McCrory signs unemployment insurance overhaul

Gov. Pat McCrory on Thursday signed a bill he says will crack down on fraud involving unemployment checks – but critics say it amounts to the latest attack on the state’s jobless.

Among the requirements of Senate Bill 15, whose primary sponsor was Mecklenburg County Republican Sen. Bob Rucho, are measures that North Carolina’s Division of Employment Security must take to root out fraudulent payments. The bill requires those seeking unemployment checks to present the employment security division with valid photo identification.

McCrory, who signed the bill in a ceremony at a Gaston County career center, touted the legislation as a “role model change for the rest of the nation.”

“It will help identify employers who do not comply with the current unemployment laws that have been on the books for years in the state of North Carolina,” the Republican governor said. “And, most importantly, this bill will help get recipients back to work sooner and become independent, not dependent, on government.”

Advocates for the state’s jobless, though, see the legislation differently. They worry about changes that will affect people applying for unemployment checks, such as a requirement that job-seekers make at least five contacts with potential employers in a week. That’s up from the previous requirement of two contacts a week.

“To me, it’s an unnecessary burden that is being placed on people,” said Steve Ford, a volunteer program associate for the North Carolina Council of Churches.

People in rural parts of the state might find it tough to make the required number of contacts, especially with employers who might pay a comparable wage, Ford said. The requirement for more contacts might also be tough for job-seekers lacking Internet access at a time when employers often require applications be filled out online, Ford said.

“It just seems like another gratuitous attempt to rub jobless’ noses in their own plight,” Ford said.

Targeting fraud

McCrory said the bill contains a variety of provisions that will help combat fraud and bad actors.

One of those provisions is the requirement that people seeking unemployment checks provide the Division of Employment Security with a photo ID, such as a driver’s license or U.S. passport. That portion of the bill takes effect immediately.

“A photo ID will ensure that the person who deserves and qualifies for the benefits is the same person who is getting the check,” McCrory said. “Doesn’t that make common sense?”

The bill also requires the Division of Employment Security to work with other state departments and offices to cross-match databases to detect fraud. McCrory said such efforts will help prevent active employment security division employees from receiving unemployment checks – a problem McCrory said the division’s assistant secretary uncovered when he was appointed in 2013.

Under another change that takes effect immediately, the state can garnish credit card payments businesses receive to pay off past-due employment taxes if the state wins a civil case against the employer. In North Carolina, employers, not employees, pay taxes that fund unemployment benefits.

Latest changes

Thursday’s changes are the latest lawmakers have made to the state’s unemployment benefits program.

In 2013, McCrory signed a law reducing the maximum unemployment benefit from $535 to $350 per week. The move, which drew criticism and made national headlines, was designed to repay more than $2 billion the state owed the federal government for past benefits.

In May, Republican leaders announced the state paid off its $2.8 billion unemployment insurance debt to the federal government early. Democrats and advocates for the poor called the repayment plan unfair because it cut benefits to people who were already struggling to find work.

Supporters of Rucho’s bill say it will save employers $240 million on unemployment insurance by suspending a fee that pays for a reserve fund for unemployment. The fee will be suspended once the fund hits $1 billion, which the state expects will happen by January.

Rucho, who did not attend Thursday’s signing because he was in Raleigh working with other lawmakers on the state’s long-delayed budget, defended his bill in an interview with the Observer. He characterized it as part of the state’s ongoing efforts to overhaul what was an insolvent unemployment benefits program.

“The old system, the way it was operating, we were nearly $2.8 billion in the hole. ... Now, how viable is that?” he said.

Rucho’s bill passed the Senate 36-7 in late August.

Sen. Jeff Jackson, a Mecklenburg County Democrat who voted for the bill, said he supported it because it “seemed to do more good than harm.”

But, he said, “people have every right to be suspicious any time this General Assembly tinkers with employment benefits. We passed some really bad laws in that area within the last few years.”

This story was originally published September 10, 2015 at 11:41 AM with the headline "McCrory signs unemployment insurance overhaul."