AN ACT to make changes to the unemployment insurance laws.

The General Assembly of North Carolina enacts:

part I.  Change the law to continue the three‑year lookback trigger for extended benefits
SECTION 1.(a)  The General Assembly finds that it enacted Section 6.16 of Session Law 2011‑145 and, in so doing, validated the effects of the Governor's Executive Order No. 113 with the stated intent to allow extended benefits to be paid under the Tax Relief Act of 2010 so long as payment of the extended benefits did not hinder the State's ability to reduce its debt owed to the federal government for unemployment benefits.
SECTION 1.(b)  It is deemed, therefore, to be in the best interest of the people of this State that the General Assembly now ratify and hereby validate the effects of the Governor's Executive Order No. 113.
SECTION 1.(c)  Section 6.16(d) of S.L. 2011‑145 reads as rewritten:
"SECTION 6.16.(d)  This section becomes effective April 16, 2011, and expires January 1, 2013."
SECTION 1.(d)  G.S. 96‑12.01(a1)(4)c.3. reads as rewritten:
"3.	This section applies as provided under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111‑312) as it existed on December 17, 2010, and is applicable to compensation for weeks of unemployment beginning after December 17, 2010, and ending on or before December 31, 2012, provided that:
I.	The average rate of (i) insured unemployment, not seasonally adjusted, equaled or exceeded one hundred twenty percent (120%) of the average of such rates for the corresponding 13‑week period ending in all of the preceding three calendar years and equaled or exceeded five percent (5%) or (ii) total unemployment, seasonally adjusted, as determined by the United States Secretary of Labor, for the period consisting of the most recent three months for which data for all states are published before the close of the week equals or exceeds six and one‑half percent (6.5%); and
II.	The average rate of total unemployment in this State, seasonally adjusted, as determined by the United States Secretary of Labor, for the three‑month period referred to in this subsection, equals or exceeds one hundred ten percent (110%) of the average for any of the corresponding three‑month periods ending in the three preceding calendar years."
SECTION 1.(e)  G.S. 96‑12.01(a1)(4)e.3. reads as rewritten:
"3.	This subdivision applies as provided under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111‑312) as it existed on December 17, 2010, and is applicable to compensation for weeks of unemployment beginning after December 17, 2010, and ending on or before December 31, 2012, provided that:
I.	The average rate of total unemployment, seasonally adjusted, as determined by the United States Secretary of Labor, for the period consisting of the most recent three months for which data for all states are published before the close of the week equals or exceeds eight percent (8%); and
II.	The average rate of total unemployment in this State, seasonally adjusted, as determined by the United States Secretary of Labor, for the three‑month period referred to in this subdivision equals or exceeds one hundred ten percent (110%) of the average for any of the corresponding three‑month periods ending in the three preceding calendar years."
SECTION 1.(f)  To maintain the rule of law with respect to State and federal relations pertaining to employment security laws in North Carolina, any executive order issued by the Governor that purports to extend unemployment insurance benefits, whether those benefits will be paid from federal or State funds, is void ab initio, unless the executive order is issued upon authority that is conferred expressly by an act enacted by the General Assembly or granted specifically to the Governor by the Congress of the United States.
SECTION 1.(g)  This section is effective when it becomes law and applies retroactively to January 1, 2012.

Part II.  resolution of outstanding issues from S.L. 2011‑401
SECTION 2.(a)  The Current Operations Appropriations Act for the 2012‑2013 fiscal year shall provide for the annual salaries of the Board of Review, as provided in G.S. 96‑4(b).
SECTION 2.(b)  G.S. 96‑14(2) reads as rewritten:
"§ 96‑14.  Disqualification for benefits.
An individual shall be disqualified for benefits:
…
(2)	For the duration of the individual's unemployment beginning with the first day of the first week after the disqualifying act occurs with respect to which week an individual files a claim for benefits if it is determined by the Division that such individual is, at the time such claim is filed, unemployed because he or she was discharged for misconduct connected with the work. 
	Misconduct connected with the work is defined as conduct evincing a willful or wanton disregard of the employer's interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of an employee or has explained orally or in writing to an employee or conduct evincing carelessness or negligence of such degree or recurrence as to manifest an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to the employer. The following examples are prima facie evidence of misconduct, which may be rebutted by the claimant:
		
a.	Violating the employer's written alcohol or illegal drug policy.
b.	Reporting to work significantly impaired by alcohol or illegal drugs.
c.	Consuming alcohol or illegal drugs on employer's premises.
d.	Conviction by a court of competent jurisdiction for manufacturing, selling, or distribution of a controlled substance punishable under G.S. 90‑95(a)(1) or G.S. 90‑95(a)(2) if the offense is related to or connected with an employee's work for an employer or is in violation of a reasonable work rule or policy.
e.	Being terminated or suspended from employment after arrest or conviction for an offense involving violence, sex crimes, or illegal drugs if the offense is related to or connected with an employee's work for an employer or is in violation of a reasonable work rule or policy.
f.	Any physical violence whatsoever related to an employee's work for an employer, including physical violence directed at supervisors, subordinates, coworkers, vendors, customers, or the general public.
g.	Inappropriate comments or behavior towards supervisors, subordinates, coworkers, vendors, customers, or to the general public relating to any federally protected characteristic which creates a hostile work environment.
h.	Theft in connection with the employment.
i.	Forging or falsifying any document or data related to employment, including a previously submitted application for employment.
j.	Violating an employer's written absenteeism policy.
k.	Refusing to perform reasonably assigned work tasks or failing to adequately perform employment duties as evidenced by no fewer than three written reprimands in the 12 months immediately preceding the employee's termination. 
The phrase "discharge for misconduct connected with the work" does not include the discharge or an employer‑initiated separation of a severely disabled veteran, as defined in G.S. 96‑8, for any act or omission of the veteran that the Division determines are attributed to a disability incurred or aggravated in the line of duty during active military service, or to the veteran's absence from work to obtain care and treatment of a disability incurred or aggravated in the line of duty during active military service."
SECTION 2.(c)  G.S. 96‑15(b)(2) reads as rewritten:
"(2)	Adjudication. – When a protest is made by the claimant to the initial or monetary determination, or a question or issue is raised or presented as to the eligibility of a claimant under G.S. 96‑13, or whether any disqualification should be imposed under G.S. 96‑14, or benefits denied or adjusted pursuant to G.S. 96‑18, the matter shall be referred to an adjudicator. The adjudicator may consider any matter, document or statement deemed to be pertinent to the issues, including telephone conversations, and after such consideration shall render a conclusion as to the claimant's benefit entitlements. The adjudicator shall notify the claimant and all other interested parties of the conclusion reached. The conclusion of the adjudicator shall be deemed the final decision of the Division unless within 30 days after the date of notification or mailing of the conclusion, whichever is earlier, a written appeal is filed pursuant to rules adopted by the Division. The Division shall be deemed an interested party for such purposes and may remove to itself or transfer to an appeals referee the proceedings involving any claim pending before an adjudicator.
Provided, any interested employer shall be allowed 10 days from the delivery of the notice of the filing of a claim against the employer's account to protest the claim and have the claim referred to an adjudicator for a decision on the question or issue raised. A copy of the notice of the filing shall be sent contemporaneously to the employer by telefacsimile transmission if a fax number is on file. Provided further, no question or issue may be raised or presented by the Division as to the eligibility of a claimant under G.S. 96‑13, or whether any disqualification should be imposed under G.S. 96‑14, after 45 days from the first day of the first week after the question or issue occurs with respect to which week an individual filed a claim for benefits. None of the provisions of this subsection shall have the force and effect nor shall the same be construed or interested as repealing any other provisions of G.S. 96‑18.
An employer shall receive written notice of the employer's appeal rights and any forms that are required to allow the employer to protest the claim. The forms shall include a section referencing the appropriate rules pertaining to appeals and the instructions on how to appeal."
SECTION 2.(d)  G.S. 96‑15(f) reads as rewritten:
"(f)	Procedure. – The manner in which disputed claims shall be presented, the reports thereon required from the claimant and from employers, and the conduct of hearings and appeals shall be in accordance with rules adopted by the Division for determining the rights of the parties, whether or not such rules conform to common‑law or statutory rules of evidence and other technical rules of procedure.
All testimony at any hearing before an appeals referee upon a disputed claim shall be recorded unless the recording is waived by all interested parties. If the testimony is recorded, it need not be transcribed unless the disputed claim is further appealed and, one or more of the parties objects, under such rules as the Division may adopt, to being provided a copy of the tape recording of the hearing. Any other provisions of this Chapter notwithstanding, any individual receiving the transcript shall pay to the Division such reasonable fee for the transcript as the Division may by regulation provide. The fee so prescribed by the Division for a party shall not exceed the lesser of sixty‑five cents (65¢) per page or sixty‑five dollars ($65.00) per transcript. The Division may by regulation provide for the fee to be waived in such circumstances as it in its sole discretion deems appropriate but in the case of an appeal in forma pauperis supported by such proofs as are required in G.S. 1‑110, the Division shall waive the fee.
The parties may enter into a stipulation of the facts. If the appeals referee, hearing officer, or other employee assigned to make the decision believes the stipulation provides sufficient information to make a decision, then the appeals referee, hearing officer, or other employee assigned to make the decision may accept the stipulation and render a decision based on the stipulation. If the appeals referee, hearing officer, or other employee assigned to make the decision does not believe the stipulation provides sufficient information to make a decision, then the appeals referee, hearing officer, or other employee assigned to make the decision must reject the stipulation. The decision to accept or reject a stipulation must occur in a recorded hearing."
SECTION 2.(e)  Subsections (b) through (d) of this section become effective November 1, 2012. The remainder of this section is effective when it becomes law.

part iii.  Compliance with the trade adjustment assistance extension act of 2011
SECTION 3.(a)  G.S. 110‑129.2(c) reads as rewritten:
"(c)	Report Contents. – Each report required by this section shall contain the name, address, social security number of the newly hired employee, the date services for remuneration were first performed by the newly hired employee, and the name and address of the employer and the employer's identifying number assigned under section 6109 of the Internal Revenue Code of 1986 and the employer's State employer identification number. Reports shall be made on the W‑4 form or, at the option of the employer, an equivalent form, and may be transmitted magnetically, electronically, or by first‑class mail."
SECTION 3.(b)  G.S. 110‑129.2(j) is amended by adding a new subdivision to read:
"(j)	Definitions. – As used in this section, unless the context clearly requires otherwise, the term:
…
(5)	"Newly hired employee" means (i) an employee who has not previously been employed by the employer and (ii) an employee who was previously employed by the employer but has been separated from such prior employment for at least 60 consecutive days."
SECTION 3.(c)  G.S. 96‑9(c)(2) is amended by adding a new sub‑subdivision to read:
"(2)	Charging of benefit payments. – 
…
f.	The Division shall charge benefits to an employer's account when it determines that an overpayment has been made to a claimant and it determines that both of the following conditions apply:
1.	The overpayment occurred because the employer failed to respond timely or adequately to a written request of the Division for information relating to an unemployment compensation claim.
2.	The employer exhibits a pattern of failure to respond timely or adequately by failing to respond to written requests from the Division for information relating to an unemployment compensation claim on two or more occasions. If an employer uses a third‑party agent to respond on its behalf to the Division, then the actions of the agent must be considered when determining a pattern of failure to respond timely or adequately. A pattern is established based on the agent's behavior overall and not only with respect to its behavior related to the employer.
For purposes of this sub‑subdivision, written notification may include a request sent electronically. A response is considered untimely if it fails to be made within the time allowed under G.S. 96‑15(b)(2). A response is considered inadequate if it fails to provide sufficient facts to enable the Division to make a correct determination of benefits. However, a response may not be considered inadequate if the Division fails to request the necessary information.
	The prohibition on the noncharging of an employer's account under this sub‑subdivision applies to each week of unemployment compensation that is an overpayment until the Division makes a determination that the claimant is no longer eligible for the overpaid amount and stops making the overpayment. If the claim is a combined‑wage claim, the determination of noncharging for the combined‑wage claim shall be made by the paying state. If the response from the employer does not meet the criteria established by the paying state for an adequate or timely response, the paying state must promptly notify the transferring state of its determination and the employer must be appropriately charged. The Division may waive the prohibition for good cause."
SECTION 3.(d)  G.S. 96‑18 is amended by adding a new subsection to read:
"(h)	Mandatory Federal Penalty. – A person who has been held ineligible for benefits under subsection (e) of this section and who, because of those same acts or omissions, has received any sum as benefits under this Chapter to which the person is not entitled shall be assessed a penalty in an amount equal to fifteen percent (15%) of the amount of the erroneous payment. The penalty amount shall be payable to the Unemployment Insurance Fund. The penalty applies to an erroneous payment made under any State program providing for the payment of unemployment compensation as well as an erroneous payment made under any federal program providing for the payment of unemployment compensation. The notice of determination or decision advising the person that benefits have been denied or adjusted pursuant to subsection (e) of this section must include the reason for the finding of an erroneous payment, the penalty amount assessed under this subsection, and the reason the penalty has been applied.
The penalty amount may be collected in any manner allowed for the recovery of the erroneous payment, except that the penalty amount may not be recovered through offsets of future benefits. When a recovery with respect to an erroneous payment is made, any recovery applies first to the principal of the erroneous payment, then to the federally mandated penalty amount imposed under this subsection, and finally to any other amounts due."
SECTION 3.(e)  G.S. 96‑6(a) reads as rewritten: 
"(a)	Establishment and Control. – There is hereby established as a special fund, separate and apart from all public moneys or funds of this State, an Unemployment Insurance Fund, which shall be administered by the Division's Employment Insurance Section exclusively for the purposes of this Chapter. All moneys in the fund shall be commingled and undivided. This fund shall consist of:
(1)	All contributions collected under this Chapter, together with any interest earned upon any moneys in the fund.(2)	Any property or securities acquired through the use of moneys belonging to the fund.
(3)	All earnings of such property or securities.
(4)	Any moneys received from the federal unemployment account in the unemployment trust fund in accordance with Title XII of the Social Security Act as amended.
(5)	All moneys credited to this State's account in the Unemployment Trust Fund pursuant to section 903 of Title IX of the Social Security Act, as amended, (U.S.C.A. Title 42, sec. 1103 (a)).(6)	All moneys paid to this State pursuant to section 204 of the Federal‑State Extended Unemployment Compensation Act of 1970.
(7)	Reimbursement payments in lieu of contributions.
(8)	Any federally mandated penalty amount assessed under G.S. 96‑18(h).
"
SECTION 3.(f)  Subsection (c) of this section becomes effective October 1, 2013, and applies to an overpayment established on or after that date. Subsections (d) and (e) of this section become effective October 1, 2013, and apply to an erroneous payment determined under G.S. 96‑18(e) to be a fraudulent overpayment on or after that date.  The remainder of this section becomes effective July 1, 2012.

part iv.  Enhance Unemployment compensation Fraud detection and Recovery, as recommended by the House Unemployment Fraud Task Force
SECTION 4.(a)  G.S. 96‑18(a) reads as rewritten:
"(a)	It shall be unlawful for any person to make a false statement or representation knowing it to be false or to knowingly fail to disclose a material fact to obtain or increase any benefit under this Chapter or under an employment security law of any other state, the federal government, or of a foreign government, either for himself or any other person. Records, with any necessary authentication thereof, required in the prosecution of any criminal action brought by another state or foreign government for misrepresentation to obtain benefits under the law of this State shall be made available to the agency administering the employment security law of any such state or foreign government for the purpose of such prosecution. Photostatic copies of all records of agencies of other states or foreign governments required in the prosecution of any criminal action under this section shall be as competent evidence as the originals when certified under the seal of such agency, or when there is no seal, under the hand of the keeper of such records.
(1)	A person who violates this subsection shall be found guilty of a Class I felony if the value of the benefit wrongfully obtained is more than four hundred dollars ($400.00).
(2)	A person who violates this subsection shall be found guilty of a Class 1 misdemeanor if the value of the benefit wrongfully obtained is four hundred dollars ($400.00) or less."
SECTION 4.(b)  G.S. 96‑18(g)(1) is repealed.
SECTION 4.(c)  G.S. 96‑18(g)(2) reads as rewritten:
"(2)	Any person who has received any sum as benefits under this Chapter by reason of the nondisclosure or misrepresentation by him or by another of a material fact (irrespective of whether such nondisclosure or misrepresentation was known or fraudulent) or has been paid benefits to which he was not entitled for any reason (including errors on the part of any representative of the Division) shall be liable to repay such sum to the Division as provided in subdivision (3) of this subsection."
SECTION 4.(d)  The Department of the Treasury, Financial Management Service, is the federal government's central debt collection agency. It develops and maintains a centralized offset program known as the Treasury Offset Program (TOP), by which payments are offset to collect delinquent debts owed to federal agencies and states. State Unemployment Compensation debts are now eligible for referral to the Program, pursuant to Public Law 110‑32 and Public Law 111‑291.
It is the desire of the General Assembly for the State to participate in the Unemployment Insurance Compensation Debt Program on or before January 1, 2013. The Division of Employment Security is required to report to the House Unemployment Fraud Task Force by September 1, 2012, November 1, 2012, and January 1, 2013, on the implementation of the TOP.  The report should contain, at a minimum, the following:
(1)	An implementation time line, including a go‑live date and status update on where the Division is in the process.
(2)	A detailed list of implementation requirements. For each requirement, the Division is to provide any barriers and proposed solutions to each barrier.
(3)	An itemized accounting of the cost to implement TOP, including the source of funds used. Recurring and nonrecurring costs shall be broken out accordingly.
(4)	For the September 1 report, the Division is to provide an estimate of how much it anticipates recovering annually through TOP. The report should include the methodology used to arrive at this estimate.
SECTION 4.(e)  Subsection (a) of this section becomes effective December 1, 2012, and applies to offenses committed on or after that date. Subsections (b) and (c) of this section become effective October 1, 2012, and apply to an overpayment established on or after that date. The remainder of this section is effective when it becomes law.

part v.  technical changes requested by the division of employment security
SECTION 5.(a)  The title of Article 4 of Chapter 96 of the General Statutes reads as rewritten:
"Article 4.
"Labor and Economic Analysis Division: Job Training, Education, and Placement Information Management."
SECTION 5.(b)  G.S. 96‑31 reads as rewritten:
"§ 96‑31.  Definitions.
As used in this Article, unless the context clearly requires otherwise, the term:
(1)	"CFS" means the common follow‑up information management system developed by the Labor and Economic Analysis Division under this Article.
	(3)	Repealed by Session Laws 2000, c. 140, s. 93.1(d).
(4)	"State job training, education, and placement program" or "State‑funded program" means a program operated by a State or local government agency or entity and supported in whole or in part by State or federal funds, that provides job training and education or job placement services to program participants. The term does not include on‑the‑job training provided to current employees of the agency or entity for the purposes of professional development."
SECTION 5.(c)  G.S. 96‑32 reads as rewritten:
"§ 96‑32.  Common follow‑up information management system created.
(a)	The Labor and Economic Analysis Division shall develop, implement, and maintain a common follow‑up information management system for tracking the employment status of current and former participants in State job training, education, and placement programs. The system shall provide for the automated collection, organization, dissemination, and analysis of data obtained from State‑funded programs that provide job training and education and job placement services to program participants. In developing the system, the Division shall ensure that data and information collected from State agencies is confidential, not open for general public inspection, and maintained and disseminated in a manner that protects the identity of individual persons from general public disclosure.
(b)	The Labor and Economic Analysis Division shall adopt procedures and guidelines for the development and implementation of the CFS authorized under this section.
(c)	Based on data collected under the CFS, the Labor and Economic Analysis Division shall evaluate the effectiveness of job training, education, and placement programs to determine if specific program goals and objectives are attained, to determine placement and completion rates for each program, and to make recommendations regarding the continuation of State funding for programs evaluated."
SECTION 5.(d)  G.S. 96‑33 reads as rewritten:
"§ 96‑33.  State agencies required to provide information and data.
(a)	Every State agency and local government agency or entity that receives State or federal funds for the direct or indirect support of State job training, education, and placement programs shall provide to the Labor and Economic Analysis Division all data and information available to or within the agency or entity's possession requested by the Division for input into the common follow‑up information management system authorized under this Article and for such other official functions as are performed by the Division. The Division of Employment Security shall provide all information in its possession and control requested by the Division in order for the Division to accomplish the purpose set forth in this Article and such other official functions performed by it. 
(b)	Each agency or entity required to report information and data to the Labor and Economic Analysis Division under this Article shall maintain true and accurate records of the information and data requested by the Division. The records shall be open to the Division for inspection and copying at reasonable times and as often as necessary. Each agency or entity shall further provide, upon request by the Division, sworn or unsworn reports with respect to persons employed or trained by the agency or entity, as deemed necessary by the Division to carry out the purposes of this Article. Information obtained by the Division from the agency, entity, or the Division of Employment Security shall be held by the Division as confidential, subject to the State and federal laws governing treatment of such information, and shall not be published or open to public inspection other than in a manner that protects the identity of individual persons and employers."
SECTION 5.(e)  	G.S. 96‑35 reads as rewritten:
"§ 96‑35.  Reports on common follow‑up system activities.
(a)	The Secretary shall present annually by May 1 to the General Assembly and to the Governor a report of CFS activities for the preceding calendar year. The report shall include information on and evaluation of job training, education, and placement programs for which data was reported by State and local agencies subject to this Article. Evaluation of the programs shall be on the basis of fiscal year data.
(b)	The Secretary shall report to the Governor and to the General Assembly upon the convening of each biennial session, its evaluation of and recommendations regarding job training, education, and placement programs for which data was provided to the CFS."
SECTION 5.(f)  This section is effective when it becomes law.

PART VI.  NC FACTS PROGRAM 
SECTION 6.(a)  G.S. 96‑4(x)(1) reads as rewritten:
"(x)	Confidentiality of Records, Reports, and Information Obtained from Claimants, Employers, and Units of Government. Disclosure and redisclosure of confidential information shall be consistent with 20 C.F.R. Part 603 and any written guidance promulgated and issued by the U.S. Department of Labor consistent with this regulation and any successor regulation. To the extent a disclosure or redisclosure of confidential information is permitted or required by this federal regulation, the Department's authority to disclose or redisclose the information includes the following:
(1)	Confidentiality of Information Contained in Records and Reports. – (i) Except as hereinafter otherwise provided, it shall be unlawful for any person to obtain, disclose, or use, or to authorize or permit the use of any information which is obtained from any employing unit, individual, or unit of government pursuant to the administration of this Chapter or G.S. 108A‑29. (ii) Any claimant or employer or their legal representatives shall be supplied with information from the records of the Division to the extent necessary for the proper presentation of claims or defenses in any proceeding under this Chapter. Notwithstanding any other provision of law, any claimant may be supplied, subject to restrictions as the Division may by regulation prescribe, with any information contained in his payment record or on his most recent monetary determination, and any individual, as well as any interested employer, may be supplied with information as to the individual's potential benefit rights from claim records. (iii) Subject to restrictions as the Secretary may by regulation provide, information from the records of the Division may be made available to any agency or public official for any purpose for which disclosure is required by statute or regulation. (iv) The Division may, in its sole discretion, permit the use of information in its possession by public officials in the performance of their public duties. (v) The Division shall release the payment and the amount of unemployment compensation benefits upon receipt of a subpoena in a proceeding involving child support. (vi) The Division shall furnish to the State Controller any information the State Controller needs to prepare and publish a comprehensive annual financial report of the State or to track debtors of the State. (vii) The Secretary may disclose or authorize redisclosure of any confidential information to an individual, agency, or entity, public or private, consistent with the requirements enumerated in 20 C.F.R. Part 603 or any successor regulation and any written guidance promulgated and issued by the U.S. Department of Labor consistent with 20 C.F.R. Part 603.
…."
SECTION 6.(b)  This section is effective when it becomes law.

Part VII.  Effective date
SECTION 7.  Except as otherwise provided, this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 27th day of June, 2012.

	s/	 Walter H. Dalton
	 President of the Senate

	s/	 Thom Tillis
	 Speaker of the House of Representatives

	s/	 Beverly E. Perdue
	 Governor

Approved 12:39 p.m. this 29th day of June, 2012