Employment Security Law 2017

Transcription

1 Employment Security Law 2017 Adam Hopler & Christopher Wilms Background In 1936, the North Carolina General Assembly enacted the Unemployment Compensation Act and provided for the funding of unemployment insurance benefits by virtue of an unemployment tax to be paid by North Carolina employers. The unemployment insurance program is now administered by the Division of Employment Security, which is a part of the North Carolina Department of Commerce. Chapter 96 of the NC General Statutes is the primary source for understanding the unemployment insurance system of NC. Regulations are contained in Title 4, Chapter 24 of the NC Administrative Code. DES publishes a series of precedent decisions which it uses as guidance on determining qualification and eligibility for benefits, which are available on its website. Finally, cases from time to time are appealed to the NC Court of Appeals and NC Supreme Court, which act as binding authority. When reviewing precedent decisions or case law, it is important to keep in mind that radical changes to the unemployment law went into effect in Cases that were initiated prior to that may reflect higher benefit amounts, interpretations of the term substantial fault which are no longer applicable, and other exceptions to disqualification which are no longer applicable. Funding of Unemployment Insurance Benefits The unemployment insurance benefits received by individuals are funded by the state unemployment tax (SUTA) paid by all covered employers in North Carolina. The tax rate, and thus the amount of an employer s SUTA payment, is normally determined by the amount of chargeable unemployment benefits received by the employer s former employees. Employers pay a tax rate which varies but is assessed on the taxable wage base which is determined by taking the average yearly insured wage and dividing by 2. The average yearly insured wage is the total amount of wages paid by an employer divided by the average monthly number of employees receiving wages in NC during the calendar year. Wage reports and tax payments are done quarterly. Private employers are experienced rated. This means that an employer s tax rate may increase or decrease depending on the number of current or former employees who have received unemployment benefits. Governmental entities, non-profit organizations and Indian tribes can elect to be experienced rated or reimbursing. If an employer elects the reimbursement option, then that employer is not required to make quarterly tax payments but instead must reimburse the DES for any benefits received by current or former employees. Reimbursing employers must maintain an account balance with the DES that is equal to one percent (1%) of its taxable wages. 1

2 In general, an employer will be charged for one hundred twenty percent (120%) of all benefits received by current or former employees. This charge is accessed when the claimant s benefit year has expired, which is one year after the claim was first filed. Benefit charges are allocated in proportion to the percentage of base period wages that each employer paid to the claimant. However, there are certain situations where a claimant will be able to receive unemployment benefits without the employer being charged for those benefits. No benefits are charged to an experienced rated employer if the DES determines that: 1) the claimant was separated from employment in the first 100 days solely for a bona fide inability to do the work; 2) the claimant left work to accompany a military spouse to a new location because of a military reassignment; and, 3) the claimant left work due to domestic violence. Employers that elect to be reimbursing rather than experience rated are not allowed to receive the non-charging of benefits. These employers will be charged for any benefits received by a former employee regardless of the reason for the former employee s separation from employment. Making a Claim for Unemployment Benefits The typical claim for unemployment benefits is filed by an individual following his/her separation from employment. The DES refers to this individual as the claimant. When a claimant files a new claim for unemployment benefits, the DES will issue a Wage Transcript and Monetary Determination that shows the wages that were reported by employers as being paid to that claimant during the base period. Pursuant to the formula set forth in N.C. Gen. Stat (b), an individual must have been paid base period wages in at least two calendar quarters and have base period wages totaling at least six times the average weekly insured wage during that base period. If the individual lacks the necessary amount of wages, the claim is not valid. If an individual believes that the Wage Transcript and Monetary Determination does not correctly list all base period wages, the individual has the right to appeal pursuant to N.C. Gen. Stat (b)(2). The term base period is defined in N.C. Gen. Stat. 96-1(b)(3) as the first four of the last five completed calendar quarters prior to the effective date of the claim. An individual who lacks necessary wages in this base period may attempt to establish a valid claim using an alternative base period consisting of the last four completed calendar quarters. Prior to filing a claim for benefits, an individual can use the benefits estimator provided on the DES s website in order to determine if he has sufficient base period wages to establish a valid claim for benefits. Weekly Benefit Amounts The maximum benefit amount is $ per week. The duration of benefits depends on the seasonal adjusted unemployment rate. There is a sliding scale which ranges from 12 to 20 weeks. The lower the average rate, the fewer weeks a person can collect. The duration is adjusted twice per year. 2

3 Is a Claimant Unemployed? A claimant is considered to be unemployed if he lacks payroll attachment at the time the claim is filed. A claimant may be considered partially unemployed, and thus eligible to receive reduced benefits, if he worked less than 60% of his customary hours during a given week provided that the reduction in hours was due to a lack of work. A claimant s receipt of post-termination severance, vacation or separation pay may affect whether the DES considers said claimant to be unemployed and thus eligible for benefits. No individual shall be considered unemployed if, with respect to the entire calendar week, the individual is receiving, has received, or will receive as a result of the individual s separation from employment, remuneration in the form of (i) wages in lieu of notice, (ii) accrued vacation pay, (iii) terminal leave pay, (iv) severance pay, (v) separation pay, or (vi) dismissal payment or wages by whatever name. An attorney drafting a settlement agreement that provides for severance pay should consider having the payment categorized as something other than severance pay or have the severance pay be attributable to weeks during which the individual has not filed a claim for unemployment benefits. The DES will generally not look beyond the plain language of the settlement agreement when determining if the payment constitutes severance pay and the weeks covered by the payment. N.C. Gen. Stat also provides that no substitute teacher or other substitute school personnel shall be considered unemployed for days or weeks when not called to work unless the individual is or was a permanent school employee regularly employed as a full-time substitute during the period of time for which the individual is requesting benefits. Eligibility In order for a claimant to be eligible to receive unemployment benefits for any week, the DES must find that the claimant was able to work, available for work, actively seeking work and willing to accept suitable work when offered. The term able to work is not a precise term that is capable of interpretation with mathematical precision. As a result, the courts have given the DES a large amount of administrative discretion in the application of this term to specific cases. The DES has interpreted the able to work requirement to mean that the claimant must be physically able to perform some type of work that the claimant is qualified to perform. N.C. Gen. Stat (c) provides that no individual shall be deemed able to work for any week for which that person is applying for or receiving benefits under any other state or federal law based on his temporary total or permanent total disability. The presumed intent of this provision was to prevent individuals from informing the DES that they are able to work while, at the same time, informing a second government agency, typically the Social Security Administration, that they are totally disabled and thus not able to work. 3

4 Even if the person is ultimately determined by the SSA to not be disabled, retroactive payment of unemployment benefits to individuals whose application for disability benefits is denied. This is a relatively new development which came as a result of HB4 in A claimant must be available for work during any week for which said claimant files a claim for benefits. The availability requirement is satisfied when the individual is willing and ready to accept suitable employment and thus genuinely attached to the labor market. In determining this attachment, the DES will look to any restrictions the individual places on the hours in which he is willing to accept work, the minimum amount of pay for which the individual will accept work and the types of work the individual is willing to accept. N.C. Gen. Stat (d) sets forth certain limitations on when a claimant may be considered to be available for work. A claimant is not considered to be available for work for any week in which such claimant is not offered employment due to a positive drug test report. This provision will only come into play when an employer reports the positive drug test result to the DES. A claimant is also not considered to be available for work if the claimant in incarcerated. An alien who is not in satisfactory immigration status is also not considered to be available for work. A claimant who has been placed on a bona fide disciplinary suspension of less than thirty days is also not considered to be available for work. N.C. Gen. Stat (e) provides that, in order to be considered to be actively seeking work, a claimant must show the following: 1) that he is registered for employment services as required by DES; 2) that he has engaged in an active work search that is appropriate in light of the employment available in the labor market and the claimant s skills and capabilities; 3) that he has sought work on at least two different days and has made at least five job contacts with potential employers during each week; and 4) that he has maintained a work search record that shows the method of contact with employers, and the date of such contact during each week. Leaving Work Good Cause Attributable to the Employer N.C. Gen. Stat provides that an individual shall be disqualified for unemployment benefits if said individual is, at the time the claim is filed, unemployed because he left work for a reason other than good cause attributable to the employer. Good cause is a reason that would be deemed by reasonable men and women as valid and not indicative of an unwillingness to work. In re Clark, 47 N.C. App. 163, 266 S.E.2d 854 (1980). A cause is attributable to the employer if it is produced, caused or created as a result of actions by the employer. Higgins v. Precision Concrete Forming, 70 N.C. App 571, 320 S.E.2d 416 (1984). An individual who leaves work because he is asked or forced to resign does not leave work within the meaning of N.C. Gen. Stat (1). In re Werner, 44 N.C. App. 723, 263 S.E.2d 4 (1980). The DES will consider a forced resignation to be tantamount to a discharge. An individual who left work due to ethical concerns with the employer s policies or practices established good cause attributable to the employer. In re Clark, 47 N.C. App. 163, 266 S.E.2d 854 (1980). In this case, the claimant was employed by a local department of social services. In 4

5 two separate instances, she had convinced a child s parents to place their children in the temporary care of others in exchange for the claimant s assurance that her department would not initiate custody proceedings. She resigned after being instructed to violate her earlier assurances and initiate custody proceedings. Leaving work due to racial discrimination constitutes good cause attributable to the employer. In re Bolden, 47 N.C. App. 468, 267 S.E.2d 397 (1980). An individual who left work due to sexual harassment left work with good cause attributable to the employer. Marlow v. North Carolina Employment Security Commission, 127 N.C. App. 734, 493 S.E.2d 302 (1997), cert. denied, 347 N.C. 577, 502 S.E.2d 595 (1998). An individual who left work because it was no longer practicable to commute to work following the relocation of the employer s business left work with good cause attributable to the employer. Watson v. Employment Security Commission of North Carolina, 111 N.C. App. 410, 432 S.E.2d 399 (1993). In this case, the employer relocated its location from Charlotte to Mooresville (a distance of approximately 30 miles) and the claimant lacked adequate transportation to commute to the new location. An individual who failed to utilize the employer s grievance procedure prior to resigning may still be found to have left work with good cause attributable to the employer. In re Werner, 44 N.C. App. 723, 263 S.E.2d 4 (1980). In the Marlow case listed above, the North Carolina Court of Appeals relied on Werner when it held that a claimant s failure to notify her employer of her sexual harassment at work did not preclude a finding that the claimant left work with good cause attributable to the employer. An individual who left work in order to accept an early retirement package offered to him by the employer did not leave work with good cause attributable to the employer. Carolina Power & Light Company v. Employment Security Commission of North Carolina, 363 N.C. 562, 681 S.E.2d 776 (2009). The court in this case relied heavily on the fact that the individual employee was not told that his job would end if he did not take early retirement. The fact that the employee specifically asked if he would still have a job and was not given an answer did not alter the court s analysis. An individual who submitted a written resignation letter was held to have left employment even though she later attempted to rescind her resignation and was not allowed to do so. Whicker v. High Point Public Schools, 56 N.C. App. 253, 287 S.E.2d 439 (1980). Leaving Work Due to Reduction in Pay or Work Hours A unilateral and permanent reduction in the rate of pay of more than 15% constitutes good cause attributable to the employer for leaving employment if the reduction is not due to any malfeasance, misfeasance or nonfeasance on the part of the individual. While this provision states that the individual must leave work solely due to the reduction in pay, Precedent Decision No. 37, In re Heenan, (2005) makes it clear that the existence of other reasons for leaving 5

6 employment in addition to the reduction in pay will not prevent the application of this provision.1 House Bill 4 also recodified N.C. Gen. Stat (1b) as N.C. Gen. Stat (b). In doing so, the General Assembly increased the amount of any reduction in work hours necessary to show good cause attributable to the employer from more than 20% to more than 50%. Such a reduction must still be unilateral, permanent and not due to any malfeasance, misfeasance or nonfeasance on the part of the individual. While this provision also states that the individual must leave work solely due to the reduction in work hours, it is likely that the DES would apply the rationale of the aforementioned Precedent Decision No. 37, In re Heenan, to these types of separations. Other Good Causes for Leaving The following reasons for leaving work are bases for which a claimant can receive benefits, but the benefits will not be charged to the employer s account: Leaving work to accompany the individual's spouse to a new place of residence because the spouse has been reassigned from one military assignment to another. Leaving work for reasons of domestic violence if the individual reasonably believes that the individual's continued employment would jeopardize the safety of the individual or of any member of the individual's immediate family. An individual is a victim of domestic violence if one or more of the following applies: (1) The individual has been adjudged an aggrieved party as set forth by Chapter 50B of the General Statutes. (2) There is evidence of domestic violence, sexual offense, or stalking. Evidence of domestic violence, sexual offense, or stalking may include any one or more of the following: (a) Law enforcement, court, or federal agency records or files. (b) Documentation from a domestic violence or sexual assault program if the individual is alleged to be a victim of domestic violence or sexual assault. (c) Documentation from a religious, medical, or other professional from whom the individual has sought assistance in dealing with the alleged domestic violence, sexual abuse, or stalking. (3) The individual has been granted program participant status as the result of domestic violence committed upon the individual or upon a minor child with or in the custody of the individual by another individual who has or has had a familial relationship with the individual or minor child. Discharge for Misconduct Connected with the Work Misconduct is defined as conduct evincing a willful or wanton disregard of the employer s interests as is found in deliberate violation of standards of behavior that the employer has a right to expect of an employee or has explained orally or in writing to an employee. Misconduct is also defined as conduct evincing carelessness or negligence or such degree or recurrence as to manifest an intentional and substantial disregard of the employer s interests or of the employee s duties and obligations to the employer. The following are specific instances which, if proven, establish a prima facie case for misconduct: 6

7 Violation of an employer s written alcohol or drug policy Reporting to work significantly impaired by alcohol or illegal drugs Consumption of alcohol or illegal drugs on the employer s premises Conviction for manufacturing, selling or distributing a controlled substance if the offense is related to the employee s work or in violation of a reasonable work rule An arrest or conviction for an offense involving violence, sex crimes, illegal drugs if the offense is related to the employee s work or in violation of a reasonable work rule or policy Physical violence related to the work and directed at supervisors, subordinates, coworkers, vendors, customers or the general public Inappropriate comments or behavior toward supervisors, subordinates, coworkers, vendors, customers or the general public related to any federally protected characteristic that creates a hostile work environment Theft in connection with employment Forging or falsifying any document or data related to employment, including a previously submitted application for employment Violation of an employer s written attendance policy Refusal to perform reasonably assigned work tasks or failure to adequately perform employment duties as evidenced by no fewer than three written reprimands in the 12 months immediately preceding termination The use of profanity towards a supervisor constitutes misconduct. Hagan v. Peden Steel, 57 N.C. App. 363, 291 S.E.2d 308 (1982). In this case, the claimant called his supervisor a God-damn liar. Absences without proper notification to the employer may constitute misconduct. Butler v. J.P. Stevens, 60 N.C. App. 563, 299 S.E.2d 672, cert. denied 308 N.C. 191, 302 S.E.2d 242 (1983). If a claimant shows, however, that he made a good faith attempt to comply with the employer s policies regarding notification of absences, then he can avoid a finding of misconduct. Helmandollar v. M.A.N. Truck and Bus Corp. 74 N.C. App. 314, 328 S.E.2d 43 (1985). A claimant s failure to provide a doctor s note to extend a leave of absence or excuse further absence from work following the expiration of a leave of absence constitutes misconduct. Davis v. Corning Glass Works, 65 N.C. App. 379, 309 S.E.2d 258 (1983). This case was decided before the North Carolina Supreme Court s decision in Intercraft Industries v. Morrison, 305 N.C. 373, 289 S.E.2d 357 (1982). In Intercraft, the court held that the violation of a work rule does not constitute misconduct if the employee s actions were reasonable and taken with good cause. The Intercraft claimant was discharged because she violated the employer s attendance policy due to a lack of child care. A claimant who was discharged because of absences caused by his incarceration was discharged for misconduct. Collins v. B & G Pie Co. Inc., 59 N.C. App. 341, 296 S.E.2d 809, 296 S.E.2d 809 (1982), cert. denied 307 N.C. 469, 299 S.E.2d 221 (1983). In Collins, the claimant was incarcerated for what the court called a legally unexcused probation violation. 7

8 A claimant s discharge for a violation of state law may constitute misconduct even if the employer had no rule or policy that prohibited the claimant s conduct. In re Gregory v. NC Department of Revenue, 93 N.C. App. 785, 379 S.E.2d 51 (1989). In this case, an employee of the North Carolina Department of Revenue was discharged for failing to timely file, or timely request an extension of time to file, his individual state tax returns for two consecutive years. A claimant s expression of his intent to violate an employer s work rule at some future date does not constitute misconduct. Kahl v. Smith Plumbing, 68 N.C. App. 287, 314 S.E.2d 574 (1984). In this case, the claimant was discharged when he stated he planned to violate the employer s policy that prohibited its employees from moonlighting and bidding on outside jobs. A claimant who was discharged for striking a child in violation of the employer s rule that prohibited corporal/physical punishment was found not to have been discharged for misconduct when she struck the child out of a reflex action in order to protect herself. Smith v. Kinder Care Learning Centers, 326 N.C. 362, 389 S.E.2d 30 (1990). The claimant in this case was pregnant at the time of the incident that led to her discharge. A student had struck her in the stomach with a book bag and the claimant responded by hitting the student on the arm in an attempt to prevent the student from striking her again. Inadequate job performance does not amount to misconduct. Guilford County v. Holmes, 102 N.C. App. 103, 401 S.E.2d 135 (1991). In this case, the employer had directed the claimant not to leave her work station. The claimant left her work station on some occasions thereafter to deliver work-related telephone messages that she believed to be important. A claimant, who was employed as a detective with the employer sheriff s department, was discharged for failing to notify the sheriff or his supervisor that he had discovered a wiretap in the sheriff s office. Instead, the claimant notified the SBI. Thereafter, an FBI agent instructed the claimant not to discuss the wiretap with anyone. The claimant s actions were found not to constitute misconduct. Williams v. Davie County, 120 N.C. App. 160, 461 S.E.2d 25 (1995). A discharge in violation of the employer s own rules does not constitute misconduct. Doyle v. Southeastern Glass Laminates, 104 N.C. App. 326, 409 S.E.2d 732 (1991) rev d per curiam 331 N.C. 748, 417 S.E.2d 236 (1992). In this case, the employer s policy provided for a written warning, a suspension and then discharge. Significantly, the employee did not commit any infractions after the suspension. In Applewhite v. Alliance One International, 188 N.C. App. 271, 654 S.E.2d 764 (2008), the claimant was discharged for violating the employer s policy that stated the receipt of three written warnings will result in discharge. The claimant s final written warning was issued when she was fifteen minutes late due to illness. The Applewhite court concluded that the claimant was not at fault with respect to the last warning and thus was not discharged for misconduct. Discharge for Loss of License An individual shall be disqualified for benefits if he is unemployed because he was discharged for failure to possess a license, certificate, permit, bond or surety that is necessary for the 8

9 performance of his employment and that the individual is responsible to supply the necessary documents and the individual s inability to do so was within the individual s control. Work Refusal Suitable Work Claimants who fail, without good cause, to accept suitable work are disqualified for the duration of the claim. During the first ten weeks of a benefit period, the DES may consider the degree of risk involved to the individual s health, safety and morals; the individual s physical fitness and prior training; the individual s experience and prior earnings; the length of the individual s unemployment and his prospects for obtaining work in his customary occupation; and, the distance of the available work from the individual s residence. During the remaining weeks of the benefit period, the DES must consider any job offer that pays 120% of the claimant s weekly benefit amount to be suitable work. Labor Disputes An individual shall be disqualified for benefits if the Commission determines that his total or partial unemployment is caused by a labor dispute in active progress. This statute further provides that the disqualification may continue for a reasonable time after the end of the labor dispute in order to allow the employer resume operations. A labor dispute as described in this provision includes not only strikes but management lockouts. In re Usery, 31 N.C. App. 703, 230 S.E.2d 585 (1976) cert. denied 292 N.C. 265, 283 S.E.2d 396 (1977). Retirement Benefits The amount of any unemployment benefits paid to a claimant for a given week shall be reduced if the claimant is receiving retirement or pension payments that are based on the previous work if a base period employer contributed, in whole or in part, to the retirement or pension plan. For example, if a claimant is eligible to receive $350 per week in unemployment benefits and also receives a retirement payment of $200 per week from a base period employer, the claimant s weekly unemployment benefit amount would be reduced to $150. Adjudication and Hearings N.C. Gen. Stat (b)(2) provides that any question or issue as to a claimant s eligibility or disqualification should be imposed shall be referred to an adjudicator for a determination. Prior to making said determination, the adjudicator will consider any written statements provided by either the claimant or employer. These written statements consist of any fact-finding report that the claimant completes at the request of the DES and the employer s response to the Notice of Claim and Request for Separation Information. The adjudicator may also contact either party by telephone for additional information. Ultimately, the adjudicator will issue a written determination as to the claimant s eligibility or qualification for benefits. Both the claimant and 9

10 the employer have the right to appeal said determination within 30 days of the mailing of said determination. A party's written appeal shall contain the following: (1) the date of the appeal; (2) the identity of the determination being appealed; (3) a clear statement of the party's intent to appeal; and (4) the name of the party appealing. Once an appeal has been received, a hearing will be scheduled before an Appeals Referee. Most hearings are initially scheduled to be conducted by telephone rather than in person. N.C. Gen. Stat (c) provide that a party has a right to object to a telephone hearing and request an in-person hearing. If a request for an in-person hearing is granted, the hearing will normally be conducted in the Division of Workforce Solutions office that is located closest to the non-objecting party. In some instances, a bifurcated hearing may be conducted with one party appearing in-person and another party appearing by telephone. These bifurcated hearings are called In-Person/Telephone Hearings. As a practical matter, there are three main differences between in-person and telephone hearings: 1) telephone hearings are generally scheduled more quickly than in-person hearings; 2) the DES will mail a copy of the hearing file along with the Notice of Hearing by telephone. Parties who are scheduled for in-person hearings are not mailed a copy of the hearing file along with the Notice of Hearing; and 3) a party wishing to present documentary evidence during a telephone hearing must provide copies of those documents to the Appeals Referee and the opposing party prior to the scheduled telephone hearing. If a hearing is initially scheduled for an in-person hearing, it is helpful for attorney representing a party to request a copy of the record from the Appeals Referee prior to the hearing. The record should contain any written statements provided to the DES by both the claimant and employer. It may also contain a copy of the Adjudicator s telephone notes regarding any telephone conversations that the Adjudicator may have had with the parties. When deciding whether to object to a telephone hearing and request an in-person hearing, an attorney should consider where the hearing will be held if the hearing is scheduled in-person. It is also helpful to determine which Appeals Referee will be assigned to the case if the matter is reset as an in-person hearing. The type of evidence that a party plans to offer can also impact the decision as to whether an in-person hearing will be preferable. Once a hearing is scheduled, acceptable grounds for granting a continuance shall include those instances when a party to the proceeding, a witness, or counsel of record has an obligation of service to the State, such as service as a member of the North Carolina General Assembly, or an obligation to participate in a proceeding in a court of greater jurisdiction. Additionally, illness of the party, death in the immediate family of the requesting party, a need to obtain an interpreter or translator, a religious observance, jury duty, actively seeking legal representation, court appearance unrelated to DES, active military duty, scheduling conflict created by new employment, or to accommodate the business needs of the employer. The Appeals Referee shall give each party 10 minutes from the time of the scheduled hearing to appear for the hearing. If the appealing party fails to appear at the hearing and a continuance had 10

11 not been previously granted the Appeals Referee shall issue an Appeals Decision dismissing the appeal. Hearsay evidence shall be accepted as credible evidence only when it: (1) falls within the statutory or common law exceptions to the hearsay rules; or (2) has an equivalent indicia of trustworthiness as competent evidence; and (3) is more probative on the point for which it is offered than any other evidence which the party offering the hearsay could reasonably be expected to procure. The Appeals Referee may permit the parties to file an affidavit at the time of the hearing in the same manner as applicable to other hearsay evidence. These hearings have historically been less formal that traditional court, insofar as the Appeals Referee is given a lot of leeway to assist the claimant in forming questions, questioning witnesses out of turn, etc. Referees tended to differ on their use and allowance of hearsay evidence, but often would let it in even if they would not make a finding based on it. It was often a fruitless endeavor to try to exclude hearsay evidence, but was ripe for challenge to the Board of Review. However, the NC Court of Appeals in 2015 in the case of Jackson v. N.C. DOC, 775 S.E.2d 687 (N.C. Ct. App. 2015) seems to have made a radical departure from the informal nature of these proceedings. In that case, Employer offered a written statement of a nurse not present at the hearing into evidence and Claimant failed to object to the entry of that document. While the statement contained in the document was likely hearsay, the NC Court of Appeals held that Claimant waived her objection to the use of that document to make findings of fact because Claimant did not object at the appeals hearing. It has become more important, given the nature of this decision and its implications, to be diligent in preserving the record for appeal during the lower level appeals hearing. Testimony at the hearing is recorded and must be provided under oath. The party with the burden of proof will be required to present evidence first. When a claimant left work, N.C. Gen. Stat provides that the claimant has the burden of showing good cause attributable to the employer. When a claimant was discharged, the employer has the burden of showing that the claimant was discharged for reasons that should disqualify the claimant from receiving benefits. Dunlap v. Clarke Checks, 92 N.C. App. 581, 375 S.E.2d 171 (1989). A party at the hearing has the right to call and examine witnesses. A party also has the right to cross-examine witnesses. Parties are not typically allowed to make opening statements but are allowed to make brief closing statements if time permits. Most hearings are scheduled to be conducted in a one hour time slot and the Appeals Referee may elect to adjourn the hearing and reconvene at a later date if the hearing cannot be completed in the time allotted for the hearing. These hearings begin with the Appeals Referee initiating a recorded call to each of the parties, and the hearing typically will proceed with about minutes of administrative matters, followed by the party with the burden of proof presenting their case. Once each witness has been examined, cross-examined, etc., the other party will present its case. The Appeals Referee has significant leeway to conduct the hearing by recalling witnesses, interjecting with questions mid-presentation, and assisting a party with the formulation of questions. For in person hearings, these are typically held in the office of the Appeals Referee. Moving to sequester witnesses is an acceptable practice in these hearings. However, for telephone hearings it is difficult to enforce. 11

12 The parties are allowed to stipulate as to the facts in lieu of a hearing. The Appeals Referee may require additional evidence or stipulations. The parties may also include a request for a specific outcome when submitting stipulations. While the Appeals Referee is not required to accept that outcome, it is unlikely that the Appeals Referee will reach a different result than the one requested by the parties. Stipulations are mostly used when the parties are attempting to reach a result where the claimant receives benefits while the employer is not charged with the benefits. Subpoenas are allowed and can either be done by request to the Appeals Referee or by a Legal Representative at their own expense. If you are doing the latter, you must obtain approval from the Appeals Referee before sending. The rules and limitations of subpoenas are outlined in 04 NCAC 24C Board of Review and Superior Court Following the conclusion of the hearing, the Appeals Referee will mail a decision to all interested parties. Said decision must include findings of fact and conclusions of law. Either party may appeal such decision pursuant to N.C. Gen. Stat (c) and obtain review by the Board of Review. If such an appeal is filed, it must contain a clear written statement as to the grounds for the appeal. Failure to comply with this requirement may result in the appeal being dismissed for insufficient grounds. Pursuant to N.C. Gen. Stat (c) and N.C. Gen. Stat (c2), an appeal must be filed within 13 days of the date on which the decision of the Appeals Referee is mailed to the parties. If an attorney did not represent a party at the hearing and has been retained to represent said party on appeal to the Board of Review, it is advisable to request a copy of the hearing record. The Board of Review will normally allow a party to request the hearing record and then supplement any appeal filed with briefs and or written arguments within a reasonable time of the attorney s receipt of the record on appeal. A party or attorney should specifically request additional time in which to submit briefs or written arguments. When it reviews the decision of the Appeals Referee, the Board of Review may, pursuant to N.C. Gen. Stat (e), affirm, modify or set aside the decision of the Appeals Referee or direct the taking of additional evidence. The Board of Review may reject the findings of fact made by the Appeals Referee and find facts for itself. The Board of Review s decision is considered the final decision of the DES. The Board of Review appeal is typically limited to a review of the exhibits and the recording of the hearing. Typically, the Board will decline to consider additional evidence. However, if your review shows that the right to present evidence was subverted by the referee, or an offer of proof of excluded evidence was not permitted, it may be prudent to provide the documentation. Additionally, if the evidence was something that could not have been obtained at the time of the hearing, it may be prudent to submit. A decision of the Board of Review becomes final 30 days after the date of mailing unless a party to the decision seeks judicial review. Judicial review is permitted only after a party has filed a petition for review in the superior court of the county in which the petitioner resides or the county in which the petitioner's principal place of business is located. The petition for review 12

13 must explicitly state what exceptions are taken to the decision or procedure and what relief the petitioner seeks. Within 10 days after the petition is filed with the court, the petitioner must serve copies of the petition by personal service or by certified mail, return receipt requested, upon the Division and upon all parties of record to the Division proceedings. The Division must furnish the petitioner the names and addresses of the parties upon request. The Division is a party to any judicial action involving any of its decisions and may be represented in the judicial action by any qualified attorney who has been designated by it for that purpose. Any questions regarding the requirements of this subsection concerning the service or filing of a petition shall be determined by the superior court. Any party to the Division proceeding may become a party to the review proceeding by notifying the court within 10 days after receipt of the copy of the petition. Any person aggrieved may petition to become a party by filing a motion to intervene as provided in G.S. 1A-1, Rule 24. Within 45 days after receipt of the copy of the petition for review or within such additional time as the court may allow, the Division must transmit to the reviewing court the original or a certified copy of the entire record of the proceedings under review. With the permission of the court the record may be shortened by stipulation of all parties to the review proceedings. Any party unreasonably refusing to stipulate to limit the record may be taxed by the court for the additional cost incurred by the refusal. The court may require or permit subsequent corrections or additions to the record when the court considers the changes desirable. Any finding of fact that is not excepted to in the petition for judicial review will be considered binding on appeal. Hagan v. Peden Steel, 57 N.C. App. 363, 294 S.E.2d 308 (1982). The standard of review in Superior Court is twofold. First, the court must determine if there is any competent evidence to support any properly challenged finding of fact. N.C. Gen. Stat (i) provides that the Division of Employment Security s findings of fact are binding on appeal if there is any competent evidence to support them. Second, the court must determine if the findings of fact support the conclusions of law. The court may not review the record for the purpose of finding facts for itself. Baptist Children s Homes of N.C. Inc. v. Employment Security Commission, 56 N.C. App. 781, 290 S.E.2d 402 (1982). Fraud and Overpayment N.C. Gen. Stat (a) provides that it is unlawful for any person to make a false statement or knowingly fail to disclose a material fact for the purpose of obtaining or increasing any benefits. If the amount of benefits unlawfully obtained is $ or less, the individual shall be guilty of a Class 1 misdemeanor. If the amount of benefits unlawfully obtained is more than $400.00, the individual shall be guilty of a Class I felony. This provision comes into play most often when a claimant fails to report work and earnings during a week in which he/she files a claim for unemployment benefits. Prior to instituting criminal charges against a claimant whom the DES believes to have committed fraud, the DES will attempt to work out a payment schedule by which the claimant can repay any benefits wrongfully received. A claimant who has been found to have committed fraud by the DES shall be ineligible to receive unemployment benefits for a one year period. 13

14 N.C. Gen. Stat (g)(1) requires that any benefits obtained as a result of fraud must be repaid to the Division of Employment Security. N.C. Gen. Stat (h) requires that a claimant pay a 15% penalty on any fraudulent overpayment received after October 1, 2013 Furthermore, N.C. Gen. Stat (g)(2) requires a claimant to repay any overpayment regardless of whether the overpayment was caused by fraud or even error on the part of the DES. N.C. Gen. Stat. 96-4(w) provides that, upon a finding of good cause, the DES shall have the power in its sole discretion to forgive, in whole or in part, any overpayment arising under N.C. Gen. Stat (g)(2). As such, the DES allows a claimant has been found to have been overpaid unemployment benefits to request a waiver of such overpayment. No waiver will be granted, however, when the overpayment was caused by fraud on the part of the claimant. The waiver is limited to a written request with attachments of any evidence that is to be considered. Other ways the Division has authority to recover an overpayment: (1) The amount of the overpayment due may be collected by civil action and the cost of such action shall be taxed against the Claimant. (2) A judgment can be entered against any property which you own. (3) The overpayment may be deducted from any future benefits. (4) Federal and/or State interception of tax refunds. 14