Bill
HB 1149
The bill creates a Short-Time Compensation program allowing employers to reduce hours and pay employees STC benefits instead of layoffs, up to 12 months.
Purpose
- Establish a Short-Time Compensation (STC) program as an alternative to layoffs, allowing employers to reduce workers’ hours temporarily while offering unemployment benefits to offset lost wages.
- Provide funding for implementation, education, and outreach about the program.
Key Provisions and Changes
1) New STC Program Framework (Chapter 96, Article 6)
- Introduces STC definitions:
- Affected unit: a definable work unit (plant/department/shift) with at least two employees to which an approved STC plan applies.
- Approved short-time compensation plan: plan approved by the Division of Employment Security.
- Short-time compensation (STC): unemployment benefits paid to employees in an affected unit under an approved plan, separate from regular unemployment benefits.
- Usual weekly hours of work: typical hours for the unit, up to 40 hours (excluding overtime).
- Eligibility and operation:
- Employers file a signed, written STC plan with the Division, including details on affected units, employee identification, notice to workers, proposed hour reductions, health/retirement benefit protections, and duration (max 12 months from the plan’s effective date).
- Plans must include assurances that reductions are in lieu of layoffs, and require employer cooperation in reporting, Division access to records, and compliance with laws.
- Eligibility for employees requires monetary unemployment eligibility, availability for their reduced hours (and possibly approved training), and contemporaneous treatment as unemployed in weeks when hours are reduced.
2) Plan details and approval process
- Submission requirements (a)(1)-(16):
- Identify affected units and workers (names, IDs, unemployment tax number).
- Notification plan to workers (including unionized and non-union workers) or explanation if advance notice isn’t feasible.
- Specify usual hours and the percentage reduction (10%–60%) during weeks covered; identify weeks with no work due to holidays/plant closings; allow for occasional plant shutdowns in appropriate industries.
- Certification that health/retirement benefits will continue for participating employees on the same terms (or equivalent treatment for defined benefit and defined contribution plans).
- Certification that hour reductions substitute for layoffs; employer obligations to reports, Division access, and compliance with laws.
- Agreement that plan participation aligns with federal/state laws and that affected collective bargaining units consent.
- Effective date/duration (ending by the 12th full calendar month after effective date or earlier mutually agreed).
- Division may add other requirements per federal guidance.
- Flexibility: Division can allow some flexibility in dates/hours in appropriate industries if good cause shown.
3) Approval, modification, and revocation
- Approval/disapproval: Division must decide within 30 days; disapproval is final but plan can be resubmitted after at least 90 days.
- Modifications: Employers may request changes; Division can approve modifications if changes occur since initial approval; modifications do not extend the original expiration date.
- Revocation: Division can revoke for good cause (noncompliance, productivity issues, violations of plan criteria) with written order and clear reasons.
- Reporting changes: Employers must report substantial changes to the plan; minor changes may be reported rather than formally modified.
4) Eligibility and Benefits Mechanics
- Eligibility criteria for short-time compensation (per week):
- Employee must be monetarily eligible for unemployment, employed in an affected unit under an active plan, and available for the reduced hours (including approved training).
- The week is treated as unemployed if hours are reduced under the plan for the duration of the plan.
- Benefit amount (as a percentage of regular unemployment):
- Weekly STC benefit equals regular weekly unemployment compensation amount multiplied by the percent reduction in hours.
- Limit: cannot exceed the regular maximum entitlement within a benefit year; cannot be paid for more than 52 weeks under a plan.
- STC benefits are deducted from the individual’s regular unemployment entitlement.
- Interaction with other employment:
- If employees work for multiple employers, benefit calculations consider total hours; certain thresholds apply to determine eligibility and benefit amount.
- If no work is provided in a week, a claimant may receive regular unemployment compensation if otherwise eligible.
5) Funding and Implementation
- Section 2: In FY 2026-2027, $100,000 from the General Fund to the Department of Commerce, Division of Employment Security, to implement and educate employers and employees about the STC program.
6) Effective Date
- Section 3: Effective when the act becomes law; Section 1’s STC provisions take effect October 1, 2026.
Who Is Affected
- Employers with qualifying units (as defined) who elect to participate in STC.
- Employees in affected units who experience an approved hour reduction and receive STC benefits.
- The Division of Employment Security (North Carolina) administering approvals, monitoring, and oversight.
- Employers with health/retirement plans, due to the certifications about benefit continuation during plan participation.
Procedural/Timeline Highlights
- Approval window: 30 days for plan decisions; disapproval allows a new submission after 90 days.
- Plan duration: up to 12 full calendar months from effective date.
- Modifications: can be requested and approved within 30 days; do not extend original expiration.
- Funding: initial implementation funds of $100,000 appropriated for 2026-2027.
Notes
- The act includes severability and federal-law consistency provisions to handle potential conflicts with federal unemployment-related requirements.
Compiled from official sources — confirm details with the bill’s official record.
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