McCrory signs clean-up of unemployment insurance into law

Credit: Office of the Governor
Credit: Office of the Governor

Gov. McCrory signs Senate Bill 15 into law

GASTONIA – Today Gov. Pat McCrory signed sweeping legislation into law to crack down on fraud in unemployment insurance payouts by boosting requirements for filing and collecting benefits. The bill, sponsored by Sen. Bob Rucho, would require recipients to provide a photo ID to collect unemployment checks.  They must also make a total of five contacts with potential employers any day each week, up from two on separate days under the old law. Investigators are now also allowed to cross-check multiple state databases, such as DMV or criminal records, to ensure that those who are deceased, incarcerated or employed are not collecting unemployment benefits.

Calling the provisions “common sense,” McCrory signed the bill at a Gaston County JobLink Career Center. “This legislation will give us the tools we need to put people back to work sooner and crack down on the fraud that has plagued the program for years,” McCrory said.

The measures come after an audit of the unemployment system last year indicated widespread fraud. In 2014, the Department of Employment Security, working with GDAC (Government Data Analytics Center), investigated 6,400 cases of potential fraud. In the first two quarters of 2015, there were almost 3,500 fraud cases investigated.

In a career center like the one chosen for today’s ceremony in Gastonia, unemployed people will come in with a photo ID, register online for the job search database NCWorks Online and have one-on-one Employment Assessment Interviews. Critics of the law says that the increase in the required number of contacts puts too much pressure o the unemployed, but supporters say the more contacts, the faster they are back on the job.

Employers also get some scrutiny under the new law. It clears the way for the state to garnish non-compliant employers’ credit card receipts if they find the employer is labeling staff as “independent contractors” to avoid paying unemployment tax, or creating fictitious staff members to collect their unemployment benefits. However, employers will also get some relief in the new law. The State Revenue Surtax will be suspended for 2016. The surtax is a 20 percent surcharge on all employers when the Unemployment Insurance Trust Fund dips below $1 billion. It is expected to do so by the end of the year.

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Dale Folwell, assistant secretary of Commerce

Also affecting businesses is the law’s shift to begin charging employers quarterly for unemployment benefits, rather than annually. Quarterly payments allow businesses to have a more predictable financial plan for the year and helps them identify possible unemployment fraud more quickly. Until now, North Carolina was the only state to charge businesses annually for unemployment insurance.

Speaking after the event, Assistant Secretary Dale Folwell said he reminded the audience that McCrory had inherited a “broken” unemployment system, and that with the General Assembly’s help, McCrory paid off $2.6 billion in debt and built a $1 billion surplus in 36 months, which Folwell called “unprecedented.”

“In addition, no governor in the U.S. had overseen the increase in quality scores, customer service and attacks on waste, fraud and abuse that Gov. McCrory had,” said Folwell, who is a former legislator and current head of the N.C. Division of Employment Security. “An accomplishment is only an accomplishment for as long as it lasts. Senate Bill 15 puts more emphasis on solvency and waste, fraud and abuse to ensure that no future N.C. governor will have to fix a bankrupt and broken unemployment system again.”

With the end of summer, North Carolina’s unemployment rate rose .01 percent in July, according to reports released by the DES last week. The state is now sitting at a 5.9 percent statewide unemployment rate. The national unemployment rate is 5.3 percent as of the end of July.