The New N.C. Standard for Employer Responses to Unemployment Benefits Claims

by Spilman Thomas & Battle, PLLC
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What North Carolina Law Says

Employers have often ignored a separation notice from the Employment Security Commission and not provided any details as to reason for separation because it was not being contested or it was a non-charging situation. Ignoring the notices is no longer a good choice. North Carolina's new law (in response to the Trade Adjustment Assistance Extension Act (TAAEA)) requires employers to send sufficient responses, without delay, for requests for information on unemployment benefits claims.

Response to the "Request for Separation Information from Employer" form (500AB) must be two things: timely and adequate. An employer can expect to receive a 500AB any time one of its employees (or former employees) files a claim for unemployment insurance benefits. A summary from the Division of Employment Security (DES) on North Carolina's law can be found here.

To be considered timely, employers must respond to the request for information within 14 calendar days of when the 500AB was sent by the DES. An adequate response is, "sufficient facts to allow DES to make a correct initial determination under the law." The DES will request different information depending on whether the employee quit, was discharged, is still employed, or was separated due to an inability to perform job duties. When responding, the goal is to provide enough information to the DES so it does not have to contact the employer again when making the benefits determination.

Under the new law, unsatisfactory responses from an employer may lead to the employer's account not being relieved of charges for erroneously paid benefits. Specifically, an employer that has a "pattern" of failing to respond timely and adequately will experience such penalties. A "pattern" is defined as when an employer's untimely or inadequate responses are (1) two or more or (2) greater than 2% of the total requests sent to the employer or its agent during the prior year, whichever is less.

What Does This Mean for You?

As the law stands now, what constitutes an "adequate" response is vague, making it somewhat difficult for employers to ensure they are in compliance with the new standards. In addition, the new law does not lay out how the non-reimbursement for erroneously paid benefits will impact an employer's unemployment tax credit. We recommend employers consult counsel on how to comply with the new standards and avoid potentially large penalties.

Employers must now more closely monitor and promptly respond to all requests for separation information from the DES - even those claims the employer did not intend to contest. If a third party agent handles unemployment claims, the employer must take steps to ensure that its agent is aware of and in compliance with the new response standards.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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