It’s not often that North Carolina lawmakers find bipartisan consensus these days – especially on legislation that would help workers, boost tax revenues, spur the economy and make North Carolina a better and fairer state. That’s what makes the demise of three important and commonsense bills that got lost in the shuffle during the closing days of the 2016 legislative session particularly unfortunate.
#1 – Cracking down on employer “misclassification fraud” – As has been reported in numerous media outlets, including a major exposé in Raleigh’s News & Observer, misclassification fraud is a large and growing problem that harms workers, puts a strain on public resources and provides an unfair advantage to unscrupulous employers competing with law-abiding businesses. It occurs when employers wrongfully treat their workers as independent contractors rather than as employees and fail to pay the appropriate taxes or make withholdings required by law.
Misclassification fraud gets employers off the hook for basic protections, including the minimum wage, overtime pay, worker’s compensation, health and safety protections and unemployment insurance. Employers who fraudulently misclassify their workers also have an unfair advantage when bidding for contracts and the public is left holding the bag. It is estimated that $467 million in state and federal taxes are lost each year in the North Carolina construction industry alone.
#2 – Expanding “certificates of relief” to help people with a criminal record successfully reenter society – Modeled on a uniform law already in effect in several states and sponsored by Commissioner of Adult Corrections and Juvenile Justice David Guice during his time in the General Assembly, the Certificate of Relief Act became law in 2011. The Act allows individuals with one or two misdemeanor or low-level felony convictions in the same session of court to petition a judge for a certificate that mitigates many of the 1000 “civil disabilities” trigged by criminal convictions in North Carolina. Someone with a certificate does not receive any favorable treatment, but the certificate is proof of rehabilitation and helps to restore access to employment, housing, and educational opportunities by shielding employers, landlords, and other decision makers from potential negligence liability.
As it is currently written, however, the law does not provide relief to many deserving North Carolinians whose criminal histories and illegal activities were not limited to a single day or incident. Expanding eligibility to men and women with multiple misdemeanor and low-level felony convictions who can prove their rehabilitation to the same courts in which they were originally convicted would provide meaningful relief to thousands of North Carolinians who have turned their lives around and are trying to do the right thing and successfully reintegrate into their communities. Restoring access to employment, housing, and other opportunities essential to productive citizenship in this transparent and bipartisan manner will significantly reduce our state’s unacceptably high two-year recidivism rate of 40%, thereby enhancing community safety, preserving state resources, strengthening families and making communities more prosperous.
#3- Providing employers with an alternative to layoffs – Today, businesses in 28 states have the option to implement a voluntary program called “work sharing” that provides an alternative to layoffs when the economy hits a rough patch. Work sharing, or short-time compensation, is run through the federal-state unemployment insurance system and allows an employer to reduce the hours of some or all workers instead of laying off a portion of the workforce. Workers with the reduced hours are then eligible for partial unemployment benefits to supplement their paychecks. For example, instead of simply laying off five workers, an employer can reduce the schedules of 25 workers by 20 percent.
By avoiding layoffs, work sharing can positively affect employee morale and loyalty by allowing employees to maintain crucial income and, in many cases, their health benefits. Work sharing in other states helped save 450,000 jobs nationally between 2008 and 2012, particularly in manufacturing.
Since employers choose work sharing as an option when there would otherwise be layoffs, there is no impact on Unemployment Insurance Trust Funds. Among the 28 states to embrace work sharing are Virginia, Texas, Florida, Wisconsin, Michigan and Ohio (where the law was endorsed by the state Chamber of Commerce). Economists and policy experts across the political spectrum have pointed to work sharing as a key strategy in maintaining employment stability.
No one expects the upcoming election to solve all of the divisions that have plagued recent General Assemblies, but there will be important things lawmakers can do in 2017 to bridge gaps and make government work for everyone. Reviving bipartisan proposals on misclassification, certificates of relief and work sharing – proposals that met little opposition but failed to find their way to the Governor’s desk in 2016 – is an obvious place to start.
Bill Rowe is General Counsel and Director of Advocacy at the North Carolina Justice Center.