Keep NC Working Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1149

Short Title: Keep NC Working Act. (Public)
Sponsors: Representatives Chesser, Reeder, Rhyne, and Schietzelt (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Commerce and Economic Development, if favorable, Appropriations, if
favorable, Rules, Calendar, and Operations of the House
May 4, 2026
*H1149-v-1*
A BILL TO BE ENTITLED 1
AN ACT ESTABLISHING THE SHORT -TIME COMPE NSATION PROGRAM FOR 2
UNEMPLOYMENT INSURAN CE BENEFITS IN NORTH CAROLINA AND 3
APPROPRIATING FUNDS RELATED TO THAT PURPOSE. 4
The General Assembly of North Carolina enacts: 5
SECTION 1. Effective October 1, 2026, Chapter 96 of the General Statutes is 6
amended by adding a new Article to read: 7
"Article 6. 8
"Short-Time Compensation. 9
"§ 96-45. Definitions. 10
The following definitions apply in this Article: 11
(1) Affected unit. – A specific plant, department, shift, or other definable unit of 12
an employing unit that has a t least two employees to which an approved 13
short-time compensation plan applies. 14
(2) Approved short -time compensation plan. – A plan that is approved by the 15
Division as provided by this Article. 16
(3) Health and retirement benefits. – Employer-provided health benefits and 17
retirement benefits under a defined benefit pension plan as defined in section 18
414(j) of the Internal Revenue Code, contributions under a defined 19
contribution plan as defined in section 414(i) of the Internal Revenue Code , 20
or that are incidents of employment in addition to the cash remuneration 21
earned. 22
(4) Program. – Short-time compensation program established pursuant to this 23
Article. 24
(5) Short-time compensation. – The unemployment benefits payable to 25
employees in an affected unit under an approved short -time compensation 26
plan, as distinguished from the unemployment benefits otherwise payable 27
under the unemployment compensation provisions of State law. 28
(6) Short-time compensation plan. – A plan submitted by an employer for 29
approval by an affected unit of the employer to avert layoffs. 30
(7) Unemployment compensation. – The unemployment benefits payable under 31
this Article other than short -time compensation and includes a ny amounts 32
payable pursuant to an agreement under any federal law providing for 33
compensation, assistance, or allowances with respect to unemployment. 34
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(8) Usual weekly hours of work. – The usual hours of work for full -time or 1
part-time employees in the affe cted unit when that unit is operating on its 2
regular basis, not to exceed 40 hours and not including hours of overtime 3
work. 4
"§ 96-46. Application to participate in short-time compensation program. 5
(a) An employer that wishes to participate in the Program shall submit to the Division a 6
signed, written short -time compensation plan for approval. The Division shall develop an 7
application form to request approval of a plan and an approval process. The application shall 8
include: 9
(1) The affected unit or units c overed by the plan, including the number of 10
full-time or part -time workers in the unit, identification of each individual 11
employee in the affected unit by name, social security number, and the 12
employer's unemployment tax account number, and any other information 13
required by the Division to identify plan participants. 14
(2) A description of how workers in the affected unit will be notified of the 15
employer's participation in the plan if the application is approved, including 16
how the employer will notify those workers in a collective bargaining unit, as 17
well as any workers in the affected unit who are not in a collective bargaining 18
unit. If the employer will not provide advance notice to workers in the affected 19
unit, the employer shall explain in a statement in the application why it is not 20
feasible to provide the notice. 21
(3) A requirement that the employer identify the usual weekly hours of work for 22
employees in the affected unit and the specific percentage by which their 23
hours will be reduced during all wee ks covered by the plan. An application 24
shall specify the overall work reduction for which a short-time compensation 25
application may be approved, which shall be not less than ten percent (10%) 26
and not more than sixty percent (60%) of the usual work hours du ring that 27
period. If the plan includes any week for which the employer regularly 28
provides no work due to a holiday or other plant closing, then the week shall 29
be identified in the application. Notwithstanding the other provisions of this 30
subdivision, an em ployer shall be allowed some weeks of complete plant 31
shutdown in appropriate industries or given certain modes of operation. 32
(4) Certification by the employer that, if the employer provides health benefits 33
and retirement benefits to any employee whose usua l weekly hours of work 34
are reduced under the Program, the benefits will continue to be provided to 35
employees participating in the Program under the same terms and conditions 36
as though the usual weekly hours of the employee had not been reduced or to 37
the sa me extent as other employees not participating in the Program. For 38
defined benefit retirement plans, the hours that are reduced under the plan 39
shall be credited for purposes of participation, vesting, and accrual of benefits 40
as though the usual weekly hour s of work had not been reduced. The dollar 41
amount of employer contributions to a defined contribution plan that are based 42
on a percentage of compensation may be less due to the reduction in the 43
employee's compensation. However, an application may contain the required 44
certification when a reduction in health and retirement benefits scheduled to 45
occur during the duration of the plan will be applicable equally to employees 46
who are not participating in the Program and to those employees who are 47
participating. 48
(5) Certification by the employer that the aggregate reduction in work hours is in 49
lieu of layoffs, whether temporary or permanent layoffs or both. 50
(6) Agreement by the employer to do all of the following: 51
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House Bill 1149-First Edition Page 3
a. Furnish reports to the Division relating to the proper conduct of the 1
plan. 2
b. Allow the Division access to all records necessary to approve or 3
disapprove the plan application and, after approval of the plan, monitor 4
and evaluate the plan. 5
c. Follow any other directives the Division deems necessary for the 6
agency to implement the plan and that are consistent with the 7
requirements for plan applications. 8
(7) Certification by the employer that participation in the plan and its 9
implementation is consistent with the employer's obligations under applicable 10
federal and State laws. 11
(8) Certification by the employer that any affected collective bargaining unit 12
agrees with the plan. 13
(9) The effective date and duration of the plan, which shall expire no later than 14
the end of the twelfth full calendar month after the effective date. 15
(10) Any other provision added to the application by the Division that the U.S. 16
Secretary of Labor determines to be appropriate for the purpose of this 17
Program. 18
(b) Regarding employers in appropriate industries or that have certain modes of 19
operation, and only if the employer demonstrates good cause, the Division may allow flexibility 20
in the application process in cases where it is reasonable not to require specific dates and hours 21
in the application, notwithstanding the provisions of subsection (a) of this section. 22
(c) To be eligible to participate in the Program, the employer must have no contributions, 23
penalties, or interest outstanding under G.S. 96-10. 24
"§ 96-47. Approval and disapproval of plan. 25
The Division shall approve or disapprove a short-time compensation plan in writing within 26
30 days of its receipt and promptly communicate the decision to the employer. A decision 27
disapproving the plan shall clearly identify the reasons for the disapproval. The disapproval shall 28
be final, but the employer shall be allowed to submit another plan for approval not earlier than 29
90 days from the date of the disapproval. 30
"§ 96-48. Effective date and duration of plan. 31
A short-time compensation plan shall be effective on the date that is mutual ly agreed upon 32
by the employer and the Division, which shall be specified in the notice of approval to the 33
employer. The plan shall expire on the date specified in the notice of approval, which shall be 34
either the date at the end of the twelfth full calendar month after its effective date or an earlier 35
date mutually agreed upon by the employer and the Division. However, if a short -time 36
compensation plan is revoked under G.S. 96-49, the plan shall terminate on the date specified in 37
the Division's written order of revocation. An employer may terminate a plan at any time upon 38
written notice to the Division. Upon receipt of notice from the employer, the Division shall 39
promptly notify each member of the affected unit of the termination date. An employer may 40
submit a new application to participate in another plan at any time after the expiration or 41
termination date. 42
"§ 96-49. Revocation of approval of plan. 43
(a) The Division may revoke approval of a short-time compensation plan for good cause 44
at any time. The revoc ation order shall be in writing and shall specify the reasons for the 45
revocation and the date the revocation is effective. The Division shall state clearly the reasons 46
for the revocation. 47
(b) The Division may periodically review the operation of each employer's plan to assure 48
that no good cause exists for revocation of the approval of the plan. Good cause shall include, 49
but not be limited to, failure to comply with the assurances given in the plan, unreasonable 50
revision of productivity standards for the affected unit, conduct or occurrences tending to defeat 51
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the intent and effective operation of the plan, and violation of any criteria on which approval of 1
the plan was based. 2
"§ 96-50. Modification of approved plan. 3
(a) An employer may request a modific ation of an approved plan by filing a written 4
request to the Division. The request shall identify the specific provisions proposed to be modified 5
and provide an explanation of why the proposed modification is appropriate for the plan. The 6
Division shall ap prove or disapprove the proposed modification in writing within 30 days of 7
receipt and promptly communicate the decision to the employer. 8
(b) The Division, in its discretion, may approve a request for modification of the plan 9
based on conditions that have changed since the plan was approved, provided that the 10
modification is consistent with and supports the purposes for which the plan was initially 11
approved. A modification shall not extend the expiration date of the original plan, and the 12
Division shall pro mptly notify the employer whether the plan modification has been approved 13
and, if approved, the effective date of modification. 14
(c) An employer is not required to request approval of a plan modification if the change 15
is not substantial, but the employer shall report every change to the plan to the Division promptly 16
and in writing. The Division may terminate an employer's plan if the employer fails to meet this 17
reporting requirement. If the Division determines that the reported change is substantial, the 18
Division shall require the employer to request a modification to the plan. 19
(d) The Division shall use its best efforts to provide for timely and flexible modifications. 20
The provisions of this section shall be liberally construed so as to provide the most flexibility for 21
employers and the Division in order to carry out the purposes of this Article. 22
"§ 96-51. Eligibility for short-time compensation. 23
An individual is eligible to receive short-time compensation with respect to any week only if 24
the individual is monetarily eligible for unemployment compensation, not otherwise disqualified 25
for unemployment compensation, and: 26
(1) During the week, the individual is employed as a member of an affected unit 27
under an approved short -time compensation plan, which was appro ved prior 28
to that week, and the plan is in effect with respect to the week for which 29
short-time compensation is claimed; 30
(2) Notwithstanding any other provisions of this Chapter relating to availability 31
for work and actively seeking work, the individual is available for the 32
individual's usual hours of work with the short-time compensation employer, 33
which may include, for purposes of this section, participating in training to 34
enhance job skills that is approved by the Division as employer -sponsored 35
training or training funded under the Workforce Investment Act of 1998; and 36
(3) Notwithstanding any other provision of law, an individual covered by a plan 37
is deemed unemployed in any week during the duration of the plan if the 38
individual's remuneration as an employee in an affected unit is reduced based 39
on a reduction of the individual 's usual weekly hours of work under an 40
approved short-time compensation plan. 41
"§ 96-52. Benefits. 42
(a) The short -time compensation weekly benefit amount shall be the product of the 43
regular weekly unemployment compensation amount for a week of total unemployment 44
multiplied by the percentage of reduction in the individual's usual weekly hours of work. 45
(b) An individual may be eligible for short -time compensation or unemployment 46
compensation, as appropriate, except that no individual shall be: 47
(1) Eligible for combined benefits in any benefit year in an amount more than the 48
maximum entitlement established for regular unemployment compensation; 49
and 50
(2) Paid short-time compensation benefits for more than 52 weeks under a plan. 51
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(c) The short -time compensation paid to an individual shall be deducted from the 1
maximum entitlement amount of regular unemployment compensation established for the 2
individual's benefit year. 3
(d) Provisions applic able to unemployment compensation claimants shall apply to 4
short-time compensation claimants to the extent that they are not inconsistent with the Program's 5
provisions. An individual who files an initial claim for short -time compensation benefits shall 6
receive a monetary determination. 7
(e) The following provisions apply to individuals who work for both a short -time 8
compensation employer and another employer during weeks covered by the approved short-time 9
compensation plan: 10
(1) If combined hours of work in a week for both employers do not result in a 11
reduction of at least ten percent (10%) or, if higher, the minimum percentage 12
of reduction required to be eligible for a short -time compensation benefit as 13
provided in this Article, of the usual weekly hours of work with the short-time 14
employer, the individual shall not be entitled to benefits under these short-time 15
compensation provisions. 16
(2) If the combined hours of work for both employers results in a reduction equal 17
to or greater than ten percent (10%) or, i f higher, the minimum percentage 18
reduction required to be eligible for a short-time compensation employer, the 19
short-time compensation benefit amount payable to the individual is reduced 20
for that week and is determined by multiplying the weekly unemploymen t 21
benefit amount for a week of total unemployment by the percentage by which 22
the combined hours of work have been reduced by ten percent (10%) or, if 23
higher, the minimum percentage reduction required to be eligible for a 24
short-time compensation benefit as provided in this Article, or more of the 25
individual's usual weekly hours of work. A week for which benefits are paid 26
under this subdivision shall be reported as a week of short-time compensation. 27
(3) If an individual worked the reduced percentage of the us ual weekly hours of 28
work for the short-time compensation employer and is available for all of his 29
or her usual hours of work with the short -time compensation employer, and 30
the individual did not work any hours for the other employer, either because 31
of the lack of work with that employer or because the individual is excused 32
from work with the other employer, the individual shall be eligible for 33
short-time compensation for that week. The benefit amount for the week shall 34
be calculated as provided in subsection (a) of this section. 35
(f) An individual who is not provided any work during a week by the short -time 36
compensation employer, or any other employer, and who is otherwise eligible for unemployment 37
compensation shall be eligible for the amount of regular unem ployment compensation to which 38
the individual would otherwise be eligible. 39
(g) An individual who is not provided any work by the short -time compensation 40
employer during a week, but who works for another employer and is otherwise eligible, may be 41
paid unemployment compensation for that week subject to the disqualifying income or other 42
provision applicable to claims for regular compensation. 43
"§ 96-53. Charging short-time compensation benefits. 44
Short-time compensation shall be charged to employers ' experience rating accounts in the 45
same manner as unemployment compensation is charged under this Chapter. Employers liable 46
for payments in lieu of contributions shall have short-time compensation attributed to service in 47
their employ in the same manner as unemployment compensation is attributed. 48
"§ 96-54. Extended benefits. 49
An individual who has received all of the short -time compensation or combined 50
unemployment compensation and short -time compensation available in a benefit year shall be 51
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considered an exhaustee for purposes of extended benefits, and if otherwise eligible under those 1
provisions, shall be eligible to receive extended benefits. 2
"§ 96-55. Severability. 3
If any provision of this Article is found by the U.S. Department of Labor to be in violation of 4
federal law, the finding shall render the provision of this Article inoperative, but the finding shall 5
not invalidate the remaining provisions of this Article and is confined in its operation to the 6
specific provision found to be in violation of federal law." 7
SECTION 2. Effective July 1, 2026, there is appropriated from the General Fund to 8
the Department of Commerce, Division of Employment Security, the sum of one hundred 9
thousand dollars ($100,000) in the 2026 -2027 fiscal year for implementation of , and to educate 10
employers and employees about benefits under, the short-time compensation program established 11
by this act. 12
SECTION 3. Except as otherwise provided, this act is effective when it becomes 13
law. 14