Under existing North Carolina law, individuals who have been convicted of certain crimes to petition our courts for a “certificate of relief,” which, if granted, provide the petitioning individual with relief from some “collateral consequences” of a conviction. In other words, the individual is not “pardoned’, and the conviction is not expunged from the individual’s record, but the individual may be able to obtain certain types of occupational licenses that they might otherwise be disqualified from obtaining due to the conviction.
North Carolina recently passed House Bill 774, which modifies the existing laws governing certificates of relief. While the law’s main impact is on individuals, the changes to the law also affect North Carolina employers. Continue reading NEW LAW: North Carolina Amendment of Its Certificate of Relief Law Impacts Employers
North Carolina Governor Roy Cooper recently signed the North Carolina Employee Fair Classification Act into law. This new law, which goes into effect on December 31, 2017, creates the Employee Classification Section of the North Carolina Industrial Commission and also creates new notice requirements for North Carolina employers.
The Employee Classification Section will have the authority to receive and investigate reports by employees who claim they were/are misclassified as independent contractors. The Section is also authorized to share information they receive with other government agencies (i.e. Department of Labor, the Division of Employment Security, the Department of Revenue and the Industrial Commission. The creation of this new agency will likely make it easier for North Carolina to target employers who are engaging in employee misclassification.
In addition to the new Section, employers will also be required to post a notice in the workplace stating:
Workers must be treated as employees unless they are independent contractors and that those who believe they have been misclassified have the right to report the alleged misclassification to the Employee Classification Section.
The notice also must provide the physical and e-mail addresses and telephone number where alleged misclassifications may be reported.
Recommendations for employers
There are several things that North Carolina employers should do prior to December 31, 2017. First, employers who work with independent contractors should audit those relationships and verify that they are true independent contractors. In addition, employers should prepare the required notice.
Thirty-five states have agreed to “team up” with the US Department of Labor to investigate worker misclassification. Is your state one of them?
In 2015, Department of Labor launched an initiative to combat the misclassification of employees as independent contractors. As a part of this initiative, the Department of Labor sought to partner with the state agencies and agree to share information and conduct joint investigations regarding independent contractor misclassification. To date, 35 states have entered into a memorandum of understanding regarding worker misclassification issues.
These states are:
- New Hampshire
- New Mexico
- New York
- North Carolina
- Rhode Island
- South Dakota
What does this mean for employers in these states?
Employers in the above-listed states should expect collaborative efforts between their state agencies and the Department of Labor during a investigation into potential employee misclassification as the state and the Department of Labor will share information. This could lead to simultaneous, multi-agency investigations into worker classification. It is recommended that companies have qualified legal counsel review any existing independent contractor arrangements. In addition, before entering into an independent contractor relationship, speak with an HR Professional or qualified legal counsel to verify that the worker truly is an independent contractor.
Earlier this year, we reported that North Carolina Governor Pat McCrory signed the Public Facilities Privacy and Security Act, a law which, among other things, made it clear that North Carolina’s Equal Employment Practices Act (NCEEPA) did not provide a cause of action for wrongful termination.
Recently, the North Carolina legislature had a change of heart. On July 18, 2016, Governor McCrory signed a bill that restores the right of employees to bring wrongful discharge claims for employment discrimination under the NCEEPA.
This new law removes the language from the Public Facilities Privacy and Security Act that eliminated employees’ right to sue in state court for violation of the NCEEPA. Instead, the new law reestablishes a procedure for employees to file state court claims of wrongful discharge under the NCEEPA within one year of alleged public policy violation. The law does not allow employees to file state court claims of employment discrimination on any other basis including harassment, hostile work environment, disparate treatment, failure to hire, or constructive discharge.
In late March, North Carolina Governor Pat McCrory signed the Public Facilities Privacy and Security Act (the “Public Facilities Law“).
The new law makes the following significant changes to the laws in North Carolina:
- All public employers (i.e. public schools and government agencies like libraries, parks, courthouses, airports, public universities, and state hospitals) are required to designate multiple-occupancy bathrooms and changing facilities (i.e., restrooms, locker rooms, or other facilities where more than one person may be undressing) for use by people based on their “biological sex” (defined as the gender listed on a person’s birth certificate);
- Any local ordinance that regulates or imposes any requirement upon an employer relating to employee compensation of employees (e.g. the wage levels of employees, hours of labor, payment of earned wages, benefits, leave, or well-being of minors in the workforce) are nullified; and
- Amends provisions in the North Carolina Equal Employment Practices Act (“NCEEPA”)
- Declares that “the regulation of discriminatory practices in employment” is an issue of statewide concern; therefore any local ordinances concerning the regulation of discriminatory practices in employment that conflict with state law are nullified;
- Sets forth that it is the public policy of North Carolina to protect the right and opportunity of all persons to seek, obtain and hold employment without discrimination on account of race, religion, color, national origin, age, biological sex or handicap by employers which regularly employ 15 or more employees.
- Prohibits employees from bringing claims based upon the public policy expressed in the NCEEPA.” (See our previous blog “Scope of Wrongful Termination Claims in North Carolina (Somewhat) Limited”)
Impact on North Carolina employers
The restroom and changing facility regulations (relating to designation based on biological sex) do not apply to or affect private employers. Private employers are free to implement their own policies that permit employees, customers, and third parties access to restrooms and locker or dressing rooms that correspond to their gender identity or expression.
In addition, if a private company voluntarily designates a restroom for use based on “biological sex” pursuant to the Public Facilities Law, such a policy will not give rise to a claim of discrimination under North Carolina state law. It may, however, give rise to a claim under Title VII, as the EEOC has been actively pursuing claims relating to employment bias based on sexual orientation and gender identity (including transgender). (See our previous blog “Sexual Orientation Bias is Barred By Title VII, Says EEOC”). Employers should proceed with caution if they seek to designate a restroom for use based on “biological sex”.
With one signature, North Carolina Governor Pat McCrory has provided a definitive answer to a question that has plagued North Carolina employers for nearly two decades – “Can a public policy wrongful discharge claim be based on the Equal Employment Practices Act (EEPA)?”
According to some state and federal courts, that answer was yes, but the North Carolina Supreme Court never expressly ruled on the issue. As a result, the question remained unresolved – but no longer.
The newly enacted Public Facilities Privacy and Security Act contains a provision clarifying the scope of a wrongful termination claim as it relates to the EEPA. In short, the Act expressly clarified that the EEPA does not provide a cause of action for wrongful termination. According to the Act, the EEPA “does not create, and shall not be construed to create or support, a statutory or common law private right of action, and no person may bring any civil action based upon the public policy expressed herein.”
However, North Carolina employers should remember that while the EEPA does not have a wrongful termination claim, employees may continue to file lawsuits for wrongful termination pursuant to a Title VII claim.
Through an Executive Order signed on December 18, 2015, North Carolina Governor Pat McCrory has created a new section within the North Carolina Industrial Commission (called the Employee Classification Section) which is tasked with overseeing employee misclassification enforcement.
Specifically, the new Employee Classification Section is responsible for receiving reports of employee misclassification and referring those reports to appropriate state agencies (e.g. the Department of Revenue, the Industrial Commission, and the Division of Employment Security for the Department of Commerce) for investigation. Following the investigation, the state agencies will be responsible for reporting the results of their investigations to the Director of the Employee Classification Section, who, in turn, must publish an annual report regarding these investigations to the Governor. In addition to the foregoing, the Employee Classification Section is also responsible for developing a procedure for the various state agencies to communicate their findings regarding employee misclassification.
What this means for North Carolina employers …
The increased focus on employee misclassification by North Carolina state agencies means that North Carolina employers need to take steps to verify their employees are properly classified before a state agency comes knocking at the door. Employers should conduct a self-audit of their exempt/nonexempt employees and their independent contractors to verify that these workers are properly classified.