North Carolina made significant progress in 2013 to restore solvency, affordability and integrity to its broke and broken unemployment insurance system. At the beginning of 2013, North Carolina employers were facing a $2.6 billion debt to the federal government, and as a result of the 2013 reforms, the state’s UI debt has been drastically reduced to under $1 billion.

The North Carolina Chamber commends Governor McCrory and the legislature for taking action to provide real solutions to our state’s unemployment system that encourage North Carolina businesses to create the jobs our citizens desperately need. Now is the time to keep this positive momentum going as our state continues to face the challenges that come with reforming this system.

North Carolina needs to pass additional measures that are necessary to keep state law in conformity with federal Unemployment Compensation (UC) law. Building on the comprehensive reform to our state’s unemployment insurance system in 2013, the General Assembly has the opportunity to pass measures to amend unemployment compensation information from public records which is a key component to keeping N.C. state law in conformity with federal UC law, as well as preventing future improper disclosures of confidential UC information.

Failure to comply with federal law and conform with U.S. Department of Labor law has the potential to create serious implications for the business community, directly impacting your federal unemployment insurance taxes:

• You could see your FUTA rates jump from $126 to $420 per employee in 2015.
• This tax increase amounts to a tax of more than $1 billion a year on businesses.
• Additionally, North Carolina could lose approximately $57 million in federal grant funds for FY2014.

There has been great progress in repairing our state’s unemployment insurance system, but we are concerned about the real consequences that not addressing this issue could have on employers. We remain committed to working with our state’s leaders to ensure they have what they need to continue that momentum and ensure policy is enacted to protect you from increased unemployment insurance taxes. Contact your legislator at (919) 733-4111 to express your concern over these potential consequences of nonconformity.

Gary J. Salamido

Vice President, Government Affairs
North Carolina Chamber