekly insured wage. - The weekly rate obtained by dividing the total wages reported by all insured employers for a calendar year by the average monthly number of individuals in insured employment during that year and then dividing that quotient by 52. Base period. - The first four of the last five completed calendar quarters immediately preceding the first day of an individual's benefit year. Benefit. - Compensation payable to an individual with respect to the individual's unemployment. Benefit year. - The fifty-two-week period beginning with the first day of a week with respect to which an individual first files a valid claim for benefits and registers for work. If the individual is payroll attached, the benefit year begins on the Sunday preceding the payroll week ending date. If the individual is not payroll attached, the benefit year begins on the Sunday of the calendar week with respect to which the individual filed a valid claim for benefits and registered for work. Code. - Defined in G.S. 105-228.90. Computation date. - August 1 of each year. Department. - The North Carolina Department of Commerce. Division. - The Department's Division of Employment Security. Employee. - Defined in section 3306 of the Code. Employer or employing unit. - Any of the following: An employer as defined in section 3306 of the Code. A State or local governmental unit required to provide unemployment compensation coverage to its employees under section 3309 of the Code. A nonprofit organization required to provide unemployment compensation coverage to its employees under section 3309 of the Code. An Indian tribe required to provide unemployment compensation coverage to its employees under section 3309 of the Code. Employment. - Defined in section 3306 of the Code, with the following additions and exclusions: Additions. - The term includes service to a governmental unit, a nonprofit organization, or an Indian tribe as described in sections 3306(c)(7) and 3306(c)(8) of the Code. Exclusions. - The term excludes all of the following: Service performed by an independent contractor. Service performed for a governmental entity or nonprofit organization under sections 3309(b) and 3309(c) of the Code. Service by one or more of the following individuals if the individual is authorized to exercise independent judgment and control over the performance of the work and is compensated solely by way of commission: Employment security law. - A law enacted by this State or any other state or territory or by the federal government providing for the payment of unemployment insurance benefits. Employment service company. - A person that contracts with a client or customer to supply an individual to perform employment services for the client or customer and that both under contract and in fact meets all of the following conditions: Negotiates with the client or customer on such matters as time, place, and type of work, working conditions, quality, and price of the employment services. Determines the assignment of an individual to the client or customer, even if the individual retains the right to refuse a specific assignment. Hires and terminates an individual supplied. Sets the rate of pay for the individual supplied. Pays the individual supplied. Federal disaster declaration. - Declaration of a major natural disaster by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, provided that the declaration allows disaster unemployment assistance under the federal act. Federal Unemployment Tax Act (FUTA). - Chapter 23 of the Code. Full-time student. - Defined in section 3306 of the Code. Governmental unit. - The term includes all of the following: The State, a county, or a municipality, or any department, agency, or other instrumentality of one of these entities. The State Board of Education, the Board of Trustees of The University of North Carolina, the board of trustees of other institutions and agencies supported and under the control of the State, a local board of education, or another entity that pays a teacher at a public school or educational institution. A special district, an authority, or another entity exercising governmental authority. An alcoholic beverage control board, an airport authority, a housing authority, a regional authority, or another governmental authority created pursuant to an act of the General Assembly. Immediate family. - An individual's spouse, child, grandchild, parent, and grandparent, whether the relationship is a biological, step-, half-, or in-law relationship. Independent contractor. - An individual who contracts to do work for a person and is not subject to that person's control or direction with respect to the manner in which the details of the work are to be performed or what the individual must do as the work progresses. Indian tribe. - Defined in section 3306 of the Code. Nonprofit organization. - A religious, charitable, educational, or other organization that is exempt from federal income tax and described in section 501(c)(3) of the Code. Person. - An individual, a firm, a partnership, an association, a corporation, whether foreign or domestic, a limited liability company, or any other organization or group acting as a unit. Secretary. - The Secretary of the Department of Commerce or the Secretary's designee. Taxable wages. - The amount determined under G.S. 96-9.3. Unemployed. - Defined in G.S. 96-15.01. Unemployment Trust Fund. - The federal fund established pursuant to section 904 of the Social Security Act, as amended. United States. - Defined in section 3306 of the Code. Wages. - Defined in section 3306 of the Code, except that no amount is excluded as provided under subdivision (b)(1) of that section. A real estate broker, as defined in G.S. 93A-2. A securities salesman, as defined in G.S. 78A-2. 4. Service performed by a direct seller, as defined in section 3508(b)(2) of the Code. The term does not include a person defined in section 3508(b)(2)(A)(iii) of the Code. 5. Service performed by a nonresident employee for a nonresident business performing disaster-related work in this State during a disaster response period at the request of a critical infrastructure company. The definitions and provisions of G.S. 166A-19.70 A apply to this exclusion. History (Ex. Sess., 1936, c. 1, s. 1; 1947, c. 598, s. 1; 1977, c. 727, s. 1; 2011-401, s. 2.1; 2013-2, s. 1(b); 2013-224, s. 19; 2017-8, s. 1(a); 2018-94, s. 1(a); 2019-187, s. 1(d).) Cross References. - As to the inapplicability of this chapter to prisoners working pursuant to G.S. 162-58 , see G.S. 162-61 . As to suspension of public assistance benefits for probation violations, see G.S. 15A-1345(a1) . Editor's Note. - The preamble to Session Laws 2011-10, provides: "Whereas, North Carolina's Unemployment Insurance Trust Fund balance had a deficit of $2,500,000,000, as of December 31, 2010, according to the Employment Security Commission; and "Whereas, the State owes the federal government $2,500,000,000 for loan liabilities incurred by the Employment Security Commission to continue unemployment insurance benefits payments to jobless North Carolinians during the current economic crisis; and "Whereas, the total collected by the State in unemployment insurance taxes in the 12-month period ending December 2010 amounted to $955,200,000, while the sum paid in unemployment insurance benefits for the same period totaled $1,900,000,000; and "Whereas, businesses large and small pay into the unemployment insurance system with the expectation that their contributions will be sufficient to provide assistance to their qualified former jobless employees; and "Whereas, it is in the best interest of the employers and employees of this State to have the most efficient and cost-effective unemployment insurance tax structure; and "Whereas, the current unemployment insurance tax structure no longer serves the businesses and citizens of this State in the manner required by these and future economic times; and "Whereas, major reforms regarding the unemployment insurance tax structure must be developed and implemented as soon as practicable; Now, therefore." Session Laws 2011-10, ss. 1-4, provide: "1. The General Assembly finds that the State must take swift and prudent action to address the two billion five hundred million dollars ($2,500,000,000) in debt liability for unemployment insurance benefits currently owed to the federal government and the substantial deficit in the North Carolina Unemployment Insurance Trust Fund. To that end, the Department of Commerce shall contract with an independent consulting firm specializing in unemployment insurance and employment security reform to obtain recommendations on what tax structure changes would be fair to the employers of North Carolina and how these revenues, and other financial options, might be used in servicing and liquidating the State's debt and deficits incurred to pay unemployment insurance benefits. "2. A contract to obtain services of a consultant pursuant to this act is not subject to Article 3C of Chapter 143 of the General Statutes. The consultation contract may be funded from (i) funds available within the Employment Security Commission, including State funds and any federal funds that may be used for the purposes of this act, and (ii) non-State or nongovernmental funds, grants, and in-kind contributions specifically designated for the purpose of carrying out the analysis required by this act. "3. The Department of Commerce shall provide the Fiscal Research Division and the Program Evaluation Division with periodic updates on the progress of the analysis. Within 45 days from the completion of the independent consultant's analysis, the Department of Commerce shall report to the Governor and to the General Assembly on the independent consultant's recommendations for reform of the State's unemployment insurance tax structure. "4. The Employment Security Commission and the Department of Revenue shall cooperate fully with the Department of Commerce, the Fiscal Research Division, and the Program Evaluation Division by giving all information and all data within their possession or ascertainable from their records necessary to carry out the purposes of this act." Session Laws 2011-145, s. 14.5(a), provides: "The statutory authority, powers, duties, functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the Employment Security Commission are transferred to the Department of Commerce with all of the elements of a Type I transfer as defined by G.S. 143A-6 ." Session Laws 2011-145, s. 14.5C, provides: "Notwithstanding any other provision of law to the contrary, the Department of Commerce may enter into contracts or, as necessary, enter into sole source contracts to timely obtain recommendations to achieve employment security organizational reform recommendations and savings." Session Laws 2011-145, s. 1.1, provides: "This act shall be known as the 'Current Operations and Capital Improvements Appropriations Act of 2011.'" Session Laws 2011-145, s. 32.2, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2011-2013 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2011-2013 fiscal biennium." Session Laws 2011-145, s. 32.5 is a severability clause. Session Laws 2011-401, ss. 1.1 to 1.3, provide: "1. Transfers of agency, powers, duties. - The statutory authority, powers, duties, functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the Employment Security Commission are transferred to the Department of Commerce with all of the elements of a Type I transfer as defined by G.S. 143A-6 . "2. Continuation of duties. - Any previous assignment of duties of a quasi-legislative and quasi-judicial nature by the Governor or General Assembly shall have continued validity with the transfer under this act. Except as otherwise specifically provided in this act, each enumerated commission, board, office, bureau, or other subunit of State government transferred to the Secretary of Commerce and the Department of Commerce, Division of Employment Security, is a continuation of the former entity for purposes of succession to all the rights, powers, duties, and obligations of the former. Where the former entities are referred to by law, contract, or other document in their former name, the Secretary of Commerce and the Department of Commerce, Division of Employment Security, are charged with exercising the functions of the former named entity. "3. No action or proceeding pending on November 1, 2011, brought by or against the Employment Security Commission shall be affected by any provision of this act, but the same may be prosecuted or defended in the name of the Department of Commerce, Division of Employment Security. In these actions and proceedings, the Secretary of Commerce or the Department of Commerce shall be substituted as a party upon proper application to the courts or other administrative or quasi-judicial bodies. "Any business or other matter undertaken or commanded by any State program or office or contract transferred by this act to the Employment Safety and Security Commission, or by the commissioners or directors thereof, pertaining to or connected with the functions, powers, obligations, and duties set forth herein, which is pending on the date this act becomes effective, may be conducted and completed by the Employment Safety and Security Commission in the same manner and under the same terms and conditions and with the same effect as if conducted and completed by the original program, office, or commissioners, or directors thereof." Session Laws 2011-401, s. 1.10(c), as amended by Session Laws 2015-238, s. 2.7, provides: "The Department of Commerce, Division of Employment Security, shall adopt rules and regulations in accordance with Article 2A of Chapter 150B of the General Statutes. Any existing rule that has not been readopted and filed with the Rules Review Commission by May 20, 2015, shall expire." Session Laws 2013-2, s. 1(b), effective July 1, 2013, rewrote the Article heading, which formerly read "Division of Employment Security." Session Laws 2013-2, s. 11, as amended by Session Laws 2013-224, s. 19, provides: "This act becomes effective July 1, 2013. Changes made by this act to unemployment benefits apply to claims for benefits filed on or after June 30, 2013. The requirements of G.S. 96-15(a1) apply to any week of an attached claim filed on or after June 30, 2013. Changes made by this act to require an account balance by an employer that is a governmental entity or a nonprofit organization and that elects to finance benefits by making reimbursable payments in lieu of contributions apply to advance payments payable for calendar quarters beginning on or after July 1, 2013. Changes made by this act to the determination and application of the contribution rate apply to contributions payable for calendar quarters beginning on or after January 1, 2014." Session Laws 2015-238, s. 3.2(a), applicable to decisions rendered on or after November 1, 2011, provides: "The following decisions in an appeal by a party to a decision of an appeals referee or hearing officer under Chapter 96 of the General Statutes are hereby validated and given the same legal effect as if those decisions had been issued by the Board of Review (BOR): "(1) Decisions issued by the Assistant Secretary of Commerce for the Division of Employment Security or by the Secretary of Commerce's designee. "(2) Decisions issued by the three individuals appointed by the Governor in December 2013 to serve as members of the BOR." Session Laws 2018-94, s. 1(b), made the amendment of subdivision (b)(12) of this section by Session Laws 2018-94, s. 1(a), effective July 1, 2018, applicable to claims for benefits filed on or after that date, and applicable to tax calculations on or after that date. Session Laws 2019-187, s. 3, made sub-sub-subdivision (b)(12)b.5., as added by Session Laws 2019-187, s. 1(d), effective August 1, 2019, and applicable to disaster declarations on or after that date. Effect of Amendments. - Session Laws 2011-401, s. 2.1, effective November 1, 2011, rewrote the section. Session Laws 2013-2, s. 1(b), added "and definitions" in the section heading; designated the former first sentence of the section as subsection (a), and therein added the subsection heading and deleted the former second sentence regarding the transfer of powers, duties, etc. of the Unemployment Compensation Commission to the Division of Employment Security; and added subsection (b). For effective date and applicability, see Editor's note. Session Laws 2017-8, s. 1(a), effective October 1, 2016, added subdivision (b)(14a). Session Laws 2018-94, s. 1(a), in subdivision (b)(12), inserted "sections" preceding "3306(c)(7)" in subdivision (b)(12)a., inserted "sections" preceding "3309(b)" in subdivision (b)(12)b.2., and added subdivision (b)(12)b.4. For effective date and applicability, see editor's note. Session Laws 2019-187, s. 1(d), added sub-sub-subdivision (b)(12)b.5. For effective date and applicability, see editor's note. Legal Periodicals. - For article discussing unemployment compensation, see 15 N.C.L. Rev. 377 (1937). For discussion of the 1939 and 1947 amendments to this Chapter, see 17 N.C.L. Rev. 415 (1939), and 25 N.C.L. Rev. 415 (1947). For explanation of the purposes and effects of the 1957 amendments to this Chapter, see 36 N.C.L. Rev. 53 (1957). For survey of 1979 administrative law, see 58 N.C.L. Rev. 1185 (1980). For note on unemployment compensation and the labor dispute disqualification, see 16 Wake Forest L. Rev. 472 (1980). For comment discussing unemployment compensation in light of Intercraft Indus. Corp. v. Morrison, 305 N.C. 373 , 289 S.E.2d 357 (1982), see 18 Wake Forest L. Rev. 921 (1982). For survey of 1982 administrative law, see 61 N.C.L. Rev. 961 (1983). For note, "Employment Discrimination - The Supreme Court Liberates Title VII Mixed-Motive Cases from the Procrustean Bed of the McDonnell Douglas•urdine Pretext Model - Price Waterhouse v. Hopkins," see 25 Wake Forest L. Rev. 345 (1990).