|What Is Unemployment Insurance?
The unemployment insurance program in North Carolina is part of a national system designed to provide temporary economic benefits to eligible workers. Eligible workers are individuals who (1) lost their jobs through no fault of their own, (2) worked during a specified time period and received a minimum amount of wages during that time period, (3) are able and available for work, and (4) are actively seeking new employment. All benefits and administrative costs of the unemployment insurance program are paid by employers through State Unemployment Tax Act (SUTA) and the Federal Unemployment Tax Act (FUTA) payments. No money is withheld from workers' checks to pay for unemployment benefits.
The Social Security Act of 1935 and Chapter 96 of the General Statutes of North Carolina (the Employment Security Law) provide the basic framework for administering the unemployment insurance program in North Carolina. Quarterly revenues from a State Unemployment Insurance tax and a Federal Unemployment Insurance tax based on a percentage of each liable employer's payroll provide funds which can be used only to pay unemployment benefits to eligible workers and to administer the unemployment insurance program.
There are two basic types of unemployment - separated and attached. Separated unemployment occurs when an individual is out of work for an indefinite period and no longer has any attachment to the payroll or work force of any employing unit. An employer is not required to provide any type of separation notice to an employee who is permanently or totally separated from the employer's payroll or work force.
Attached unemployment occurs when an individual retains an attachment to the payroll and work force of an employer, but works less than three customarily scheduled workdays (or less than 60% of the customarily scheduled work hours) during a payroll week because the employer could not provide full- time work. Attached unemployment is also referred to as a "temporary layoff". In such cases, the employer must prepare an attached claim for the worker and send it to Raleigh for processing within 7 days of the last day of the payroll week.
Employers may file claims for workers on temporary layoff using Form NCUI 501, Benefit Claim for Attached Worker, or in a prescribed format via magnetic tape, tape cartridges, IBM-compatible personal computer diskettes, or electronic transfer. The Commission provides free software to employers who wish to file by diskette or the internet. Employers may also enter temporary layoff data online on the internet. Who is an Employee?
- A full-time or part-time worker as defined under common law rules for determining employer-employee relationships; or
- An officer of a corporation (including sub-chapter S corporations) performing services.
Who is NOT an Employee?
- An independent contractor;
- The spouse, parent or child (under the age of 21) of an individual business owner;
- An employee of a church;
- Insurance agents, real estate agents and securities salesmen paid solely by commission;
- Students enrolled and attending classes at a non-profit or public school which combines credit for academic studies and work experience. This service must be an integral part of the school's program and the school must certify the service (co-op programs);
- An inmate of the North Carolina prison system on work release;
- Workers on a fishing vessel under 10 net tons. Members of a fishing crew which is normally less than 10 individuals paid by a share of the catch.
Note: Other employment may be exempt under the law. If you have questions, call (919) 707-1170 or, if you are located in North Carolina, contact a field tax auditor through the nearest Job Service office. What are Wages?
Wages include all pay for services, in cash or any other medium such as food or lodging.Required Poster
Agricultural and domestic employers report only cash wages paid to employees and not food or lodging.
Employers determined to be liable under the Employment Security Law (Chapter 96 of the North Carolina General Statutes) are required to prominently display in their workplace the poster
- NCUI 524, Certificate of Coverage for and Notice to Workers.
It is available in English and Spanish. Fraud Prevention and Detection
The Employment Security Commission operates a continuous statewide investigation program designed to detect and recover both fraudulent and nonfraudulent benefit overpayments.
Form NCUI 528, Request for Breakdown of Earnings, is mailed each quarter to employers who reported they paid wages to an individual during a quarter in which the individual received unemployment benefits.
Time cards or other daily time records should be kept for at least two years after the calendar year in which an individual worked. The Commission normally subpoenas daily time records whenever a claimant appeal alleges that incorrect wage data was reported or when a claimant is being prosecuted for making false statements to obtain or increase his unemployment insurance benefits.