ESC suspends part of new state law

Posted October 12, 2011

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— Employment Security Commission Chairwoman Lynn Holmes said Wednesday that she has suspended parts of new state law to head off potential tax increases on North Carolina employers.

Senate Bill 532, which lawmakers passed over Gov. Beverly Perdue's veto, gives businesses more latitude to deny jobless benefits to former workers.

Perdue warned lawmakers in June that the legislation didn't meet federal requirements and could cause unemployment taxes to skyrocket in North Carolina.

The U.S. Department of Labor informed state officials last month that provisions of the new law threatened the eligibility of North Carolina employers to qualify for credit under the Federal Unemployment Tax Act. Without the credit, federal unemployment taxes would increase from 0.8 percent to 6.2 percent, officials said.

Holmes' action also allows the state to retain federal grants for its employment service programs.

Senate President Pro Tem Phil Berger called the notice issued by Perdue and Holmes "bizarre."

"For months, we advised the Perdue administration that it did not have to enforce provisions of the law if the U.S. Department of Labor determined they did not comply with federal requirements. In fact, we made that very point when we overrode her veto," Berger, R-Rockingham, said in a statement. "I’m baffled why they would now send us a politically charged letter to ‘alert’ us to something we’ve already been working on together for months.”


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  • computer trainer Oct 13, 2011

    Berger, R-Rockingham, said in a statement. "I’m baffled why they would now send us a politically charged letter to ‘alert’ us to something we’ve already been working on together for months.”-- Bottom line, this is a political ploy by Bev and her APPOINTED Chairman, Lynne Holmes. All her political buddies are circling the wagons, to ensure that she will be re-elected, so that they can keep their cushy jobs.

  • ericraleigh Oct 12, 2011

    The chairwoman is following a state law passed by our own NC legislature that allows the head of the agency to suspend enforcement of other related laws that are declared out of conformity with federal requirements. Go to the NC General Assembly's website and look up 96-19. So it's unlikely the chairwoman or anyone else is going to go to jail for doing exactly what she's allowed to do by law. The General Assembly may disagree with the chairwoman or the federal regulators, and if so its up to them to re-write the laws in a way that meets federal requirements. The federal requirements control because federal money funds the administration of unemployment insurance system in the states. So since the feds pay the bills, they get to make at least the baseline rules of eligibility.
    As someone else said, one wonders why the General Assembly would pass a law that they knew would meet opposition from the federal government. Why not write a law they knew would be in compliance?

  • ncmedic201 Oct 12, 2011

    @Rebel, what do you mean where was she? She told them before they passed this bill that it would not meet Federal law. She vetoed this bill because it would not meet Federal law. The GA overrode that veto knowing it would not meet Federal law.

  • miseem Oct 12, 2011

    Some of these posters need to read the whole article. Phil Berger himself stated that the legislature had informed Perdue that if the law did not meet federal requirements, it should not be enforced. I guess, according to cushioncritter, he should go to jail also. Of course, that also raises the question of why the legislature would pass, over a veto, a law that they had suspicions would not pass federal approval.

  • Rebelyell55 Oct 12, 2011

    I am glad she did it- it shows she sees the big picture.
    October 12, 2011 4:32 p.m.
    LOL. This woman has done nothing. Where was she at when this was being brought up? Did you see her name anywhere, letting them know what they were in for? This came about only after the fact, and then when some one from the Federal goverment sent her a notice. Also, it said "threaten" not that it actual would. All this did is make sure Business keep their money and not have to help pay for unemployment created by them for greed of profit. I'll agree the law was poorly written, and that AG Mr. Roy Cooper was the one that told them so. But it's still the law. The one who voted for it, should be in session right now fixing it, not some agencies head blocking it.

  • ncmedic201 Oct 12, 2011

    @cushion, you would rather have the unemployment tax rate of businesses increased from 0.8% to 6.2% than have the commissioner of ESC step in and protect businesses and jobs in our state? You sound more concerned with the politics than the affects of this law

  • jlp Oct 12, 2011

    Well this is what happens when you have amateur hour at the legislature. Better remember to get rid of Tillis, Berger and all of their friends in 2012.

  • cushioncritter Oct 12, 2011

    Perhaps the legislature needs to consider a set of remedies in the next session for bureaucrats taking actions like this including fines, prison time, and being permanently barred from elected office. We also need a court system that doesn't need to deliberate matters like this for years -- in any other profession that indicates incompetence. Holmes should have been arrested within one hour, and begin serving a long prison sentence within one week of this "decision to suspend the laws of the state of NC".

  • ncmedic201 Oct 12, 2011

    I would imagine she has some authority when it comes to abiding by federal requirements and making sure the state does not interfere with businesses qualifying under the Federal Unemployment Tax Act.

  • OncomingStorm Oct 12, 2011

    I am glad she did it- it shows she sees the big picture.