North Carolina Termination Laws

October 2nd 2024

When firing an employee in North Carolina, it is essential to understand the legal framework that governs such decisions. State and federal laws establish rules to ensure terminations are handled fairly and legally.

In this article, several key concerns related to North Carolina termination are discussed, including wrongful terminaiton, notice provisions, and unemployment benefits.

This Guide Covers

Legal Considerations for Termination in North Carolina
At-Will Employment in North Carolina
Lawful Termination in North Carolina
Legal Protections During Termination in North Carolina
Terminated Employee Benefits in North Carolina
Layoffs in North Carolina
Resignations in North Carolina
Legal Cases Related to Wrongful Termination in North Carolina

Legal Considerations for Termination in North Carolina

In North Carolina, employers have several legal considerations to keep in mind when it comes to termination:

  • Anti-Discrimination Laws: An employer cannot fire employees due to any of these protected characteristics: race, gender, religion, national origin, disability, age, or pregnancy, according to federal and state laws.
  • Retaliation Protections: Employees can exercise their rights, including filing a workers’ compensation claim, reporting unsafe working conditions, or taking FMLA-protected leave, without the fear of being retaliated against or terminated.
  • Final Pay and Benefits:  An employer should ensure that every terminated employee receives their final pay, including the accrued wages and compensation earned for vacation time, as required by the North Carolina Wage and Hour Act.

At-Will Employment in North Carolina

What is At-Will Employment?

At-will employment is a legal doctrine that allows either the employer or the employee to terminate the employment relationship for any reason or no reason at all. The doctrine implies no prior notice is necessary.

This means that an employer can fire an employee without giving a cause, and conversely, an employee can leave their job without explaining their reasons. This principle is applied provided the termination does not violate any state or federal laws.

What are the Exceptions to At-Will Employment in North Carolina?

While North Carolina adheres to the at-will employment doctrine, there are important exceptions employers must understand:

  • Discrimination: An employer cannot fire employees based on discriminatory reasons related to protected classes, such as race, color, religion, sex, national origin, disability, or age (40 or older). This is prohibited under state and federal laws.
  • Retaliation: Dismissing an employee in retaliation for engaging in protected activities is illegal. These activities include filing a complaint about workplace safety, wage violations, discrimination, or participating in a workplace investigation.
  • Public Policy Exception: No employee can be fired for reasons that violate public policy. This includes firing an employee for refusing to engage in illegal activities, exercising a legal right (such as serving on a jury), or performing a duty required by law.

Employment Under Contract in North Carolina

In contrast to at-will employment, employment under contract is governed by specific terms agreed to by employers and employees. In the contract, specific terms are outlined, including the duration of employment, job duties, compensation, and grounds for termination.

A contract may also establish grounds for terminating employment, including notice periods, causes for termination, and severance pay. The conditions stipulated in the contract bind both employers and employees. If either party fails to adhere to the contract terms, the affected party may have grounds to file a breach of contract.

Lawful Termination in North Carolina

Legal Grounds for Termination in North Carolina

Employers in North Carolina can terminate an employee for any reason that is not prohibited by legal protections. Such common reasons for employee terminations include:

  • Performance Issues: An employer can fire an employee because their work performance is considered unsatisfactory or inadequate in meeting the company’s standards.
  • Misconduct: Employees can be dismissed for violating company policies or engaging in inappropriate behavior. In such cases, employers are advised to record the misconduct and disciplinary action taken as proof in cases of legal disputes.
  • Business Needs and Downsizing: Employers may lay off employees due to economic downturns, financial difficulties, or restructuring. These decisions should be made following any applicable company policies or federal and state laws governing layoffs.
  • Contractual Obligations: Some employment contracts indicate the possible causes of terminations and on what terms these might occur. If an employee is under a written contract stipulating the terms of termination, the employer must abide by those terms. Failure to do so may lead to a breach of contract claim.

Read our comprehensive guide to firing employees in North Carolina for further information.

How Do I File a Wrongful Termination Claim in North Carolina?

In North Carolina, employees planning to file a wrongful termination claim are advised to gather evidence of the alleged wrongful act. Some common forms of wrongful acts include discrimination, retaliation, or breach of contract. Employees with claims based on wrongful termination can file a complaint with the Equal Employment Opportunity Commission (EEOC).

For breaches of employment contracts, employees may consider consulting with an employment attorney to explore legal options, including filing a lawsuit in state court. Employees are encouraged to act promptly as there are time limits for filing claims and lawsuits, often within 180 days for federal claims and up to three years for contract breaches.

Legal Protections During Termination in North Carolina

Several federal and state laws offer legal protections for employees during termination:

  • Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act of 1964 prohibits employers from terminating employees based on race, color, religion, sex, or national origin. This federal law applies to employers with 15 or more employees.
  • Age Discrimination in Employment Act (ADEA): The ADEA protects employees aged 40 and older from employment termination based on their age. This federal statute applies to employers with 20 or more employees.
  • Americans with Disabilities Act (ADA): The ADA forbids an employer from terminating an employee due to disability if the employee can perform the essential functions of their job with or without reasonable accommodation. This protection extends to employers with 15 or more employees.
  • Family and Medical Leave Act (FMLA): The FMLA provides eligible employees with up to 12 weeks of unpaid, job-protected leave for family or medical reasons. It also prohibits termination for taking FMLA leave.
  • Occupational Safety and Health Act (OSH Act): The OSH Act protects employees from termination for reporting unsafe working conditions or exercising their rights under workplace safety regulations. When an employee is fired based on safety or refusal to work in hazardous conditions, they can file a retaliation claim with the Occupational Safety and Health Administration.
  • Uniformed Services Employment and Reemployment Rights Act (USERRA): USERRA protects military or reservist employees from being terminated based on their military service obligations, including deployment, training, or other military-related absences.
  • North Carolina Retaliatory Employment Discrimination Act (REDA): REDA protects employees from being terminated for filing claims or complaints related to workers’ compensation, workplace safety, or wage disputes. This state law ensures that employees cannot be fired for asserting their legal rights or reporting violations.
  • North Carolina Equal Employment Practices Act (NCEEPA): The NCEEPA prohibits employers from terminating employees based on race, religion, color, national origin, age, sex, or disability.
  • North Carolina Wage and Hour Act (NCWHA): The NCWHA requires employers to pay terminated employees all wages earned, including bonuses or commissions, by the next scheduled payday. If an employer fails to comply, the employee can file a wage claim with the North Carolina Department of Labor.
  • North Carolina Employment Security Law: Under the Employment Security Law, terminated employees may be eligible for unemployment benefits if they lost their job through no fault of their own, such as being laid off. Employees fired for misconduct may be denied benefits, but if an employee believes the termination was unfair, they can appeal the denial of benefits through the North Carolina Division of Employment Security.

Terminated Employee Benefits in North Carolina

Employees terminated in North Carolina have several benefits depending on the reason for termination and terms of employment:

  • Final Paycheck: Employees must receive their final paycheck on the next scheduled payday following termination. The final paycheck must include all unpaid wages, including accrued but unused vacation time, if company policy or an employment contract provides for it.
  • Unemployment Benefits: Eligible terminated employees may apply for unemployment benefits through the North Carolina Division of Employment Security (DES). The employee’s eligibility depends on factors such as the reason for termination and the individual’s work history.
  • Health Insurance Continuation: Employees who lose their jobs may be eligible to continue their health insurance coverage. Under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), eligible employees can continue for up to 18 months at their own expense. COBRA applies to companies with 20 or more employees. In addition to federal COBRA, the North Carolina Mini-COBRA provides insurance continuation coverage for employees of companies with fewer than 20 employees. This state aligns with the federal COBRA, allowing continuation for up to 18 months for eligible employees.

Layoffs in North Carolina

In North Carolina, layoffs happen when a number of workers are terminated due to business-related reasons such as economic downturns, restructuring, or organizational changes. North Carolina does not have a state-specific notice requirement for layoffs. Hence, the state follows the federal Worker Adjustment and Retraining Notification (WARN) Act.

Under the federal WARN Act, employers with at least 100 workers are required by law to provide advance notice 60 days before:

  • Plant closings: Closing a plant that affects at least 50 employees during any 30-day period. This does not include part-time employees and those who have worked less than six months.
  • Mass layoffs: Conducting a mass layoff affecting at least 500 employees or between 50 to 499 employees if that number is at least one-third of the employer’s total number of employees.

Resignations in North Carolina

In North Carolina, resignations can be classified under two categories:

Voluntary Resignations

Voluntary resignation is when an employee leaves their job for various reasons, such as personal choice, a new job opportunity, relocation, or dissatisfaction with their current position.

North Carolina does not require employees to give notice before resignation. However, providing a two-week notice period is considered a professional courtesy and can help ensure a smoother transition.

Involuntary Resignations

An involuntary resignation or constructive discharge arises when the employer compels resignation either directly or indirectly by creating circumstances against the employee. For example, the employer creates intolerable working conditions that would make it unreasonable for the employee to continue working.

If an employee quits due to intolerable conditions that were the employer’s fault, they can claim for wrongful termination. The employee should document the conditions and communicate their concerns before quitting to strengthen their claim. Employees who resigned involuntarily may be eligible for unemployment benefits, depending on the circumstances and whether they can prove that their resignation was due to employer-created conditions.

Legal Cases Related to Wrongful Termination in North Carolina

1. Educational Testing Company Pays $110,000 to Settle Religious Discrimination Case

In EEOC v. Measurement Incorporated, a former employee, Jacqueline Dukes, who is a member of the Christian Denomination Children of Yisrael, was terminated from her position at Measurement Incorporated, an educational testing company based in Durham, N.C. Dukes’ religious beliefs prohibit her from working on the Sabbath, which she observes from sunset on Friday to sunset on Saturday.

Dukes was fired for failure to report to work during her Sabbath despite informing her employer that she could not do so in observance of her religious practice. The U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit against Measurement Incorporated, citing religious discrimination under Title VII of the Civil Rights Act of 1964, which requires employers to make reasonable accommodations for employees’ religious beliefs unless doing so would cause undue hardship to the business.

Following the intervention by EEOC, a three-year consent decree was agreed. Besides paying $110,000 in back pay and compensatory damages to Dukes, the decree mandates Measurement Incorporated to implement anti-discrimination training, post notices about employee rights, and submit regular reports for religious accommodation requests to ensure compliance with federal law.

Key Lesson Learned from the Case:
  • Employers are required by law to accommodate employees’ held religious beliefs unless it imposes an undue hardship on the business. Failure to provide such accommodations can result in significant legal and financial consequences, including settlements for back pay and damages.
  • Regular training and clear policies on religious accommodation are crucial for avoiding legal disputes.
  • Posting notices and maintaining documentation of religious accommodation requests help foster transparency and compliance with federal regulations.

2. Nursing Home Faces $300,000 Settlement for Pregnancy Discrimination

In the case of EEOC v. Britthaven, Inc., the EEOC brought a lawsuit against Britthaven, a nursing home and assisted living company, alleging pregnancy discrimination. The case focused on a company-wide policy that subjected pregnant employees to unfair treatment compared to their non-pregnant colleagues.

Since 2002, Britthaven has been requiring pregnant employees to obtain full medical clearance to continue working after the company learned of their pregnancy. This policy led to several pregnant women, including Katherine Hance, being forced to take medical leave or being terminated, even though they were capable of performing their job duties. Hance, who worked at Britthaven’s Carolina Commons facility in Greensboro, was one of several employees impacted by this practice across the company’s 54 facilities in North Carolina, Virginia, and Kentucky.

Following the EEOC’s investigation and legal action, Britthaven agreed to a settlement, paying $300,000 in back pay and compensatory damages. The settlement also included a three-year agreement that prohibited the company from engaging in pregnancy discrimination or retaliation, mandated anti-discrimination training, and required Britthaven to report to the EEOC on its medical clearance practices to ensure compliance.

Key Lessons Learned from the Case:
  • Pregnancy discrimination violates federal law, and companies can face significant financial and reputational consequences for such practices.
  • Anti-discrimination training and clear policies can help prevent legal disputes and ensure fair treatment for all employees.

Learn more about North Carolina Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.