N.C. Employers May Provide Support Payments to Workers Without Affecting Unemployment Benefits
On April 20, 2020, Governor Roy Cooper signed Executive Order No. 134 (EO134) to allow North Carolina employers to make COVID-19 Support Payments (defined and discussed below) to employees who are temporarily furloughed because of the economic or public health impacts of the pandemic, without affecting those employees’ rights to unemployment insurance benefits. This move recognizes that some businesses want to assist employees by providing voluntary payments that typically would delay or reduce unemployment benefits under existing law.
EO134 authorizes the North Carolina Division of Employment Security (DES) to cause COVID-19 Support Payments not to reduce or delay unemployment benefits that an otherwise eligible temporarily furloughed employee would be entitled to receive, and to determine that no overpayment occurs when such employees receive unemployment insurance benefits at the same time as COVID-19 Support Payments.
For purposes of EO134, a “furlough” means a temporary period of time during which an employee performs no personal services for the employer as a result of a temporary layoff caused by the economic or public health impacts of COVID-19.
EO134 defines COVID-19 Support Payments as payments or a series of payments that:
- Are voluntarily made by an employer to an employee in response to furloughing the employee;
- Are for services rendered by the employee in the past;
- Hold no obligation for the employee (or the employee’s estate) to repay;
- Are provided without obligation for the employee to perform or not perform any act in connection with the individual’s status as an employee; and
- Are made pursuant to a COVID-19 Support Payment Plan provided to DES using DES’s form for that purpose.
And, EO134 explains that a COVID-19 Support Payment Plan is one that:
- Details the anticipated length of the furlough;
- States the amount of the COVID-19 Support Payments;
- Identifies the employees receiving COVID-19 Support Payments;
- Includes 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 provided during the furlough; and
- Includes a promise that employees are not required to return or repay the COVID-19 Support Payments.
Under EO134 and guidance issued by DES, before making any payments under COVID-19 Support Payment Plans, employers must first:
- Submit employer-filed unemployment claims (known as “attached claims”) for each employee receiving COVID-19 Support Payments; and
- Submit their COVID-19 Support Payment Plans to DES (electronically to firstname.lastname@example.org) using a DES-prepared form.
Note that while COVID-19 Support Payment Plans must be submitted to DES, they need not be approved by DES and employers are not required to wait on approval from DES before making COVID-19 Support Payments. However, DES cautions that payments made before filing attached claims for employees who may receive COVID-19 Support Payments or before completing the necessary certifications may affect employees’ eligibility for benefits.
EO134 includes significant protections for employers and affected employees. Specifically, it makes clear that:
- COVID-19 Support Payment Plans are not promises by employers to make the payments listed in the plans and, if employers choose to provide plans that involve a series of payments, they retain the flexibility to stop those payments before the scheduled end of the plan;
- Employees who accept COVID-19 Support Payments are not obligated to return to work for their employers after their furloughs end; and
- Temporarily furloughed employees are eligible for unemployment insurance as long as they satisfy applicable criteria, regardless of whether they receive COVID-19 Support Payments.
We will continue to provide further updates and guidance as appropriate on employment issues arising from the COVID-19 crisis. In the meantime, please feel free to reach out to anyone on our Employment, Labor and Human Resources team if you have any questions or want to discuss specific circumstances you are facing.
Additionally, please visit and bookmark our firm’s Coronavirus (COVID-19) Business Resource Center, which is continuously updated with useful materials and resources related to COVID-19. This tool has been made available to ensure that our clients and the broader business community stay informed on key issues that may impact their operations and to navigate the related business and legal issues during these challenging times.