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ESC suspends part of new state law

Posted October 12, 2011 3:30 p.m. EDT
Updated October 12, 2011 6:36 p.m. EDT

— 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.”