North Carolina Changes Separation Payment Requirements And Employer-Notice Requirements For Employee Wages

On July 8, 2021, North Carolina Governor Roy Cooper signed Senate Bill 208, which modifies the requirements for: (i) final wage payment to separated employees; and (ii) employer-provided notice to employees concerning their wages.  SB 208 amends the North Carolina Wage and Hour Act, N.C. Gen. Stat. § 95-25.1 et seq., by making the following changes:

1. The amendment requires an employer to pay final wages to separated employees through its regular pay channels unless the employee requests in writing that final payment be made via trackable mail.
2. The amendment requires that an employer provide written notice at the time of hiring of: (i) promised wages; and (ii) the day and place for payment.
3. The amended law now requires that an employer provide written notice of at least one pay period prior to any change in an employee's promised wages. However, as was the case under the prior version of the statute, wages may be increased retroactively without the required prior written notice.

Implications for Employers:

1. Employers can no longer satisfy their notice requirement by providing oral notice of promised wages at the start of employment; notice must be made in writing.
2. Employers can no longer satisfy their notice requirement regarding changes to employee wages by posting notice of such changes in a place accessible to employees. Instead, employers must provide advance written notice to employees.
3. Notice of changes to compensation can no longer be made 24 hours prior to the change; rather, written notice must be made one pay period prior to any change. Of particular note is that the advance notice requirement applies to both increases and reductions in employee pay.  However, as a practical matter, employers face a low level of risk of employee claims of improper notice where notice of increased pay is provided late (less than one pay period in advance), as employees receiving a pay increase likely will not be concerned about the timing of such notice.

The amendments are effective immediately.

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