AN OVERVIEW OF NORTH
CAROLINA AND SOUTH CAROLINA
EMPLOYMENT LAWS
HR CERTIFICATE SERIES
11 FEBRUARY 2015
Angus Macaulay
[email protected]
803.253.8279
Grainger Pierce
[email protected]
704.338.5321
Certified Labor & Employment Law
Specialist
TOPICS
I.
Payment of Wages
II.
Enforceability of Non-Compete and Non-Disclosure Agreements
III.
Drug Testing
IV.
Employee Privacy
V.
Employee References
VI.
Preemption of Tort Claims Involving Workers’ Compensation
VII. Workers’ Compensation Retaliation Claims
VIII. Claims for Unemployment Insurance
IX.
Garnishment Laws
X.
Negligent Hiring, Retention, and Supervision
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I. PAYMENT OF WAGES
NORTH CAROLINA
A. NC Wage and Hour Act
1.
2.
Every employer must:
•
At time of hiring, notify employees of promised wages and
day/place for payment
•
Make available employment practices and policies
regarding wages
•
Notify employees at least twenty-four (24) hours prior to
reduction in promised wages
•
Provide itemized statement of deductions for each pay
period
Must pay all wages on regular payday, and all wages
due each pay period.
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I. PAYMENT OF WAGES
NORTH CAROLINA
3.
Must provide written notice of any policy that results in loss
or forfeiture of vacation time or pay.
4.
Withholding of wages:
•
Voluntary: permitted if employer complies with notice and
consent requirements
•
Involuntary: In certain limited cases (e.g., criminal process
issued); but employee must be reimbursed if found “not guilty”
B. Violations of the NC Wage and Hour Act can subject
employers to civil penalties, 2x the full amount of
unpaid wages, and costs and attorney fees.
C. Record Keeping: North Carolina: Employers must
retain all records, posted notices, and writings
required by the Wage and Hour Act and the rules
and regulations promulgated there under for three
years (13 NCAC 12.0802).
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I. PAYMENT OF WAGES
SOUTH CAROLINA
A. SC Payment of Wages Act, S.C. CODE ANN. § 4110-10, et seq. (Supp. 2010)
1.
“Employer” includes all persons and entities, both public and
private, and any agent of officer of these entities.
2.
“Employee” includes hourly employees, executives, salaried
employees, and outside salespersons. Independent
contractors not covered.
3.
Every new employee must receive (can be posted) “Terms of
Employment” form which specifies:
•
Normal wages agreed upon
•
Normal hours of work
•
Time and place wages will be paid
•
Deductions to be made from wages, including insurance
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I. PAYMENT OF WAGES
SOUTH CAROLINA
3.
Any changes to these terms, other than wage
increases, must be given in writing at least seven
(7) calendar days before they become effective.
4.
Must pay all wages due each pay period.
5.
Must give employees an itemized statement
showing gross pay and all deductions each pay
period.
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I. PAYMENT OF WAGES
SOUTH CAROLINA
B.
Employers who violate the SC Payment of Wages Act
are subject to civil penalties of $100 for each violation
plus 3x the full amount of unpaid wages, costs and
attorney fees in a civil action.
C.
Recordkeeping requirements: three (3) years (name,
address, deductions); itemized statements.
D.
Employers with informal “practices” or “policies” could
be violating the Act if they fail to give new hires
written notice of a policy/practice, even though it may
be a flexible one.
E.
Separated employees must receive last paycheck
within forty-eight (48) hours of date of separation or
by next regular payday (not to exceed thirty (30)
days).
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I. PAYMENT OF WAGES
SOUTH CAROLINA
E. Employers may not withhold or divert any
portion of an employee’s wages unless
employer is required or permitted to do so
by state/federal law or employer has given
written notice.
F. Individual liability (knowledge of failure to
pay, direct responsibility).
G. Wrongful/retaliatory discharge in violation
of public policy.
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II. ENFORCEABILITY OF NON-COMPETE AND NON-DISCLOSURE AGREEMENTS
NORTH CAROLINA
A. Covenants not to complete are enforceable
when they are reasonable, although they
are not favored. To be enforceable, a
covenant not to compete must be:
1. In writing;
2. Part of the contract of employment or sale of a
business;
3. Based on valuable consideration;
4. Reasonably necessary for the protection of the
company’s interests; and
5. Reasonable in relation to time and territory.
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II. ENFORCEABILITY OF NON-COMPETE AND NON-DISCLOSURE AGREEMENTS
SOUTH CAROLINA
A. South Carolina courts generally follow the
“reasonableness test” to determine if a Covenant Not
to Compete is enforceable. Under this test, a NonCompete Agreement can be enforced if it is:
•
Necessary for the protection of the legitimate
interests of the employer;
•
Is reasonably limited with respect to time and place;
•
Is not unduly harsh and oppressive and curtailing the
legitimate efforts of the employee to earn a
livelihood;
•
Is reasonable from the standpoint of sound public
policy, and
•
Is supported by valuable consideration.
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II. ENFORCEABILITY OF NON-COMPETE AND NON-DISCLOSURE AGREEMENTS
SOUTH CAROLINA
B. Under the South Carolina Trade Secrets Act, S.C.
CODE ANN. § 39-8-10, et seq., “trade secret” is
defined as:
•
•
Information including, but not limited to a formula,
pattern, compilation, program, device, method,
technique, product, system, or other process, design,
prototype, procedure, or code that:
o
Derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by
proper means by the public or any other person who can obtain
economic value from its disclosure or use, and
o
Subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
Written agreement not required for Trade Secret Act’s
protection. If written agreement is made, definition of
“trade secret” cannot be more expansive than the Act.
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III. DRUG TESTING
NORTH CAROLINA
A. Employers are permitted to conduct drug
screenings of prospective employees
pursuant to, and in compliance with, the
Controlled Substance Examination
Regulation Act (N.C. Gen. Stat. § 95-230
et. seq.) and the related regulations codified
in 13 NCAC .0400, which includes
procedures to protect employees and
applicants.
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III. DRUG TESTING
SOUTH CAROLINA
A.
B.
SC “Drug Free Workplace Act,” S.C. CODE ANN. § 44-107-10,
et seq. (2002), requires recipients of State grants or contracts
to maintain drug free workplaces. State contractors/grantees
must:
1.
Publish and provide a written “drug free policy statement”
for employees;
2.
Notify State agencies after receiving notice of a conviction
for a drug offense occurring in the workplace;
3.
Establish and Maintain a “drug free workplace program for
all employees;”
4.
Make a good faith effort to continue to maintain a drug free
workplace.
If the contractor/grantee fails to take the necessary steps as
required by the Act, the recipient will be subject to suspension
of payments or termination.
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S.C. CODE ANN. § 41-35-120 (2)
EMPLOYEE MAY BE DISQUALIFIED FROM UNEMPLOYMENT BENEFIT
‣
The employer must have a policy that prohibits the illegal use
of drugs. The policy must state that violation of the policy can
result in termination;
‣
The employer must communicate the policy to employees;
‣
Termination of employment based upon positive drug test
results (for illegal drugs or legal drugs used unlawfully),
refusal by the employee to provide a sample, or provision of
an adulterated sample;
‣
The sample must be collected and labeled by a licensed
health care professional or an individual who is authorized by
federal or state law to collect and label samples.
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IV. EMPLOYEE PRIVACY
NORTH CAROLINA
A. Common Law Right to Privacy
1. An employee could make a successful common
law claim for invasion of privacy or intentional
infliction of emotional distress in extreme (and
rare) circumstances.
2. North Carolina recognizes only two of the four
common-law claims for invasion of privacy:
•
Appropriation of one’s likeness and
•
Intrusion upon seclusion.
3. Sexual harassment constitutes intentional
infliction of emotional distress.
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IV. EMPLOYEE PRIVACY
NORTH CAROLINA
B. Privacy Related Statutes
1. North Carolina Controlled Substance Examination
Regulation Act. N.C. Gen. Stat. § 95-230 et. seq.
•
Provides procedures to protect employees
•
“[E]mployers who test employees for controlled substances
shall use reliable and minimally invasive examinations and
screenings.”
•
“Individual dignity shall be preserved to the extent
practicable.”
2. “One-Party Consent Rule” (N.C. Gen. Stat. § 15A287)
•
Provides that employee communications—both oral and
electronic—may be monitored or recorded when one party
to that communication consents to the interception or when
the nature and circumstances of the communication do not
give rise to an expectation of privacy.
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IV. EMPLOYEE PRIVACY
SOUTH CAROLINA
A. Common Law Right to Privacy
1. South Carolina courts recognize four types of
invasion of privacy claims:
•
The “tort of intrusion into seclusion” is defined as an
unreasonable and uninvited intrusion into employee’s
personal life.
•
The “tort of public disclosure” is defined as an
unreasonable disclosure of true, private facts (e.g.,
reason for termination, content of performance evaluation,
or medical information).
•
The “tort of false light” is defined as an unreasonable
disclosure of false information that places the employee in
false light in the public eye.
•
The “tort of appropriation” is defined as use of an
employee’s name or likeness without consent that results
in unwelcome publicity, such as in advertising.
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IV. EMPLOYEE PRIVACY
SOUTH CAROLINA
B. Privacy Related Statutes – South Carolina
1. S.C. Constitution
Right to privacy
•
S.C. Const. art. 1, § 10.
•
The right of the people to be secure in their persons,
houses, papers, and effects against unreasonable
searches and seizures and unreasonable invasions
of privacy shall not be violated, and no warrants
shall issue but upon probable cause, supported by
oath or affirmation, and particularly describing the
place to be searched, the personal or thing to be
seized, and the information to be obtained. 1970
(56) 2684; 1971 (57) 315.
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IV. EMPLOYEE PRIVACY
SOUTH CAROLINA
2. Interception of Wire, Electronic or Oral
Communications Act, S.C. CODE ANN. § 17-30-10
to -145 (Supp. 2006).
•
Requires the consent of at least one party to
intercept communications lawfully.
•
Therefore, in order for an employer to intercept
communications lawfully, there must be prior
consent before the interception.
•
“Interception” under the act is defined as obtaining
“the contents of a wire, oral, or electronic
communication by any electronic, mechanical, or
other device” (S.C. CODE ANN. § 17-30-15(3)).
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3. Employee’s right to confidentiality of documents
•
An employer is responsible for maintaining
employee records listed by the Department of
Employment and Workforce as confidential, S.C.
Code Ann. § 41-29-150.
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V. EMPLOYEE REFERENCES
NORTH CAROLINA
A. NC Job Reference Liability Statute (NCGS §
1-539.12)
1. Employer who discloses information re: job history
or performance to prospective employer is
generally immune to consequences
2. Unless:
•
Information false
•
Employer knew or should have known false
B. “Blacklisting” (NCGS § 14-355)
1. After discharging employee, employer cannot
attempt to prevent further employment
2. Civil and criminal liability
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V. EMPLOYEE REFERENCES
SOUTH CAROLINA
A. South Carolina Employment Reference
Statute, S.C. CODE ANN. § 41-1-65 (Supp.
2006).
1. Grants civil immunity for disclosing some
information to potential employers of former
employees:
‣
Written evaluations
‣
Personnel notices of reason for separation
‣
Whether employee voluntarily or involuntarily separated
2. No immunity where “an employer knowingly or
recklessly releases or discloses false information.”
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VI. PREEMPTION OF TORT CLAIMS INVOLVING WORKERS’ COMPENSATION
NORTH CAROLINA
A. North Carolina Workers’ Compensation Act
1. Generally preempts tort claims by an employee
against employer for injuries suffered in course
and scope of employment.
2. Claims arising from intentional conduct of
employer are not barred.
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VI. PREEMPTION OF TORT CLAIMS INVOLVING WORKERS’ COMPENSATION
SOUTH CAROLINA
A. Workers’ compensation is an employee’s exclusive
remedy for personal injury arising out of or in the
course of employment. S.C. CODE ANN. § 42-1-540
(1985). Court will usually dismiss an employee’s tort
claim against his/her employer as the claim is
properly a worker’s compensation claim.
1. Exceptions are claims that are not personal injury.
For example:
•
Employee’s claim for slander (injury to reputation).
•
Employee’s claim for false imprisonment and invasion
of privacy (Note, if the false imprisonment claim
results in emotional distress, covered by workers’
compensation).
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VI. PREEMPTION OF TORT CLAIMS INVOLVING WORKERS’ COMPENSATION
SOUTH CAROLINA
2. Intentional Acts of Employer (not an accident).
3. Acts Committed by the Alter Ego of the Company.
4. An Employee’s Tort Claims Against Supervisor or
Co-Worker.
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VII. WORKER’S COMPENSATION RETALIATION
NORTH CAROLINA
A. North Carolina Retaliatory Employment
Discrimination Act (“REDA”); Chapter 95,
Article 21
1. “Retaliatory Action”
•
Discharge, suspension, demotion, or relocation
•
Any other adverse employment action in terms,
conditions, privileges, and benefits of employment
2. Protects employee who (in good faith) does or
threatens to engage in a number of activities,
including filing a workers’ compensation claim
3. Note: No violation if employer proves it would have
taken the same action in absence of protected
activity
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VII. WORKER’S COMPENSATION RETALIATION
SOUTH CAROLINA
A. Retaliatory Discharge
South Carolina law prohibits any employer from
discharging or demoting any employee because the
employee has instituted, in good faith, any
proceeding under the SC Worker’s Compensation
law. S.C. CODE ANN. § 41-1-80 (Supp. 2009).
Protection extends to employees who have testified
or will testify in a worker’s compensation proceeding.
Id.
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VII. WORKER’S COMPENSATION RETALIATION
SOUTH CAROLINA
B. An employee discharged or demoted in violation of the
statute may bring an action to recover lost wages and
seek reinstatement to former position. Future earnings
and punitive damages are not recoverable, and the
statute of limitations is one year. An employee can state
a prima facie case by showing a satisfactory work
performance and close temporal relationship between
the adverse employment action and the worker’s
compensation proceeding.
The employee bears the burden of showing that he or
she would not have been demoted/discharged but for
the workers’ compensation claim.
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VII. WORKER’S COMPENSATION RETALIATION
SOUTH CAROLINA
3. Employer’s affirmative defenses:
•
Willful or habitual tardiness or absence.
•
Disorderly conduct or intoxication at work.
•
Destruction of company property.
•
Embezzlement or larceny of employer’s property.
•
Malingering.
•
Failure to meet established work standards.
•
Violation of written company policy.
•
Failure to file a claim.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
A. Procedural Steps for Granting Unemployment Benefits
1.
Claimant’s Request for Determination
•
2.
Filing Information Form
o
The Claimant must provide information related to the termination of
employment, including the Claimant’s belief regarding why he/she was
terminated.
o
The Employer then provides information on the form regarding the
Claimant’s employment and makes a statement explaining the reasons
for the Claimant’s termination of employment.
Interview with Claimant
•
At this interview, the Claimant is provided with the Employer’s
statement and given a chance to rebut the information.
3. Initial Determination
•
A written determination is issued providing claims information
and an explanation for either granting or denying the Claimant’s
request for benefits.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
4. Appeal of Initial Determination
•
The Claimant or Employer who disagrees with the Initial
Determination has a right to appeal.
•
A hearing scheduled before an Administrative Hearing Officer
(“Hearing Officer”) of the SC DEW or Appeals Referee of the
NCDES.
•
The Hearing Officer conducts a “hearing” and renders a decision
based on the testimony and the written record presented.
5. The Initial Appeal Before the Administrative Hearing
Officer
•
The Hearing Officer hears all evidence related to the claim.
•
The hearing before the Hearing Officer does not always comply
with judicial procedures or rules of evidence.
•
All parties have the right to be represented by legal counsel or
other representatives.
•
The written decision issued by the Hearing Officer will include a
statement of facts and a separate statement of conclusions of
law.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
6. Decision of the Hearing Officer
•
The written decision issued by the Hearing Officer will
include a statement of facts and a separate statement
of conclusions of law.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
B. The Claimant is eligible for unemployment
benefits without disqualification.
C. The Claimant is found to have voluntarily quit
employment without good cause.
1. Reasons which usually do not constitute “good
cause” are:
•
Personal illness (unless the illness is directly related to or
caused by the employment);
•
Family illness;
•
Pregnancy;
•
Loss or lack of transportation;
•
Relocation; and
•
Lack of child care.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
2. Reasons which may constitute “good cause”
are:
•
A significant reduction in wages or salary;
•
Significant changes in working hours;
•
A substantial changes in other terms of
employment;
•
Violation of an agreed-to condition of employment;
•
Sexual or racial harassment; and
•
Illness or disability related to work.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
D. The Claimant is found to have been
discharged “for cause”;
1.
2.
3.
4.
Chronic absenteeism;
Chronic tardiness;
Insubordination;
Unjustified refusal to follow reasonable
instructions or normal procedures;
5. Violations of reasonable published rules or
regulations.
E. Where the Employer contends that the
Claimant was discharged for cause, the
Employer has the burden to establish that the
Claimant was discharged for cause.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
“Discharge for Gross Misconduct”
•
Examples:
o
$50+ in willful or reckless damage to company
property
o
Consumption of alcohol or being under influence
of alcohol in violation of company policy
o
Employee theft of $50+ of company property
o
Assault/battery of an employee or customer
o
Criminal abuse of patient or child
o
Failure to accept work
o
Insubordination: willful failure to comply with
lawful, reasonable order of a supervisor directly
related to employment and as described in job
description
o
Willful neglect of duty directly related to his/her job
as described in job description.
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
F. Appeal to the Appellate Panel
1.
The Hearing Officer’s decision is appealable to the
Appellate Panel (SC) or full board of Review (NC).
2.
Must file appeal within ten (10) calendar days of the
decision.
3.
Hearing transcript issued.
4.
In SC, the Hearing Officer’s decision is appealable to the
Full Commission.
G. Hearing Before Appellate Panel
1.
Three (3) Appellate Panelists generally participate (two (2)
required for forum).
2.
No new evidence can be presented.
3.
Each party generally provided eight (8) minutes to state
position.
4.
Panelists may question parties
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
H. Appeal to Administrative Law Court
1. In SC, Appellate Panel’s decision appealable to
Administrative Law Court
•
Must file appeal within thirty (30) days of
Commission’s decision
2. In NC, Board of Review’s decision appealable
to Superior Court
•
Must file appeal within thirty (30) days of
Commission’s decision
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VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE
SOUTH CAROLINA
I. Hearing Before Appellate Panel
1. Three Appellate Panelists generally participate
(two required for forum).
2. No new evidence can be presented.
3. Each party generally provided 8 minutes to
state position.
4. Panelists may question parties.
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IX. GARNISHMENT LAW
NORTH CAROLINA
A. NC Courts can order garnishment for child
support, alimony, student loans, taxes, and some
EMS services
B. BUT courts in other states may order more
C. Employer does not violate NC Wage and Hour Act
by complying with garnishment order from other
state
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IX. GARNISHMENT LAW
SOUTH CAROLINA
A. Generally, no general garnishment statute which may
be used to enforce collection of judgments taking a
portion of a person’s wages. Garnishment not allowed
for debts arising from a consumer credit sale, a
consumer lease, a consumer loan, or a consumer
rental purchase agreement
B. Child Support and Spousal Payments.
Wages are subject to garnishment or withholdings in
domestic cases for child support and spousal
payments. The employer must be served with a notice
from the family court to withhold certain amounts from
each pay day of the employee. Employer should
notify the employee of a deduction prior to the first
withholding and provide employee with a copy of the
garnishment Order.
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IX. GARNISHMENT LAW
SOUTH CAROLINA
C. An employer must pay the amount withheld to the
Clerk of Court within ten (10) working days of the date
income is withheld and notify the Court if the
employee quits or is terminated. No employer may
discharge, refuse to hire, or otherwise penalize any
employee for the reason that a creditor of the
employee has subjected or attempted to subject
unpaid earnings of the employee to garnishment.
D. South Carolina allows for garnishment for the
repayment of student loans. Similarly, the Federal
Higher Education Act allows the Department of
Education to garnish wages to collect defaulted
student loans up to the level permitted by the Federal
Consumer Credit Protection Act.
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X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION
NORTH CAROLINA
A. NC Courts recognize claims for negligent
hiring, supervision, and retention
1. Workers’ Compensation Act generally
precludes employees asserting such claims
against employers.
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X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION
SOUTH CAROLINA
A. Hiring
1.
Generally, a plaintiff injured by an employee may claim
that the employer knew or should have known that the
employee was dangerous. The employer has a
responsibility to exercise reasonable care in hiring its
employees. To protect itself, employer should obtain as
much legally permissible information as possible about
the applicant (without violating any privacy laws).
2.
Employer should require the applicant to certify that the
information provided is truthful and complete, and that
the employer can decline to hire or terminate the
applicant, if the applicant provides incomplete or
misleading information.
3.
If an employer can show that the employee’s
application, etc., does not indicate danger, may be able
to escape liability.
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X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION
SOUTH CAROLINA
B. Negligent Retention involves the reasonable care an
employer must exercise after an applicant is hired
and becomes an employee.
C. Two elements—knowledge of the employee and
foreseeability of harm to third parties. Plaintiff must
demonstrate that the employee had “dangerous
proclivities,” and employer was aware. A single
isolated prior incident of misconduct could support a
negligent retention claim, if the prior misconduct has
a “sufficient nexus to the ultimate harm.”
Overview of SC and NC
Employment Laws
February 11, 2015
www.nexsenpruet.com
45
X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION
SOUTH CAROLINA
D. Negligent Supervision
1.
An employer may have a legal duty to use due care in
supervising an employee as a result of a contractual
relationship with the employee. This duty sounds in tort, not
in contract, and the duty is limited to the employee’s actions
undertaken in his capacity as an agent for the employer.
Overview of SC and NC
Employment Laws
February 11, 2015
www.nexsenpruet.com
46
X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION
SOUTH CAROLINA
E. Liability for negligent supervision can be found if an
employee intentionally harms another person when:
1.
The employee is on the employers property or is using the
employer’s personal property;
2.
The employer knows or has reason to know that it has the
ability to control the employee; and
3.
The employer knows or should know of the necessity and
opportunity for exercising such control.
Moore v. Berkley County School District, 486 S.E.2d 9 (Ct. App.
1997).
Overview of SC and NC
Employment Laws
February 11, 2015
www.nexsenpruet.com
47