Due to the challenges of COVID-19, many North Carolina employers have placed employees on furlough, which is generally understood to be a temporary hiatus from work. Some employers have looked for ways to support their employees financially through the disruption of daily life when furloughed and seeking unemployment benefits due to COVID-19. On April 20, 2020, North Carolina Governor Roy Cooper signed Executive Order 134 allowing employers to provide financial assistance to employees furloughed because of COVID-19 through COVID-19 Support Payment Plans without jeopardizing their right to receive unemployment benefits.
COVID-19 Support Payments are voluntary payments an employer can make to a furloughed employee for services rendered in the past which the employee is not obligated to repay. They are provided without obligation from the employee to perform or not perform any act in connection with the individual’s status as an employee. Furloughed employees may receive COVID-19 Support Payments from their employer in addition to unemployment benefits. COVID-19 Support Payments will not reduce or delay available unemployment benefits or cause overpayment.
COVID-19 Support Payments must be made pursuant to a COVID-19 Support Payment Plan provided to the North Carolina Division of Employment Security (DES). If an employer desires to make voluntary COVID-19 Support Payments to its employees, without jeopardizing their right to receive unemployment benefits, the employer must first follow these steps established by the North Carolina DES:
- Submit an attached claim (an unemployment claim filed by an employer on behalf of an employee who has been temporarily laid off or who has worked less than 60 percent of their customary full-time hours in a calendar week) for each employee who may receive COVID-19 Support Payments. The procedure for filing an attached claim is detailed on DES’s website; and
- Submit a written COVID-19 Support Payment Plan to DES by completing the COVID-19 Support Payment Plan Application Form and submitting the completed form electronically to firstname.lastname@example.org. The COVID-19 Support Payment Plan must include:
- The anticipated length of the furlough;
- The amount of the COVID-19 Support Payments;
- The names of the employees receiving COVID-19 Support Payments;
- A promise that the employer is not making the COVID-19 Support Payments as a form of payment for the employees’ performance of personal services while furloughed (i.e. they do not constitute “wages”); and
- A promise that employees are not required to return or repay the COVID-19 Support Payments.
The required information for the COVID-19 Support Payment Plan is outlined on the COVID-19 Support Payment Application Form simplifying the processes for employers.
DES approval of a COVID-19 Support Payment Plan is not required before employers can make COVID-19 Support Payments to employees. However, employers need to follow the steps above established by DES before making COVID-19 Support Payments to employees. Employers who make COVID-19 Support Payments without filing attached claims for employees or who do not complete the necessary certifications may impact a furloughed employee’s eligibility for unemployment benefits.
There are protections for employers under COVID-19 Support Payment Plans. Employers have discretion to stop providing payments before the scheduled end of their COVID-19 Support Payment Plans. Employers are also free to choose the amount of the payment and frequency of the payment. A COVID-19 Support Payment Plan is not a promise to make the payments listed in the plan. There are also protections for employees. Employees who accept COVID-19 Support Payments are not obligated to return to work for their employers after their furloughs end.
The takeaway is that employers who wish to provide furloughed employees with financial support now have a mechanism for doing so without jeopardizing those employees’ right to collect unemployment benefits.