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On April 20, 2020, Governor Roy Cooper issued Executive Order No. 134 (the “Executive Order”).  The Executive Order provides employers with the ability to make payments to furloughed employees without impacting those employees’ ability to receive unemployment benefits.  The Executive Order follows a previous executive order issued by Governor Cooper which eased certain requirements for applying for unemployment benefits in North Carolina and the federal enactment of the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748 (the “CARES Act”), which dramatically expanded unemployment benefits to combat the economic impact of the ongoing COVID-19 outbreak.

What does the Executive Order Do? 

Under the Executive Order, employers may create COVID-19 Support Payment Plans for employees who are, for a temporary period of time, performing no personal services for the employer as a result of a layoff caused by the economic impacts or public health impacts of COVID-19, without those COVID-19 Support Payment Plans impacting an individual’s ability to receive unemployment benefits.  To qualify as a COVID-19 Support Payment, a payment or series of payments must:

  • Be voluntarily made by an employer to an employee in response to the employee being furloughed;
  • Be for services rendered by the employee in the past;
  • Have no obligation for the employee to repay;
  • Be provided without obligation for the employee to perform (or not perform) any act in connection with the employee’s employment status; and
  • Be made pursuant to a COVID-19 Support Payment Plan provided by the employer to the North Carolina Division of Employment Security (“DES”)

Individuals who are furloughed, receive such payments, and remain available to return to work for their employer will be considered “able to work, available to work, actively seeking work, and accepting suitable work” for purposes of receiving unemployment benefits.  If the above criteria are met, such payments will not reduce or delay unemployment benefits the individuals would otherwise be entitled to receive.

What Must an Employer to Offer COVID-19 Support Payments to Furloughed Employees? 

Employers who opt to provide such payments to furloughed employees must submit employer-filed unemployment claims on behalf of each employee receiving COVID-19 Support Payments, as well as submit its COVID-19 Support Payment Plan.  Such a plan must include:

  • The anticipated length of the furlough;
  • The amount of the COIVD-19 Support Payment(s);
  • The names of the furloughed employees receiving COVID-19 Support Payments;
  • A promise that the employer is not making the COVID-19 Support Payment as a form of compensation or remuneration for the employee’s performance of personal services during the furlough; and
  • A promise that the furloughed employees are not required to return or repay the COVID-19 Support Payment(s).

The Executive Order makes clear that such plans “are not promises by the employer to make the payments listed” and that “employers retain the flexibility to stop those payments before the scheduled end of the plan.”  Likewise, the Support Payments and Support Payment Plans are “not promises by the employee to return to work for the employer.”

While such plans must be submitted to DES, they do not need to be – and will not – approved by DES.  Importantly, employers’ COVID-19 Support Payment Plans must be provided by using a form provided by DES, which should be available from DES in the coming days. 

As a result of the Executive Order, employers will now have greater flexibility to provide support payments to employees who have been furloughed as a result of COVID-19, without jeopardizing the employees’ ability to qualify for unemployment benefits.

Should you have any questions about Executive Order 134, please contact Denis Jacobson at djacobson@tuggleduggins.com or (336) 271‑5242, Ross   Hamilton at rhamilton@tuggleduggins.com or (336) 271-5279, or Daniel Stratton at dstratton@tuggleduggins.com or (336) 271-5240. Please also follow our Twitter account @TuggleDuggins at https://twitter.com/TuggleDuggins  for continuing, up-to-date information related to navigating the law during the COVID-19 outbreak.

© 2020 Tuggle Duggins P.A. All Rights Reserved. The purpose of this bulletin is to provide a general summary of significant legal developments. It is not intended to constitute legal advice or a recommended course of action in any given situation. It is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature. Moreover, information contained in this bulletin may have changed subsequent to its publication. This bulletin does not create an attorney-client relationship between Tuggle Duggins P.A. and the recipient. Therefore, please consult legal counsel before making any decisions or taking any action concerning the issues discussed herein.

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