Until the second week of November, North Carolina employers were expecting higher unemployment insurance costs for the fiscal year 2014. Then, however, they were surprised with the news that their financial burden would be drastically reduced.

The potential tax increase was related to the Federal Unemployment Tax Act and the debt North Carolina accrued following the Great Recession. Like many states, North Carolina had to borrow money from the federal government in order to continue benefits for unemployed residents. Instead of paying back that debt during fiscal year 2014, however, Gov. Pat McCrory announced an approved waiver from the U.S. Department of Labor that drastically reduced the burden on local employers.

“Restructuring North Carolina’s unemployment insurance system and aligning it with those of our neighboring states has set our unemployment program on a path to sustainability,” McCrory said in a statement. “By demonstrating to the federal government that we have cut up the federal unemployment insurance credit card, North Carolina employers will avoid paying penalties and be able to invest those funds in job creation.”

“North Carolina employers are expected to save $180 million in tax year 2014”

McCrory shares news at industry event
For this fiscal year, North Carolina employers are expected to save roughly $180 million. Recent reforms in the state, including this waiver, helped bring the debt down from $2.8 billion to $465 million.

According to local media outlet the Times-News, McCrory made the announcement at an industry event for Honda’s new jet engine. During his speech, he noted that he was proud of North Carolina’s state legislature and that the overall goal was to get people back to work.

The recent waiver approval was contingent on the reforms made in the state, the governor’s statement explained. Over the past year, North Carolina’s efforts have helped drastically cut unemployment insurance debt.

Division of Employment Security assistant secretary Dale Folwell added that North Carolina wasn’t done with the improvements there, either. He explained that it was the DES’ goal to pay off the entire debt by 2015, which will allow local employers to receive their full FUTA credit once more.

Overall, the gains made in North Carolina will help employers save money on their unemployment insurance expenses this fiscal year, with additional savings likely in 2015 and beyond.

At Corporate Cost Control, we work closely with employers across the country to better manage the nuances of unemployment insurance. Legislation changes on the state level could impact you today, and we welcome any questions or concerns you may have on a wide range of topics.


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