INTRODUCTION
Losing a job can be a very difficult time for an employee. This guide is intended to provide an overview of some of the legal issues that may arise when you are unemployed.
This guide was prepared as a public service by the Young Lawyers Division of the North
Carolina Bar Association and is not intended to be a comprehensive statement of the law
or to constitute legal advice.
including explaining the reason for your discharge. If your employer contests the claim or
if your claim raises eligibility issues, the claim will be reviewed by an adjudicator who will
make a determination as to whether you have a valid claim. An appeal can be made from
the adjudicator's decision.
Receiving Benefits
Once your claim is approved, there is a one-week waiting period before you can receive
benefits. The amount and length of your payments will depend on your wages and time
worked prior to your unemployment.
WAGES AND BENEFITS
The payment of compensation to employees is controlled by the Fair Labor Standards
Act (a federal statute) and the Wage and Hour Act (a North Carolina statute). These
statutes address minimum wage requirements, overtime payment and other wage-related
issues. The Wage and Hour Act provides that when you are separated from a job
(through termination, layoff, resignation, etc.), your employer must provide your final
pay on or before the next regular payday. Bonuses, commissions or other types of compensation that must be calculated must be paid on the first regular payday after the
amount becomes calculable.
Although the above-mentioned statutes do not require employers to provide vacation or
other leave, an employer who provides such benefits must do so consistent with any
policies or practices established by the employer. This means that when your employment has ended, any benefits that you have earned must be provided to you at that time,
unless your employer's policies or practices provide otherwise.
UNEMPLOYMENT COMPENSATION
Unemployment insurance is paid by employers to provide temporary monetary relief to
separated employees who qualify for such benefits. Unemployment benefits are administered by the Employment Security Commission (ESC), which maintains local offices
throughout the state. To receive unemployment benefits, you must file a claim with the
ESC, meet eligibility requirements and comply with ESC requirements for maintaining
benefits.
Maintaining Eligibility
In addition to providing unemployment benefits, the ESC also provides job assistance.
This is important since to maintain your benefits, you must be actively seeking employment. This means doing those things that an unemployed person would normally do to find
employment.
MAINTAINING HEALTH INSURANCE-COBRA AND HIPAA
Job termination or a reduction in hours does not mean that you and your family must go
without health insurance. The federal government, in the Consolidated Omnibus Budget
Reconciliation Act of 1985, commonly known as "COBRA," has established laws to ensure
that you can continue to receive health coverage.
Eligibility
If you are laid off, have your hours reduced or are terminated, you and your family may be
eligible for continuing health benefits under COBRA if the following criteria apply:
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Eligibility
You may be eligible for unemployment benefits if you:
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are unemployed through no fault of your own;
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are able and available for work; and
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are actively seeking work.
Disqualification
You may be disqualified from receiving benefits if you were discharged from work due
to work "misconduct." Some behavior that may be considered misconduct includes, but
is not limited to, use of alcohol or drugs; fighting; unauthorized absences without good
cause; and theft of company property. If you were discharged for a reason that does not
constitute misconduct, but is considered a "substantial fault," your benefits may be partially reduced. Substantial fault includes those acts, over which you have reasonable
control, that violate reasonable job requirements.
Your employer regularly had 20 or more employees working at least 50 percent of the
time in the previous year. (This includes part-time employees.)
Your employer maintained a group health insurance plan.
You (and your family, if applicable) participated in that group health insurance plan.
You are terminated for a reason other than "gross misconduct."
Your employer continues to operate a group health insurance plan after your termination.
You continue to pay premiums on a timely basis.
You have not reached the maximum coverage period for COBRA coverage.
You are not eligible for other group health insurance or governmental health benefits.
Election of Coverage
If you qualify for COBRA benefits, the health plan administrator at your former job must
provide you with written notice explaining your rights under COBRA and the procedure for
electing coverage upon your termination. All of your family members who were properly
participating in your employer's health plan on the date of your termination are also eligible
for COBRA coverage. You and your family have 60 days from the date of the "qualifying
event," that is, your termination date (or the date you first received notice, whichever is
later) to elect coverage. You will have the choice of electing individual coverage for yourself or family coverage to include the family members who were covered on your date of
termination. This 60 day time period cannot be extended. Once you elect coverage, that
coverage is retroactive to the date you were terminated.
The ESC can inform you of additional disqualifying reasons. Your employer has the
burden of proving that you are disqualified from receiving benefits.
Benefits
COBRA benefits, by law, must be the identical health benefits to which you were entitled
prior to your termination. A plan may, but is not required to, allow a terminated employee
to opt out of "non-core" health benefits such as vision and dental plans. COBRA does not
provide for continuation of life insurance, disability insurance or accident insurance.
Filing a Claim
An employment claim must be filed at your local ESC office. To find out the location
of your local office, look for the county office of the ESC in your phone book or go
online to www.ncesc.com.
Once you file a claim, your employer will have the opportunity to respond to the claim,
In general, you are allowed to have COBRA health benefits through your former employer
for up to 18 months. (In certain limited situations, you can maintain COBRA health insurance for up to 36 months.)
Be aware that if you relocate out of your COBRA health plan's coverage area, you
will lose your COBRA benefits since the employer is not required to offer you coverage in an area which the plan does not cover.
Cost
In most cases, you will be required to pay for the entire cost of your COBRA health
benefits. Generally, COBRA insurance is more expensive than any fees you may have
had to pay as an employee. However, COBRA insurance is usually cheaper than individual health insurance you could purchase on your own. Furthermore, by law your
plan administrator can only charge you up to 102 percent of the plan's cost. The extra
2 percent is allowed for expenses associated with maintaining you and your dependents on the plan. The plan administrator cannot charge any other surcharge or premium which is not charged to ongoing employees.
After you elect COBRA, you have 45 days to pay the first premium, which is likely to
be high because it covers the period retroactive to the date coverage ended through
your employer. Successive payments are due according to plan requirements, but
COBRA allows for a 30 day grace period after each due date for payment. However,
neither the plan administrator nor the employer is required to send you monthly premium notices, so make sure you pay attention to due dates.
Pre-existing Exclusions in Health Coverage
Once you obtain new employment, you may be concerned about whether your new
insurance will cover your pre-existing conditions. Under the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), your new health insurance plan
is required to provide coverage for pre-existing conditions provided that you had no
break in your insurance coverage. For purposes of the HIPAA, a break in insurance is
defined as a period of time in which you had no insurance in place for more than 63
days.
Although the HIPAA allows for a short period of non-coverage, you still may want to
obtain COBRA in case your job search takes longer than you anticipate. If you forgo
COBRA and wind up with a gap in coverage of more than 63 days, you will lose your
HIPAA protection for pre-existing conditions.
RETIREMENT
Upon termination of employment, there are many issues about your retirement distributions that you should consider. A few of these issues are described below.
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Annuitization — Many pensions allow you to take payments in the form of an
annuity.
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Lump Sum Distributions — Many qualified retirement plans offer lump sum
distributions which may be taxed as ordinary income.
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IRA "Rollover" — This has become an attractive alternative to immediate distribution. To qualify for an IRA rollover, the distribution must result from one of
six events: (1) death (limited to surviving spouse), (2) attainment of age 59.5, (3)
termination of service, (4) permanent disability, (5) plan termination, or (6)
divorce. Rollover must occur within 60 days of the date the distribution is
received. Unless distributions are directly rolled over, there will be federal
income tax withholding of 20 percent on the distributed amount, plus any applicable penalties.
To determine whether any of these retirement options are available to you, speak with
your retirement fund administrator.
WRONGFUL TERMINATION
In North Carolina, employment generally is "at-will." This means that an employer
can discharge an employee with or without cause. However, there are certain recognized exceptions to this general rule which permit a discharged employee to bring a
cause of action against his/her former employer for wrongful termination under the
appropriate set of facts.
The first exception to the employment-at-will doctrine is if an employee was covered
by an employment contract for a definite term or a collective bargaining agreement
when he/she was terminated. A second exception is if the employer violates a federal
or state statute in terminating an employee. Examples include federal and state
statutes prohibiting employers from discharging employees solely because of their
age, race, sex, religion, national origin or disability. Lastly, a discharged at-will
employee may have a cause of action for wrongful discharge if, by terminating the
employee, the employer violated some public policy specifically designed to protect
the employee or the general public. For example, if you are an at-will employee, you
may have a cause of action for retaliatory termination if you were fired because you
filed a claim for workers compensation or because you refused to violate the law
when requested by your former employer's specific instruction or direction.
If you believe that your termination falls within one of the aforementioned exceptions
to the employment-at-will doctrine, thus giving you a cause of action against your former employer, it is important that you consult with an employment attorney as soon as
possible. Some specific causes of action, such as employment discrimination claims
have statutory deadlines that need to be followed in order for a discharged employee's
rights to be preserved and enforced.
Local Resources
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Recruiting/placement firms, whether local or online
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Employment and training services offered through the Employment Security
Commission and other government agencies
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Local library for information on community events
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Local newspaper to stay abreast on area companies
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Interest Inventory Assessment Tests offered through Placement/Career Counseling
Office at local community colleges and universities
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Career re-training classes provided at local colleges and universities
Employment Security Office
P.O. Box 25903
Raleigh, NC 27611-6504
www.ncesc.com
Wage and Hour Bureau
4 W. Edenton Street
Raleigh, NC 27601-1092
(919) 807-2796
1-800-NC-LABOR
www.nclabor.com
A Guide to Legal Issues Surrounding
Layoff and Termination
North Carolina Lawyer Referral Service
1-800-662-7660
Wake County (919) 677-8574
If you are considering bringing a wrongful termination case, you should begin by
gathering all of the relevant evidence pertinent to your case. Such evidence may
include: employment contracts, covenants not to compete, trade secret agreements,
employee handbooks, personnel files, evaluations, letters of hire and termination,
unemployment and workers' compensation papers and releases, etc. An employment
attorney can assist and advise you regarding your case and what you will need. For
assistance in locating an attorney in your area, contact the North Carolina Lawyer
Referral Service, a non-profit public service project of the North Carolina Bar
Association, toll free at 1-800-662-7660. (Wake County residents call 677-8574.)
RESOURCES FOR THOSE FACING
LAYOFF/UNEMPLOYMENT
Although finding a new job and dealing with unemployment issues will not be easy,
there are numerous resources that you can utilize to help you identify your next steps.
Such resources may be provided by your employer, by the local community, by the
government or they may be your own personal resources.
Employer Sponsored Resources
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Interviewing and coaching workshops and resume preparation services, career
skills training/re-training resources
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Job placement services
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Employee assistance programs providing financial and/or emotional counseling
services
Personal Resources
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Investigate opportunities through family, friends, religious, civic or social
acquaintances
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Investigate opportunities using industry-specific contacts
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Investigate opportunities through continued membership in and networking at
organization and association meetings
Life After Layoff
This guide was prepared as a public service by the Young Lawyers Division
of the North Carolina Bar Association and is not intended to be a comprehensive staement of the law or to constitute legal advice. North Carolina and
federal laws change frequently and could ffect the information in this guide.
If you hve specific questions with regard to any matters contained in this
guide, you are encouraged to consult an attorney. For assitance in locating an
attorney in your area, contact the North Carolina Lawyer Referral Service, a
non-profit public service porject of the North Carolina Bar Association, toll
free at 1-800-662-7660. (Wake County residents call 677-8574).
© 2003 N.C. Bar Association
For an additional guide, send a self-addressed stamped envelope to:
N.C. Bar Association
Young Lawyers Division
Attn: Life After Layoff Brochure
P.O. Box 3688
Cary, NC 27519
Visit our website at www.ncbar.org