Fair Minimum Wage Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1059

Short Title: Fair Minimum Wage Act. (Public)
Sponsors: Representatives Prather, Longest, Buansi, and K. Brown (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Rules, Calendar, and Operations of the House
April 28, 2026
*H1059-v-1*
A BILL TO BE ENTITLED 1
AN ACT ESTABLISHING STATE MINIMUM WAGES THAT ADJUST UPWARD 2
AUTOMATICALLY FOR INFLATION, CREATING THE NORTH CAROLINA WAG E 3
BOARD, ESTABLISHING THE SHORT -TIME COMPE NSATION PROGRAM, 4
REPEALING THE RESTRI CTION ON LOCAL MINIM UM WAGES, AND 5
APPROPRIATING FUNDS FOR IMPLEMENTATION OF THIS ACT. 6
Whereas, the wages paid to working North Carolinians should be sufficient to better 7
reflect the rising cost of basic necessities, including housing, food, transportation, and health 8
care; and 9
Whereas, indexing the State minimum wage for inflation will help preserve workers' 10
purchasing power over time and reduce the need for repeated legislative intervention; and 11
Whereas, allowing local governments to adopt higher minimum wages, where 12
appropriate, gives communities greater flexibility to respond to local labor market conditions and 13
cost pressures; and 14
Whereas, a Wage Board and a short -time compensation program can help the State 15
promote fair wages, reduce avoidable layoffs, and support workforce stability during economic 16
downturns; and 17
Whereas, improving wage standards and employment stability advances the general 18
welfare of the people of North Carolina; Now, therefore, 19
The General Assembly of North Carolina enacts: 20
SECTION 1.1. G.S. 95-25.3 reads as rewritten: 21
"§ 95-25.3. Minimum wage. 22
(a) Every Except as provided by subsection (a1) of this section, every employer shall pay 23
to each employee who in any workweek performs any work, wages of at least six dollars and 24
fifteen cents ($6.15) per hour or the minimum wage set forth in paragraph 1 of section 6(a) of the 25
Fair Labor Standards Act, 29 U.S.C. 206(a)(1), as that wage may change from time to time, 26
whichever is higher, except as otherwise provided in this section.fifteen dollars ($15.00) per hour, 27
which shall be adjusted automatically for inflation annually to reflect increases in the Consumer 28
Price Index, with the first adjustment occurring effective January 1, 202 7. These adjustments 29
shall be effective January 1 of each year . The adjustments shall be calculated by the 30
Commissioner as the percentage of change between the October Consumer Price Index in the 31
year most recently ended, calculated to the nearest tenth of one percent (1/10 of 1%), provided 32
that this percentage change is positive. For the purposes of this section, the term "Consumer Price 33
Index" means the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, 34
General Assembly Of North Carolina Session 2025
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all items, not seasonally adjusted, standard reference base, as published by the Bureau of Labor 1
Statistics of the U.S. Department of Labor. 2
(a1) Notwithstanding the provisions of subsection (a) of this section, an employer whose 3
gross annual receipts for the preceding calendar year were less than four hundred thousand dollars 4
($400,000) shall pay to each employee who in any workweek performs any work wages of at 5
least eleven dollars ($11.00) per hour or the minimum wage set forth in paragraph 1 of section 6
6(a) of the Fair Labor Standards Act, 29 U.S.C. § 206(a)(1), as that wage may change from time 7
to time, whichever i s higher, except as otherwise provided in this section. The rate of eleven 8
dollars ($11.00) per hour is effective January 1, 2027, and shall be adjusted annually thereafter 9
in the same manner and on the same schedule as provided in subsection (a) of this s ection. An 10
employer that qualifies under this section has the burden of establishing its eligibility by 11
maintaining records sufficient to demonstrate gross annual receipts for the preceding calendar 12
year. The records shall be retained for at least three years and shall be made available to the 13
Commissioner upon request. 14
(a2) A local government may adopt an ordinance establishing a local minimum wage 15
within its territorial jurisdiction that is higher than the statewide minimum wage; then, in t hat 16
case, every employer in the jurisdiction shall instead pay the higher local minimum wage. 17
(a3) The North Carolina Wage Board is established within the Department. Wage Board 18
members shall be appointed by, and serve at the pleasure of, the Commissioner. The Wage Board 19
shall review wages in this State annually and publish a report establishing targets for the State to 20
remain competitive and that allow wage earners to afford housing, health care, and other basic 21
necessities. 22
(b) In order to prevent curtailment of opportunities for employment, the wage rate for 23
full-time students, learners, apprentices, and messengers, as defined under the Fair Labor 24
Standards Act, shall be ninety percent (90%) of the rate in effect under subsection (a) above, or 25
subsection (a1) of this section rounded to the lowest nickel. 26
(c) The Commissioner, in order to prevent curtailment of opportunities for employment, 27
may, by regulation, establish a wage rate less than the wage rate in effect under section (a) or 28
subsection (a1) of this section which may apply to persons whose earning or productive capacity 29
is impaired by age or physical or mental deficiency or injury, as such persons are defined under 30
the Fair Labor Standards Act. 31
(d) The Commissioner, in order to prevent curta ilment of opportunities for employment 32
of the economically disadvantaged and the unemployed, may, by regulation, establish a wage 33
rate not less than eighty-five percent (85%) of the otherwise applicable wage rate in effect under 34
subsection (a) or subsection (a1) of this section which shall apply to all persons (i) who have 35
been unemployed for at least 15 weeks and who are economically disadvantaged, or (ii) who are, 36
or whose families are, receiving Work First Family Assistance or who are receiving supplemental 37
security benefits under Title XVI of the Social Security Act. 38
Pursuant to regulations issued by the Commissioner, certificates establishing eligibility for 39
such subminimum wage shall be issued by the Division of Employment Security. 40
The regulation issued by the Commissioner shall not permit employment at the subminimum 41
rate for a period in excess of 52 weeks. 42
(e) The Commissioner, in order to prevent curtailment of opportunities for employment, 43
and to not adversely affect the viability of seasonal establishments, may, by regulation, establish 44
a wage rate not less than eighty-five percent (85%) of the otherwise applicable wage rate in effect 45
under subsection (a) or subsection (a1) of this section that shall apply to any employee employed 46
by an establishment that is a seasonal food service establishment. 47
(f) Tips earned by a tipped employee may be counted as wages only up to the amount 48
permitted in section 3(m) of the Fair Labor Standards Act, 29 U.S.C. 203(m), if the tipped 49
employee is notified in advance, is permitted to retain all tips and the employer maintains 50
accurate and complete records of tips received by each employee as such tips are certified by the 51
General Assembly Of North Carolina Session 2025
House Bill 1059-First Edition Page 3
employee monthly or for each pay period. Even if the employee refuses to certify tips accurately, 1
tips may still be counted as wages when the employer complies with the other requirements of 2
this section and can demonstrate by monitoring tips that the employee regularly receives tips in 3
the amount for which the credit is taken. Tip pooling shall also be permissible among employees 4
who customarily and regularly receive tips; however, no employee's tips may be reduced by more 5
than fifteen percent (15%) under a tip pooling arrangement. 6
(g) Repealed by Session Laws 2006-259, s. 18, effective August 23, 2006." 7
SECTION 2.1. G.S. 95-25.1 reads as rewritten: 8
"§ 95-25.1. Short title and legislative purpose; local governments preempted.purpose. 9
(a) This Article shall be known and may be cited as the "Wage and Hour Act." 10
(b) The public policy of this State is declared as follows: The wage levels of employees, 11
hours of labor, payment of earned wages, and the well -being of minors are subjects of concern 12
requiring legislation to promote the general welfare of the people of the State without 13
jeopardizing t he competitive position of North Carolina business and industry. The General 14
Assembly declares that the general welfare of the State requires the enactment of this law under 15
the police power of the State. 16
(c) Repealed by Session Laws 2017-4, s. 1, effective March 30, 2017. 17
(d) The provisions of this Article supersede and preempt any ordinance, regulation, 18
resolution, or policy adopted or imposed by a unit of local government or other political 19
subdivision of the State that regulates or imposes any requireme nt upon an employer pertaining 20
to compensation of employees, such as the wage levels of employees, hours of labor, payment of 21
earned wages, benefits, leave, or well-being of minors in the workforce. This subsection shall not 22
apply to any of the following: 23
(1) A local government regulating, compensating, or controlling its own 24
employees. 25
(2) Economic development incentives awarded under Chapter 143B of the 26
General Statutes. 27
(3) Economic development incentives awarded under Article 1 of Chapter 158 of 28
the General Statutes. 29
(4) A requirement of federal community development block grants. 30
(5) Programs established under G.S. 160D-1311." 31
SECTION 3.1. Chapter 96 of the General Statutes is amended by adding a new 32
Article to read: 33
"Article 6. 34
"Short-Time Compensation. 35
"§ 96-45. Short-time compensation. 36
(a) Definitions. – The following definitions apply in this section: 37
(1) Affected unit. – A specified plant, department, shift, or other definable unit of 38
two or more employees designated by the employer to participate in a 39
short-time compensation plan. 40
(2) Employer-sponsored training. – A training component sponsored by an 41
employer to improve the skills of the employer's workers. 42
(3) Normal weekly hours of work. – The number of hours in a week that an 43
individual would regularly work for the short -time compensation employer, 44
not to exceed 40 hours, excluding overtime. 45
(4) Short-time compensation benefits. – Benefits payable to individuals in an 46
affected unit under an approved short-time compensation plan. 47
(5) Short-time compensation employer. – An employer with a short -time 48
compensation plan in effect. 49
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(6) Short-time compensation plan or plan. – An employer 's written plan for 1
reducing unemployment under which an affected unit shares the work 2
remaining after its normal weekly hours of work are reduced. 3
(b) Approval of Plans. – An employer wishing to participate in the short -time 4
compensation program must submit a signed, written, short -time plan to the Division. The 5
Division shall approve the plan if all of the following criteria are met: 6
(1) The plan applies to and identifies each specific affected unit. 7
(2) The individuals in the affected unit are identified by name and social security 8
number. 9
(3) The normal weekly hours of work for individuals in the affe cted unit are 10
reduced by at least ten percent ( 10%) and by not more than sixty percent 11
(60%). 12
(4) The plan includes a certified statement by the employer that the aggregate 13
reduction in work hours is in lieu of layoffs that would affect at least ten 14
percent (10%) of the employees in the affected unit and that would have 15
resulted in an equivalent reduction in work hours. 16
(5) The plan applies to at least ten percent (10%) of the employees in the affected 17
unit. 18
(6) The plan is approved in writing by the collective bargaining agent for each 19
collective bargaining agreement covering any individual in the affected unit. 20
(7) The plan does not serve as a subsidy to seasonal employers during the 21
off-season or as a subsidy to employers who traditionally use part -time 22
employees. 23
(8) The plan certifies that, if the employer provides fringe benefits to any 24
employee whose workweek is reduced under the program, the fringe benefits 25
will continue to be provided to the employee participating in the short -time 26
compensation program under the same terms and conditions as though the 27
workweek of such employee had not been reduced or to the same extent as 28
other employees not participating in the short-time compensation program. As 29
used in this subdivision, the term "fringe benefits" includes, but is not limited 30
to, health insurance, retirement benefits under defined benefit pension plans 31
as defined in the Employee Retirement Income Security Act of 1974, 29 32
U.S.C. § 1002(35), contributions under a defined contribution plan as defined 33
in section 414(i) of the Internal Revenue Code, paid vacation and holidays, 34
and sick leave. 35
(9) The plan describes the manner in which the requirements of this subsection 36
will be implemented, including a plan for giving notice, if feasible, to an 37
employee whose workweek is to be reduced, together with an estimate of the 38
number of layoffs that would have occurred absent the ability to participate in 39
short-time compensation. 40
(10) The terms of the employer 's written plan and implementation are consist ent 41
with employer obligations under applicable federal laws and laws of this State. 42
(11) The employer has filed all quarterly reports and other reports required under 43
this Chapter and has paid all obligation assessments, contributions, 44
reimbursements in li eu of contributions, interest, and penalties due through 45
the date of the employer's application. 46
The Division shall approve or disapprove a short -time compensation plan in writing within 47
15 days after its receipt. If the plan is denied, the Division shall notify the employer of the reasons 48
for disapproval. The plan takes effect on the date of its approval by the Division and expires at 49
the end of the twelfth full calendar month after its effective date. 50
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(c) Revocation of Approval. – The Division shall periodically monitor the employer's 1
plan compliance and operations. Plan approval may be revoked based on good cause, including 2
the failure to comply with assurances provided in the plan such as that the aggregate reduction 3
in hours is in lieu of layoffs. 4
(d) Eligibility Requirements for Short -Time Compensation Benefits. – Except as 5
provided in this subsection, an individual is eligible to receive short-time compensation benefits 6
for any week only if the individual complies with this Chapter and the Division finds that (i) the 7
individual is employed as a member of an affected unit in an approved plan that was approved 8
before the week and is in effect for the week , (ii) the individual is able to wo rk and is available 9
for additional hours of work or for full -time work with the short -time employer, and (iii) the 10
normal weekly hours of work of the individual are reduced by at least ten percent (10%) but not 11
by more than sixty percent (60%), with a corresponding reduction in wages. 12
The Division may not deny short -time compensation benefits to an individual who is 13
otherwise eligible for these benefits for any week by reason of the application of any provision 14
of this Chapter relating to availability for work, active search for work, or refusal to apply for or 15
accept work from other than the short -time compensation employer of that individual. The 16
Division may not deny short -time compensation benefits to an individual who is otherwise 17
eligible for these be nefits for any week because such individual is participating in an 18
employer-sponsored training or a training under the Workforce Innovation and Opportunity Act 19
to improve job skills when the training is approved by the Division. 20
Notwithstanding any other p rovision of law, an individual is deemed unemployed in any 21
week for which compensation is payable to the individual, as an employee in an affected unit, 22
for less than the individual 's normal weekly hours of work in accordance with an approved 23
short-time compensation plan in effect for the week. 24
(e) Weekly Benefit Amount. – The weekly short -time compensation benefit amount 25
payable to an individual is equal to the product of the individual's weekly benefit amount and the 26
ratio of the number of normal weekly h ours of work for which the employer would not 27
compensate the individual to the individual's normal weekly hours of work. The benefit amount, 28
if not a multiple of one dollar ($1.00), is rounded downward to the next lower multiple of one 29
dollar ($1.00). 30
(f) Total Benefit Amount. – An individual may not be paid benefits under this section in 31
an amount that is more than the individual's maximum entitlement, and an individual may not be 32
paid short-time compensation benefits in excess of that maximum. 33
(g) Effect of Benefit. – The short-time compensation benefits paid to an individual shall 34
be deducted from the total benefit amount established for that individual. An individual who 35
receives all of the short -time compensation or combined reemployment assistan ce or 36
unemployment compensation and short -time compensation available in a benefit year is 37
considered an exhaustee for purposes of the extended benefits program and, if otherwise eligible 38
under those provisions, is eligible to receive extended benefits. An otherwise eligible individual 39
may not be disqualified from benefits for leaving employment instead of accepting a reduction 40
in hours under an approved plan. 41
(h) Allocation of Charges. – Except when the result is inconsistent with the other 42
provisions of this Chapter, short-time compensation benefits shall be charged to the employment 43
record of employers. 44
(i) Seasonal, temporary, or intermittent employees are not eligible for participation in the 45
program. The following definitions apply in this subsection: 46
(1) Seasonal employment. – Employment with an employer who experiences at 47
least a twenty percent (20%) difference between its highest level of 48
employment during a particular season and its lowest level of employment 49
during the off-season in each of the previous three years as reported to the 50
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State agency and/or employees are hired to work on a temporary basis by 1
employers that need extra help during a particular season. 2
(2) Temporary employment. – Employment where an employee is exp ected to 3
remain in a position for only a limited period of time and/or is hired by a 4
temporary agency to fill a gap in an employer's workforce. 5
(3) Intermittent employment. – Employment that is not continuous but may 6
consist of periodic intervals of weekly work and intervals of no weekly work." 7
SECTION 4.1. Effective July 1, 2026, there is appropriated from the General Fund 8
to the Department of Labor the sum of one hundred fifty thousand dollars ($150,000) in 9
nonrecurring funds for the 2026-2027 fiscal year to implement the provisions of this act. 10
SECTION 5.1. Except as otherwise provided, this act is effective when it becomes 11
law. 12