AN OVERVIEW OF NORTH CAROLINA AND SOUTH CAROLINA ... · Angus Macaulay . [email protected]....

Angus Macaulay [email protected]

AN OVERVIEW OF NORTH CAROLINA AND SOUTH CAROLINA

EMPLOYMENT LAWS HR CERTIFICATE SERIES

11 FEBRUARY 2015

Certified Labor & Employment Law Specialist

Grainger Pierce [email protected]

803.253.8279

704.338.5321

Overview of SC and NC Employment Laws www.nexsenpruet.com February 11, 2015

TOPICS

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I. Payment of Wages

II. Enforceability of Non-Compete and Non-Disclosure Agreements

III. Drug Testing

IV. Employee Privacy

V. Employee References

VI. Preemption of Tort Claims Involving Workers’ Compensation

VII. Workers’ Compensation Retaliation Claims

VIII. Claims for Unemployment Insurance

IX. Garnishment Laws

X. Negligent Hiring, Retention, and Supervision

Overview of SC and NC Employment Laws www.nexsenpruet.com February 11, 2015 3

A. NC Wage and Hour Act

1. Every employer must: • At time of hiring, notify employees of promised wages and

day/place for payment • Make available employment practices and policies

regarding wages • Notify employees at least twenty-four (24) hours prior to

reduction in promised wages • Provide itemized statement of deductions for each pay

period

2. Must pay all wages on regular payday, and all wages due each pay period.

I. PAYMENT OF WAGES NORTH CAROLINA


3. Must provide written notice of any policy that results in loss or forfeiture of vacation time or pay.

4. Withholding of wages: • Voluntary: permitted if employer complies with notice and

consent requirements • Involuntary: In certain limited cases (e.g., criminal process

issued); but employee must be reimbursed if found “not guilty”

B. Violations of the NC Wage and Hour Act can subject employers to civil penalties, 2x the full amount of unpaid wages, and costs and attorney fees.

C. Record Keeping: North Carolina: Employers must retain all records, posted notices, and writings required by the Wage and Hour Act and the rules and regulations promulgated there under for three years (13 NCAC 12.0802).

I. PAYMENT OF WAGES NORTH CAROLINA


A. SC Payment of Wages Act, S.C. CODE ANN. § 41-10-10, et seq. (Supp. 2010)

1. “Employer” includes all persons and entities, both public and private, and any agent of officer of these entities.

2. “Employee” includes hourly employees, executives, salaried employees, and outside salespersons. Independent contractors not covered.

3. Every new employee must receive (can be posted) “Terms of Employment” form which specifies:

• Normal wages agreed upon • Normal hours of work • Time and place wages will be paid • Deductions to be made from wages, including insurance

I. PAYMENT OF WAGES SOUTH CAROLINA

Overview of SC and NC Employment Laws www.nexsenpruet.com February 11, 2015

I. PAYMENT OF WAGES

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3. Any changes to these terms, other than wage increases, must be given in writing at least seven (7) calendar days before they become effective.

4. Must pay all wages due each pay period. 5. Must give employees an itemized statement

showing gross pay and all deductions each pay period.

SOUTH CAROLINA


B. Employers who violate the SC Payment of Wages Act are subject to civil penalties of $100 for each violation plus 3x the full amount of unpaid wages, costs and attorney fees in a civil action.

C. Recordkeeping requirements: three (3) years (name, address, deductions); itemized statements.

D. Employers with informal “practices” or “policies” could be violating the Act if they fail to give new hires written notice of a policy/practice, even though it may be a flexible one.

E. Separated employees must receive last paycheck within forty-eight (48) hours of date of separation or by next regular payday (not to exceed thirty (30) days).



E. Employers may not withhold or divert any portion of an employee’s wages unless employer is required or permitted to do so by state/federal law or employer has given written notice.

F. Individual liability (knowledge of failure to pay, direct responsibility).

G. Wrongful/retaliatory discharge in violation of public policy.



A. Covenants not to complete are enforceable when they are reasonable, although they are not favored. To be enforceable, a covenant not to compete must be:

1. In writing; 2. Part of the contract of employment or sale of a

business; 3. Based on valuable consideration; 4. Reasonably necessary for the protection of the

company’s interests; and 5. Reasonable in relation to time and territory.

II. ENFORCEABILITY OF NON-COMPETE AND NON-DISCLOSURE AGREEMENTS NORTH CAROLINA


A. South Carolina courts generally follow the “reasonableness test” to determine if a Covenant Not to Compete is enforceable. Under this test, a Non-Compete Agreement can be enforced if it is:

• Necessary for the protection of the legitimate interests of the employer;

• Is reasonably limited with respect to time and place; • Is not unduly harsh and oppressive and curtailing the

legitimate efforts of the employee to earn a livelihood;

• Is reasonable from the standpoint of sound public policy, and

• Is supported by valuable consideration.

II. ENFORCEABILITY OF NON-COMPETE AND NON-DISCLOSURE AGREEMENTS SOUTH CAROLINA


B. Under the South Carolina Trade Secrets Act, S.C. CODE ANN. § 39-8-10, et seq., “trade secret” is defined as:

• Information including, but not limited to a formula, pattern, compilation, program, device, method, technique, product, system, or other process, design, prototype, procedure, or code that: o Derives independent economic value, actual or potential, from not

being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use, and

o Subject of efforts that are reasonable under the circumstances to maintain its secrecy.

• Written agreement not required for Trade Secret Act’s protection. If written agreement is made, definition of “trade secret” cannot be more expansive than the Act.

II. ENFORCEABILITY OF NON-COMPETE AND NON-DISCLOSURE AGREEMENTS SOUTH CAROLINA


A. Employers are permitted to conduct drug screenings of prospective employees pursuant to, and in compliance with, the Controlled Substance Examination Regulation Act (N.C. Gen. Stat. § 95-230 et. seq.) and the related regulations codified in 13 NCAC .0400, which includes procedures to protect employees and applicants.

III. DRUG TESTING NORTH CAROLINA


A. SC “Drug Free Workplace Act,” S.C. CODE ANN. § 44-107-10, et seq. (2002), requires recipients of State grants or contracts to maintain drug free workplaces. State contractors/grantees must:

1. Publish and provide a written “drug free policy statement” for employees;

2. Notify State agencies after receiving notice of a conviction for a drug offense occurring in the workplace;

3. Establish and Maintain a “drug free workplace program for all employees;”

4. Make a good faith effort to continue to maintain a drug free workplace.

B. If the contractor/grantee fails to take the necessary steps as required by the Act, the recipient will be subject to suspension of payments or termination.

III. DRUG TESTING SOUTH CAROLINA


‣ The employer must have a policy that prohibits the illegal use of drugs. The policy must state that violation of the policy can result in termination;

‣ The employer must communicate the policy to employees; ‣ Termination of employment based upon positive drug test

results (for illegal drugs or legal drugs used unlawfully), refusal by the employee to provide a sample, or provision of an adulterated sample;

‣ The sample must be collected and labeled by a licensed health care professional or an individual who is authorized by federal or state law to collect and label samples.

S.C. CODE ANN. § 41-35-120 (2) EMPLOYEE MAY BE DISQUALIFIED FROM UNEMPLOYMENT BENEFIT


A. Common Law Right to Privacy

1. An employee could make a successful common law claim for invasion of privacy or intentional infliction of emotional distress in extreme (and rare) circumstances.

2. North Carolina recognizes only two of the four common-law claims for invasion of privacy:

• Appropriation of one’s likeness and

• Intrusion upon seclusion.

3. Sexual harassment constitutes intentional infliction of emotional distress.

IV. EMPLOYEE PRIVACY NORTH CAROLINA


B. Privacy Related Statutes 1. North Carolina Controlled Substance Examination

Regulation Act. N.C. Gen. Stat. § 95-230 et. seq. • Provides procedures to protect employees • “[E]mployers who test employees for controlled substances

shall use reliable and minimally invasive examinations and screenings.”

• “Individual dignity shall be preserved to the extent practicable.”

2. “One-Party Consent Rule” (N.C. Gen. Stat. § 15A-287)

• Provides that employee communications—both oral and electronic—may be monitored or recorded when one party to that communication consents to the interception or when the nature and circumstances of the communication do not give rise to an expectation of privacy.

IV. EMPLOYEE PRIVACY NORTH CAROLINA


A. Common Law Right to Privacy

1. South Carolina courts recognize four types of invasion of privacy claims:

• The “tort of intrusion into seclusion” is defined as an unreasonable and uninvited intrusion into employee’s personal life.

• The “tort of public disclosure” is defined as an unreasonable disclosure of true, private facts (e.g., reason for termination, content of performance evaluation, or medical information).

• The “tort of false light” is defined as an unreasonable disclosure of false information that places the employee in false light in the public eye.

• The “tort of appropriation” is defined as use of an employee’s name or likeness without consent that results in unwelcome publicity, such as in advertising.

IV. EMPLOYEE PRIVACY SOUTH CAROLINA


B. Privacy Related Statutes – South Carolina

1. S.C. Constitution Right to privacy

• S.C. Const. art. 1, § 10.

• The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures and unreasonable invasions of privacy shall not be violated, and no warrants shall issue but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, the personal or thing to be seized, and the information to be obtained. 1970 (56) 2684; 1971 (57) 315.



2. Interception of Wire, Electronic or Oral Communications Act, S.C. CODE ANN. § 17-30-10 to -145 (Supp. 2006).

• Requires the consent of at least one party to intercept communications lawfully.

• Therefore, in order for an employer to intercept communications lawfully, there must be prior consent before the interception.

• “Interception” under the act is defined as obtaining “the contents of a wire, oral, or electronic communication by any electronic, mechanical, or other device” (S.C. CODE ANN. § 17-30-15(3)).



3. Employee’s right to confidentiality of documents • An employer is responsible for maintaining

employee records listed by the Department of Employment and Workforce as confidential, S.C. Code Ann. § 41-29-150.


A. NC Job Reference Liability Statute (NCGS § 1-539.12)

1. Employer who discloses information re: job history or performance to prospective employer is generally immune to consequences

2. Unless: • Information false • Employer knew or should have known false

B. “Blacklisting” (NCGS § 14-355) 1. After discharging employee, employer cannot

attempt to prevent further employment 2. Civil and criminal liability

V. EMPLOYEE REFERENCES NORTH CAROLINA


A. South Carolina Employment Reference Statute, S.C. CODE ANN. § 41-1-65 (Supp. 2006).

1. Grants civil immunity for disclosing some information to potential employers of former employees: ‣ Written evaluations ‣ Personnel notices of reason for separation ‣ Whether employee voluntarily or involuntarily separated

2. No immunity where “an employer knowingly or recklessly releases or discloses false information.”

V. EMPLOYEE REFERENCES SOUTH CAROLINA


A. North Carolina Workers’ Compensation Act 1. Generally preempts tort claims by an employee

against employer for injuries suffered in course and scope of employment.

2. Claims arising from intentional conduct of employer are not barred.

VI. PREEMPTION OF TORT CLAIMS INVOLVING WORKERS’ COMPENSATION NORTH CAROLINA


A. Workers’ compensation is an employee’s exclusive remedy for personal injury arising out of or in the course of employment. S.C. CODE ANN. § 42-1-540 (1985). Court will usually dismiss an employee’s tort claim against his/her employer as the claim is properly a worker’s compensation claim.

1. Exceptions are claims that are not personal injury. For example:

• Employee’s claim for slander (injury to reputation). • Employee’s claim for false imprisonment and invasion

of privacy (Note, if the false imprisonment claim results in emotional distress, covered by workers’ compensation).

SOUTH CAROLINA VI. PREEMPTION OF TORT CLAIMS INVOLVING WORKERS’ COMPENSATION


2. Intentional Acts of Employer (not an accident). 3. Acts Committed by the Alter Ego of the Company. 4. An Employee’s Tort Claims Against Supervisor or

Co-Worker.

SOUTH CAROLINA VI. PREEMPTION OF TORT CLAIMS INVOLVING WORKERS’ COMPENSATION


A. North Carolina Retaliatory Employment Discrimination Act (“REDA”); Chapter 95, Article 21

1. “Retaliatory Action” • Discharge, suspension, demotion, or relocation • Any other adverse employment action in terms,

conditions, privileges, and benefits of employment 2. Protects employee who (in good faith) does or

threatens to engage in a number of activities, including filing a workers’ compensation claim

3. Note: No violation if employer proves it would have taken the same action in absence of protected activity

VII. WORKER’S COMPENSATION RETALIATION NORTH CAROLINA


A. Retaliatory Discharge South Carolina law prohibits any employer from discharging or demoting any employee because the employee has instituted, in good faith, any proceeding under the SC Worker’s Compensation law. S.C. CODE ANN. § 41-1-80 (Supp. 2009). Protection extends to employees who have testified or will testify in a worker’s compensation proceeding. Id.

VII. WORKER’S COMPENSATION RETALIATION SOUTH CAROLINA


B. An employee discharged or demoted in violation of the statute may bring an action to recover lost wages and seek reinstatement to former position. Future earnings and punitive damages are not recoverable, and the statute of limitations is one year. An employee can state a prima facie case by showing a satisfactory work performance and close temporal relationship between the adverse employment action and the worker’s compensation proceeding. The employee bears the burden of showing that he or she would not have been demoted/discharged but for the workers’ compensation claim.



3. Employer’s affirmative defenses: • Willful or habitual tardiness or absence. • Disorderly conduct or intoxication at work. • Destruction of company property. • Embezzlement or larceny of employer’s property. • Malingering. • Failure to meet established work standards. • Violation of written company policy. • Failure to file a claim.



A. Procedural Steps for Granting Unemployment Benefits 1. Claimant’s Request for Determination

• Filing Information Form o The Claimant must provide information related to the termination of

employment, including the Claimant’s belief regarding why he/she was terminated.

o The Employer then provides information on the form regarding the Claimant’s employment and makes a statement explaining the reasons for the Claimant’s termination of employment.

2. Interview with Claimant • At this interview, the Claimant is provided with the Employer’s

statement and given a chance to rebut the information.

3. Initial Determination • A written determination is issued providing claims information

and an explanation for either granting or denying the Claimant’s request for benefits.

VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE


4. Appeal of Initial Determination • The Claimant or Employer who disagrees with the Initial

Determination has a right to appeal. • A hearing scheduled before an Administrative Hearing Officer

(“Hearing Officer”) of the SC DEW or Appeals Referee of the NCDES.

• The Hearing Officer conducts a “hearing” and renders a decision based on the testimony and the written record presented.

5. The Initial Appeal Before the Administrative Hearing Officer

• The Hearing Officer hears all evidence related to the claim. • The hearing before the Hearing Officer does not always comply

with judicial procedures or rules of evidence. • All parties have the right to be represented by legal counsel or

other representatives. • The written decision issued by the Hearing Officer will include a

statement of facts and a separate statement of conclusions of law.



6. Decision of the Hearing Officer • The written decision issued by the Hearing Officer will

include a statement of facts and a separate statement of conclusions of law.



B. The Claimant is eligible for unemployment benefits without disqualification.

C. The Claimant is found to have voluntarily quit employment without good cause.

1. Reasons which usually do not constitute “good cause” are:

• Personal illness (unless the illness is directly related to or caused by the employment);

• Family illness; • Pregnancy; • Loss or lack of transportation; • Relocation; and • Lack of child care.



2. Reasons which may constitute “good cause” are:

• A significant reduction in wages or salary; • Significant changes in working hours; • A substantial changes in other terms of

employment; • Violation of an agreed-to condition of employment; • Sexual or racial harassment; and • Illness or disability related to work.



D. The Claimant is found to have been discharged “for cause”;

1. Chronic absenteeism; 2. Chronic tardiness; 3. Insubordination; 4. Unjustified refusal to follow reasonable

instructions or normal procedures; 5. Violations of reasonable published rules or

regulations. E. Where the Employer contends that the

Claimant was discharged for cause, the Employer has the burden to establish that the Claimant was discharged for cause.



“Discharge for Gross Misconduct” • Examples:

o $50+ in willful or reckless damage to company property

o Consumption of alcohol or being under influence of alcohol in violation of company policy

o Employee theft of $50+ of company property o Assault/battery of an employee or customer o Criminal abuse of patient or child o Failure to accept work o Insubordination: willful failure to comply with

lawful, reasonable order of a supervisor directly related to employment and as described in job description

o Willful neglect of duty directly related to his/her job as described in job description.



F. Appeal to the Appellate Panel 1. The Hearing Officer’s decision is appealable to the

Appellate Panel (SC) or full board of Review (NC). 2. Must file appeal within ten (10) calendar days of the

decision. 3. Hearing transcript issued. 4. In SC, the Hearing Officer’s decision is appealable to the

Full Commission. G. Hearing Before Appellate Panel

1. Three (3) Appellate Panelists generally participate (two (2) required for forum).

2. No new evidence can be presented. 3. Each party generally provided eight (8) minutes to state

position. 4. Panelists may question parties



H. Appeal to Administrative Law Court 1. In SC, Appellate Panel’s decision appealable to

Administrative Law Court • Must file appeal within thirty (30) days of

Commission’s decision 2. In NC, Board of Review’s decision appealable

to Superior Court • Must file appeal within thirty (30) days of

Commission’s decision



I. Hearing Before Appellate Panel 1. Three Appellate Panelists generally participate

(two required for forum). 2. No new evidence can be presented. 3. Each party generally provided 8 minutes to

state position. 4. Panelists may question parties.

VIII. CLAIMS FOR UNEMPLOYMENT INSURANCE SOUTH CAROLINA


A. NC Courts can order garnishment for child support, alimony, student loans, taxes, and some EMS services

B. BUT courts in other states may order more C. Employer does not violate NC Wage and Hour Act

by complying with garnishment order from other state

IX. GARNISHMENT LAW NORTH CAROLINA


A. Generally, no general garnishment statute which may be used to enforce collection of judgments taking a portion of a person’s wages. Garnishment not allowed for debts arising from a consumer credit sale, a consumer lease, a consumer loan, or a consumer rental purchase agreement

B. Child Support and Spousal Payments. Wages are subject to garnishment or withholdings in domestic cases for child support and spousal payments. The employer must be served with a notice from the family court to withhold certain amounts from each pay day of the employee. Employer should notify the employee of a deduction prior to the first withholding and provide employee with a copy of the garnishment Order.

IX. GARNISHMENT LAW SOUTH CAROLINA


C. An employer must pay the amount withheld to the Clerk of Court within ten (10) working days of the date income is withheld and notify the Court if the employee quits or is terminated. No employer may discharge, refuse to hire, or otherwise penalize any employee for the reason that a creditor of the employee has subjected or attempted to subject unpaid earnings of the employee to garnishment.

D. South Carolina allows for garnishment for the repayment of student loans. Similarly, the Federal Higher Education Act allows the Department of Education to garnish wages to collect defaulted student loans up to the level permitted by the Federal Consumer Credit Protection Act.

IX. GARNISHMENT LAW SOUTH CAROLINA


A. NC Courts recognize claims for negligent hiring, supervision, and retention

1. Workers’ Compensation Act generally precludes employees asserting such claims against employers.

X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION NORTH CAROLINA


A. Hiring 1. Generally, a plaintiff injured by an employee may claim

that the employer knew or should have known that the employee was dangerous. The employer has a responsibility to exercise reasonable care in hiring its employees. To protect itself, employer should obtain as much legally permissible information as possible about the applicant (without violating any privacy laws).

2. Employer should require the applicant to certify that the information provided is truthful and complete, and that the employer can decline to hire or terminate the applicant, if the applicant provides incomplete or misleading information.

3. If an employer can show that the employee’s application, etc., does not indicate danger, may be able to escape liability.

X. NEGLIGENT HIRING, RETENTION, AND SUPERVISION SOUTH CAROLINA


B. Negligent Retention involves the reasonable care an employer must exercise after an applicant is hired and becomes an employee.

C. Two elements—knowledge of the employee and foreseeability of harm to third parties. Plaintiff must demonstrate that the employee had “dangerous proclivities,” and employer was aware. A single isolated prior incident of misconduct could support a negligent retention claim, if the prior misconduct has a “sufficient nexus to the ultimate harm.”



D. Negligent Supervision 1. An employer may have a legal duty to use due care in

supervising an employee as a result of a contractual relationship with the employee. This duty sounds in tort, not in contract, and the duty is limited to the employee’s actions undertaken in his capacity as an agent for the employer.



E. Liability for negligent supervision can be found if an employee intentionally harms another person when:

1. The employee is on the employers property or is using the employer’s personal property;

2. The employer knows or has reason to know that it has the ability to control the employee; and

3. The employer knows or should know of the necessity and opportunity for exercising such control.

Moore v. Berkley County School District, 486 S.E.2d 9 (Ct. App. 1997).


AN OVERVIEW OF NORTH CAROLINA AND SOUTH CAROLINA ... · Angus Macaulay . [email protected]....

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