USA – NORTH CAROLINA Law and Practice Contributed by: Phillip Strach, Alyssa Riggins, Nathaniel Pencook and Cassie Holt, Nelson Mullins Riley & Scarborough LLP
Employees who maintain a claim for wrongful termina - tion in violation of public policy can sometimes pro - vide more expansive remedies than those available under federal law. Group Redundancies In North Carolina, a “group lay-off” is when a group of 20 or more workers are either partially or totally terminated from their employment at the same time. The North Carolina Supreme Court held in Gorski that when a group lay-off occurs, the employer must notify the local employment security office prior to the termi - nation date and allow the employees to collect up to four weeks’ pay without the employee having to prove that they are available to work. 7.2 Notice Periods North Carolina is an at-will employment state. This means that unless an employer contracted with an employee to work for a certain period of time, with certain terms calling for a specific period of notice, an employer can terminate an employee’s employment at any time for any non-discriminatory purpose. This means that an employer can give little to no notice prior to termination. 7.3 Dismissal for (Serious) Cause As mentioned in 7.2 Notice Periods , North Carolina is an at-will employment state, so an employer who does not enter into an employment contract with an employee giving that employee the right to only be terminated “for cause” can terminate an employee at any time for any non-discriminatory purpose. For employees with a contract containing a “for cause” termination provision, the employer must follow the terms of those procedures carefully. In drafting “for cause” provisions, employers should carefully con - sider the terms to make them tailored to the specific industry and favourable to the company. Before send - ing out an employment contract with a “for cause” termination provision, it is advisable for companies to speak with a local employment lawyer. 7.4 Termination Agreements Termination agreements are generally enforceable in North Carolina. This stems from North Carolina’s inter - est in allowing freedom of contract, specifically in the context of modifying at-will employment agreements.
Agreements providing for severance in the event of termination are common, and courts generally hold them to be enforceable. In the past, termination agree - ments providing for restrictive covenants such as non- compete provisions have been enforceable by North Carolina courts. By way of example, in United Labo- ratories, Inc v Kuykendall , the North Carolina Supreme Court upheld a non-compete provision contained within a sale representative agreement as enforceable, despite the discharged employee arguing otherwise. As discussed in 2.1 Non-Competes , the FTC’s action to hold non-competes unlawful for all except senior executives is unlikely to proceed. However, employ - ers may want to consider other means of lawfully protecting themselves and their investments besides non-competes, especially to the extent they operate in states where they are banned or limited. Non-dis - closure agreements can be an alternative to non-com - pete agreements that lawfully protect an employer’s IP and investments in skills training. Federal and state trade secrets laws provide another way to protect employers when contractual protections are lacking. Another form of agreement that can arise following the termination of employment is a release agreement, whereby an employee releases bringing any past and future legal claims that they may have grounds to bring against their former employer. In North Carolina, it is common practice to enter into a general release of claims agreement, which includes a non-exhaus - tive list of released claims. These general releases may include the release of claims such as wrongful discharge, emotional distress and claims under the North Carolina Persons with Disabilities Protection Act (PDPA). However, it is unlawful in North Carolina to agree to release certain claims, including claims under the NCWHA, workers’ compensation claims or rights to benefits under the North Carolina Workers Compensation Act, as well as waiver of unemploy - ment benefits. The inclusion of one of these claims in a general release agreement can render an otherwise- enforceable agreement invalid. 7.5 Protected Categories of Employee Protected classes under federal law include race, col - our, national origin, religion, sex (including pregnancy, childbirth and other related medical conditions), sex -
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