Reduced Hours,Reduced Wages, and Layoffs during the COVID-19 Crisis

These general rules should be followed when considering a reduction in hours, a reduction in wages, or termination in North Carolina. If there is an employment agreement in place, the provisions of the agreement will generally take precedence over these rules. 

Reducing Hours 

• An employer is free to adjust the hours of its employees regardless of what the employees are scheduled to work. 

• The employer does not have give its employees any advanced notice of having to work different hours.

 • Keep in mind that if hours are significantly reduced, employees may no longer be eligible to receive the employer’s health insurance benefits. 

Reducing Wages 

• An employer can change its wage agreement with an employee at any time, regardless of what the original wage agreement was.

 • An employer must notify its employees in writing at least 24 hours prior to any changes in its wage agreements that result in the reduction in pay or wage benefits.

• An employer cannot make changes in pay or wage benefits that result in the retroactive reduction of wages or wage benefits that are already earned. 

Layoffs 

• Layoffs are defined as a full separation with an employee.

• You’ll want to draft a termination letter to the affected employee. You’ll also want to encourage your employee to apply for unemployment benefits as quickly as possible.

 • In North Carolina, the employer’s unemployment insurance tax account will not be charged, for those individuals who are paid benefits for reasons related to COVID-19. 

• As an employer, when your company announces plans to either close a facility or conduct a mass personnel layoff, you may be required to file a report with the state, under certain circumstances, known as a Worker Adjustment and Retraining Notification – commonly called a WARN notice.

Generally, an employer cannot discriminate against its employees for reasons based on age, race, sex, religion, national origin, color, disability, or pregnancy. Discrimination claims can be made based on reduced hours, reduced wages, and termination, if there are other employees who were not affected by reductions or termination. To avoid any potential discrimination claims, when deciding whose hours/wages will be reduced or who will be laid off, it may be helpful to make these changes on the basis of seniority at the company.

Please contact us if you need assistance making any of these changes in employment or complying with current state and federal employment laws