Bill
HB 1059
NC's Fair Minimum Wage Act establishes an inflation-indexed minimum wage, allows local higher rates, and creates a State Wage Board and a short-time compensation program to reduce
Purpose and intent
- Establish a state minimum wage framework that automatically adjusts for inflation, create a North Carolina Wage Board, implement a short-time compensation (STC) program, repeal local minimum wage preemption, and provide funding for implementation.
- Rationale statements in the bill emphasize preserving workers’ purchasing power amid rising costs (housing, food, transportation, health care) and offering local flexibility and workforce stability during downturns.
Key provisions
1) State minimum wage and inflation indexing
- General rule: Employers must pay at least $6.15 per hour or the higher federal FLSA minimum wage, with a base of $15.00 per hour that is indexed for inflation annually.
- Inflation adjustment: Starting January 1, 2027, the $15.00/hour minimum (and the applicable higher baseline when applicable) will be automatically adjusted each January 1 according to the percent change in the Consumer Price Index (CPI-U) from the prior October, calculated to the nearest tenth of a percent. Adjustments apply only if the change is positive.
- Employer eligibility exception (a1): Employers with gross annual receipts under $400,000 can pay a minimum of $11.00/hour starting January 1, 2027, with annual adjustments on the same schedule as the inflation indexing above. Employers must prove eligibility with records retained for at least three years.
- Local minimum wage option (a2): Local governments may adopt higher local minimum wages within their jurisdiction; employers then must pay the higher local rate.
2) North Carolina Wage Board (new)
- A Wage Board is established within the Department of Labor to review wages annually and publish targets to keep wages competitive while allowing workers to afford basics (housing, health care, etc.).
- Board members are appointed by the Commissioner and serve at the Commissioner’s pleasure.
3) Short-Time Compensation (STC) program (new Chapter 96, Article 6)
- Purpose: Allow employers to reduce normal weekly hours for a defined “affected unit” rather than laying off workers, with partial wage supplementation to affected employees.
- Plan approval: Employers submit a written plan to the Division; approval requires detailed criteria (identification of affected unit, names/SSNs, 10-60% hour reductions, non-layoff rationale, coverage of at least 10% of affected unit, CBAs or union input, avoidance of subsidies to seasonal/part-time practices, continuation of fringe benefits, notice, and compliance with state/federal laws). Approval decision within 15 days; plan lasts 12 full calendar months after effective date; annual re-approval required.
- Eligibility for benefits: Workers must be part of an approved plan, available for additional or full-time work, and experience a 10-60% reduction in hours with corresponding wage reduction.
- Benefit calculation: Weekly benefit equals the ratio of reduced hours to normal hours times the weekly benefit amount, rounded down to the nearest dollar.
- Benefit interactions: Benefits reduce other unemployment benefits; seasonal/temporary/intermittent employees are not eligible.
- Funding: Employer charges for STC benefits are allocated to the employer’s unemployment insurance records.
4) Other adjustments and protections
- Full-time students, learners, apprentices, and messengers receive 90% of the standard rate to prevent curtailing opportunities.
- Regulatory authority to set lower rates for certain protected groups or circumstances (age, disability, unemployment duration, economically disadvantaged) with caps (not less than 85% of the standard rate) and time limits (e.g., 52 weeks for subminimum wage).
- Tip credits allowed with strict recordkeeping and certification requirements; tip pooling permitted but limited to reduce individual tips by no more than 15%.
5) Preemption and local government impact
- Repeals the broad preemption of local minimum wage regulations under current law (subject to federal and other statutory limits), enabling localities to enact higher minimum wages.
Funding and effective date
- Appropriation: $150,000 in nonrecurring General Fund funds for 2026-2027 to implement provisions.
- Effective date: Generally upon becoming law; inflation indexing first applies to January 1, 2027.
Potential impact
- Higher, inflation-adjusted minimum wages statewide (with a floor and an automatic annual increase).
- Localities could set higher minimum wages, increasing local variance.
- Introduction of a STC program aimed at reducing layoffs during downturns, potentially stabilizing employment and smoothing wage reductions for workers.
- Administrative and recordkeeping requirements for employers and the state to monitor compliance and implementation.
Compiled from official sources — confirm details with the bill’s official record.
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