Labor and Employment Law Overview: North Carolina
Federal law and guidance on this subject should be reviewed together with this section.
Author: Susan Tahernia
- State law prohibits employers from discriminating against employees based on a variety of factors. See Unlawful Discrimination and Retaliation.
- Employees engaging in the lawful use of lawful products on their own time have certain rights under state law. See Unlawful Discrimination and Retaliation.
- North Carolina law requires employers to provide leaves of absence not required under federal law. See Leaves of Absence; Time Off.
- Certain employees may be paid less than the minimum wage. See Employee Compensation.
- Deductions may be made from employees' pay only under limited circumstances. See Employee Compensation.
- Employers must comply with safety standards and notify OSHA of workplace injuries and illnesses, if certain factors apply. See Risk Management - Health, Safety, Security.
- State law specifies whether employers may provide a reason for an employee's discharge when that individual applies for work elsewhere. See Termination of Employment.
Key North Carolina Employment Laws
North Carolina has key employment laws affecting the employer-employee relationship. Below, HR professionals will find a summary of certain laws they are most likely to encounter.
It is important that HR professionals understand state law and how it interacts with applicable federal laws.
Interplay Between State and Federal Law
Employers are responsible for complying with both state and federal executive orders, statutes, regulations and other legal requirements.
Often, state and federal legal requirements will address the same subject matter and impose varying compliance obligations on the employer.
For instance, federal law may impose a higher minimum wage rate than state law.
Alternatively, state law may require employers to retain certain records for a longer time period than federal law.
Unfortunately, employers cannot select which law they want to comply with. Instead, employers that are covered by both state and federal law must comply with both.
As a general rule of thumb, complying with the law that offers the greatest possible rights or benefits to the employee will ensure the employer meets its compliance obligations.
Acme Entertainment is covered by federal minimum wage laws and state minimum wage laws.The federal minimum wage rate islower than the state minimum wage rate.If Acme pays the lower federal rate, Acme will not be fulfilling its obligations under the law, may be liable to its employees for back wages and may be fined by the Department of Labor. Acme must, instead, pay the higher, more favorable rate.
North Carolina law specifically permits, and in some cases requires, criminal background checks for certain classes of employees, including the following:
- County employees;
- Applicants for employment with certain public agencies; and
- Certain licensed professionals.
With respect to those classes of employees, state law also establishes parameters on employers' use of criminal history information.
Unlawful Discrimination and Retaliation
North Carolina Human Relations Commission
North Carolina Human Relations Commission (HRC) is the primary civil rights agency in the state. HRC is part of North Carolina's Department of Administration.
In addition to its other responsibilities, HRC may hear and decide disputes arising under the North Carolina Equal Employment Practices Act (NCEEPA), North Carolina's antidiscrimination law.
Protected Classes under the North Carolina Equal Employment Practices Act
The NCEEPA offers protection similar to that provided under federal antidiscrimination laws.
Specifically, under the NCEEPA, employers who regularly employ15 or more employees are prohibited from discriminating in employment on the basis of the following:
- National origin;
- Age; and
Discrimination Based Upon Employees' Lawful Use of Lawful Products
With certain exceptions, North Carolina employers are prohibited from discrimination in employment because an applicant or employee engages in, or has engaged in, the lawful use of lawful products (e.g., tobacco use).
Employees are protected when use of the product:
- Occurs off the premises of the employer during non-working hours; and
- Does not adversely affect the following:
- Job performance;
- Ability to do the job; or
- Safety of other employees.
Retaliatory Employment Discrimination Act
The Retaliatory Employment Discrimination Act protects employees involved in the following activities from retaliation or discrimination by their employer:
- Workers' compensation claims;
- Wage and hour complaints;
- Occupational safety and health complaints (e.g., filing a complaint or assisting an inspector);
- Mine safety and health complaints;
- Genetic testing;
- Sickle cell or hemoglobin carriers;
- North Carolina National Guard Service;
- The Juvenile Justice System;
- Victims of domestic violence; and
- Pesticide regulation complaints.
See NC Gen. Stat. § 95-240 et seq.;
Child Labor Laws
State child labor laws place restrictions on the type of work minors can perform and limitations on their hours of work.
For example, 30 minute breaks must be provided to minors after five consecutive hours of work.
Required Wage Notices
Employees must be notified of the following:
- Pay rates;
- Vacation and sick leave policies; and
- Commission, bonus and other pay matters.
Payment of Wages
Payment of wages cannot be ad hoc. Instead, employers must designate regular paydays and, absent an exception, must pay all wages due and owing on the regular payday. See Payroll > Payment of Wages: North Carolina.
Employers in North Carolina are required to pay the higher of the minimum wage rate established by state or federal laws with certain exceptions (tipped employees and certain full-time students).
Employers must pay nonexempt employees one-and-one-half their regular rate of pay after 40 hours of work in any one workweek.
Employees of seasonal recreational and amusement establishments should be paid one-and-one-half their regular rate of pay after 45 hours of work in any one workweek.
Deductions from paychecks are limited to the following:
- Those required by law; and
- Those agreed to in writing on or before payday.
If the written authorization signed by an employee does not specify a dollar amount, the employee must:
- Receive, prior to payday, written notice of the actual amount to be deducted and the employee's right to withdraw the authorization; and
- Be given a reasonable opportunity to withdraw the authorization.
Deductions for cash or inventory shortages or for loss or damage to an employer's property may not be taken, unless the employee receives seven days' advance notice.
However, this seven-day rule does not apply to these deductions made at termination.
In addition, state law requires that:
- The withholding or diversion of wages owed for the employer's benefit may not be taken if they reduce wages below the applicable minimum wage rate; and
- No reductions should be made to overtime wages owed.
Pay Rate Changes
At least 24 hours prior to any reduction in the rate of promised wages, employers must notify employees as follows:
- In writing; or
- Through a posted notice maintained in a place accessible to its employees.
The actual change in pay rate should not retroactively be applied to work already done by the employee.
Leaves of Absence; Time Off
Leave for Parental Involvement
Subject to certain conditions, employers are required to grant four hours' unpaid leave per year to the following employees to attend, or otherwise be involved at, their child's school:
- Guardians; or
- Persons standing in loco parentis of a school aged child.
Employers may not take adverse employment action against employees who take leave for these purposes. See Employee Leaves > FMLA: North Carolina.
Jury Duty - Time Off
While North Carolina does not expressly provide employees with time off for jury duty, state law prevents employers from terminating employees because they have jury duty service.
Domestic Violence Victims - Time Off
Domestic violence victims may take time off from work without fear of reprisal in employment.
Specifically, employers may not take adverse employment action against domestic violence victims for taking time off from work to seek relief or legal intervention related to their domestic violence victim status.
Voluntary Shared Leave - Public Employees
Employees of the state, a public school or a community college may donate a portion of their leave time to either of the following:
- An immediate family member who is a state, public school or community college; or
- A coworker's immediate family member who is employed by a state, public school or community college.
Employers may not compel employees to donate leave. Employees must do so voluntarily.
Paid Leave for Athletic Training and Events - Public Employees
Employees of the state and public school employees who are paid using state funds are entitled to take paid leave to participate in, and train for, the US team for the Olympics, Pan American or other similar athletic competitions.
The duration of the leave is the shorter of:
- The training camp and competition; or
- 30 days in a single year.
Vacation Leave - Public Employees
State employees are entitled to vacation leave in an amount established by state law.
North Carolina law provides that each state worker is entitled to, at least, two weeks of vacation per calendar year.
Vacation leave is prorated monthly, cumulative to at least 30 days.
Risk Management - Health, Safety, Security
Occupational Safety and Health
North Carolina is a state that operates an approved state OSH plan covering the private sector. See Risk Management - Health, Safety, Security > HR and Workplace Safety: North Carolina.
Termination of Employment
Separated employees should be paid their wages and any non-forfeited vacation pay on the next regularly scheduled payday after the separation.
The employee may be paid through regular payment methods (e.g., by direct deposit if that is the way the employee has been paid in the past) or, if the employee requests, by mail. See +NC Gen. Stat. § 95-25.7.
Deductions for cash or inventory shortages or for loss or damage to an employer's property may be taken from the employee's final paycheck.
Payment of Vacation Time or Pay
In the event an employer has a vacation forfeiture policy (also referred to as a "use it or lose it" policy), employees must be notified of the policy, in writing, or the policy must be conspicuously posted.
Employees who are not properly notified are not subject to the loss or forfeiture of vacation time or pay.
Those employees will be entitled to all earned and unused vacation days upon termination of employment. See +NC Gen. Stat. § 95-25.7.
Continuation of Health Coverage
Employees working for smaller employers (i.e., employers with less than 20 employees) are exempt from the federal Consolidated Omnibus Budget Reconciliation Act (COBRA).
North Carolina's state continuation law, or its mini-COBRA law, applies to employers with less than 20 employees.
The law allows eligible separated employees to elect to continue health care coverage for up to 18 months after the date their coverage would have otherwise ended due to a change in eligibility.
North Carolina law prohibits employers from preventing discharged employees from obtaining new employment.
State law does not prohibit any employer from furnishing in writing, upon request, a truthful statement of the reason for the employee's discharge to prospective employers.
In fact, North Carolina offers immunity for employers who provide truthful references.
Specifically, employers who provide truthful information concerning a current or former employee's job performance (e.g., suitability for reemployment or whether the employee's skills and traits render him or her suitable for future employment) will not be liable in a private lawsuit initiated by the employee.
Prior to providing a reference, HR must verify the information provided. If the information is false or HR failed to take reasonable measures to verify the information, immunity may be lost and the employer may be liable.
County employees may place a written release in their file entitling employers to provide copies of the employee's personnel records to prospective employers.
The release would immunize the employer from liability in a subsequent lawsuit by the employee. See +NC Gen. Stat. § 153A-98.
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