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Beth Langley has been focused on employment law in North Carolina since 1992, but the Brooks, Pierce, McLendon, Humphrey & Leonard, LLP partner hasn’t seen anything like the current crisis. “I’ve spent the last week on the phones with business owners figuring out what to do. Everyone is concerned, everyone is having to make hard decisions.”
Gov. Roy Cooper’s executive order on unemployment benefits provides some flexibility to business owners as they make staff reductions. “But the state has limited jurisdiction. The Fair Labor Standards Act, which is completely governed by the federal government, affects most employers,” says Langley.
Privately held N.C. businesses have virtually no restrictions on dismissing employees except when collective bargaining agreements are in effect. “Restaurant employees, day care workers, those sorts of people are the first being hit right now,” she says.
Federal stimulus programs will prove essential to cushioning the financial blows for both businesses and employees. “We just hope they do it right and not cause more loss.”
Many Brooks Pierce clients are concerned about a provision in the coronavirus relief act that requires companies with less than 500 employees to front the costs of paid sick and emergency leave, Langley says. Companies with less than 50 employees can seek exemptions, while those with more than 500 are excluded from the mandate.
The law makes affected small businesses eligible for tax credits to reimburse their costs. “But you need revenue to have a tax credit and that is obviously a big problem for many businesses,” Langley says. “There are some basic economics here that aren’t being understood.”
U.S. Reps. Dan Bishop of Charlotte and Ted Budd voted against the stimulus bill because of the leave mandates, but it easily passed and was quickly signed into law by President Trump.
The National Federation of Independent Businesses criticized the measure in a statement: “Small businesses in every state are facing extremely low foot traffic, reduced revenues, and are struggling to remain afloat. Our members are telling us, in droves, that the additional mandates in this bill could be a devastating blow they cannot afford to shoulder. Small business owners need relief now, and we look forward to continuing to work with Congress and the administration in this next phase to find a workable solution moving forward.”
Small business owners are also closely watching rules involving unemployment compensation, Langley says. Cooper’s order stated that an employers’ rate won’t change based on claims filed by coronavirus-related workers, unlike typical practice. “His order makes a lot of sense because the goal is to get unemployed funds to workers faster and not punish companies for having to let people go for reasons that were out of their control.”
When laying off employees, Langley says small businesses should remember that hourly staff are compensated for the actual hours worked, while exempt employees must be paid through the end of a specific work week under federal guidelines. For example, if an exempt worker is laid off on a Monday morning, he or she is required to be paid through Friday in the case of a typical work week.
North Carolina’s unemployment insurance fund has a surplus of near $4 billion, versus a $2 billion deficit at the end of the 2007-09 recession. A factor is that state lawmakers have reduced the maximum weekly payout to $350 and created incentives to encourage people to return to the workforce.
Cooper’s order makes it easier for people to apply for benefits and removes a requirement that one has to look for work because of the current restrictions on movement, Langley says.
Langley started her career with the Adams Kleemeier Hagan Hannah & Fouts firm, which merged with Nexsen Pruet in 2004. She later worked at Hagan Barrett & Langley before joining Brooks Pierce two years ago.