North Carolina Wage and Hour Act Update and Impact on Small Businesses


On July 8, 2021, Governor Roy Cooper signed into law some changes to the Wage and Hour Act through the North Carolina Department of Labor Wage and Hour Division. The Wage and Hour division enforces the laws related to minimum wage, hours, wage payment provisions, deductions from pay, child labor and the like.

The three changes that were made and are effective immediately for all North Carolina employers and small businesses include:


Written Notice of Wages


Old rule: It was acceptable to provide employees with a verbal or written notice of the rate of pay, the pay date frequency and how they are paid (ie direct deposit, live check)


New rule: At time of hire, employers must provide employees with a written notice of the rate of pay, the pay date frequency and how they are paid.


What this means: It’s not uncommon for a small business to make verbal offers or hire on a handshake and not have anything in writing. However, it has always been best practice to have all terms of an offer in writing. With this new law, proceeding without providing, essentially an Offer Letter or Terms of Employment notice, to new employees is a violation of the NC Department of Labor Wage and Hour Act. If your small business doesn’t have an Offer Letter or any documentation for new hires, it is recommended to create or implement an Offer Letter or Terms of Employment Letter template that not only outlines the required items in the written notice but all other aspects of a new hires’ employment.


Wage Decrease Notice Period


Old Rule: An employer was required to give employees a 24-hour notice in writing of any decrease in wages.


New Rule: Employers are required to give employees a full pay period notice in writing of any decrease in wages. There is no notice requirement for increases in wages, which is no change.


What this means: It is important to be mindful of your small business' payroll schedule and ensure that any wage changes that would result in a reduction in pay must be made in writing with a minimum of 1 payroll cycle notice period.


Delivery of Final Paycheck


Old Rule: An employee’s final paycheck at time of separation is due on or before the next regular pay cycle and through the means in which they were set up (direct deposit) or via trackable mail, if requested by the employee.


New Rule: An employee’s final paycheck at time of separation is due on or before the next regular pay cycle and through the means in which they were set up (direct deposit) or via trackable mail, if requested in writing by the employee.


What this means: If an employee is signed up for direct deposit and that is how they have received their pay each pay period, that is how it must be paid out at time of separation. If the employee would prefer to have a “live” check for their final pay, they must request that in writing and the check must be mailed with tracking and documentation to show delivery. If an employee is not signed up for direct deposit and they typically get a “live” check, their final paycheck will still be a live check but it does need to be sent via trackable mail.


These are seemingly small changes but can be very impactful for a small business or non-profit because of the administrative impact at the time of hire, time of wage adjustments and time of separation.


The new laws are also best practices that should already be a part of your small business, but if they aren’t, we can help. Give us a call and let’s talk about what these changes mean for your NC small business or non-profit.


- Deanna


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