North Carolina has enacted a law intended to help employers catch up to the employment demands of a growing economy, while offering some individuals a second chance at earning a living. 

On June 25, 2018, Gov. Roy Cooper signed House Bill 774 (“H.B. 774”), which will take effect on December 1, 2018. H.B 774 expands the group of individuals convicted of low-level felonies in North Carolina who can petition courts for a certificate that provides potential employers immunity from employment-related negligence lawsuits.

Since 2011, North Carolina has permitted individuals convicted of certain low-level felonies and misdemeanors to petition courts to obtain a Certificate of Relief.  Certificates of Relief are a legislative construct intended to reduce employment barriers by encouraging employers to hire individuals with prior felony or misdemeanor convictions. Certificates of Relief bar all employment-related negligence lawsuits against employers for the acts or omissions of an individual who has obtained the certificate, so long as the employer relied on such individual’s Certificate of Relief at the time the alleged negligence occurred.

Once H.B. 774 takes effect, Certificates of Relief will be available to any person convicted of no more than three Class H or I felonies and any misdemeanors. H.B. 774 also changed the method by which Class H and I felonies are counted. Multiple Class H or I felonies during the same court session will now be counted as a single felony conviction for Certificate of Relief purposes. Once H.B. 774 takes effect, many individuals convicted of low-level felonies may become eligible to receive Certificates of Relief.

Examples of crimes considered Class H felonies in North Carolina are:

• Breaking and entering with felonious intent;
• Possession of stolen goods;
• Possession with intent to manufacture, sell or deliver cocaine;
• Sale of certain controlled substances;
• Embezzlement of amounts less than $100,000; and
• Larceny of property worth more than $1,000. 

Some examples of Class I felonies are:

• Forgery of notes, checks or securities;
• Possession with intent to manufacture, sell or deliver marijuana;
• Uttering a forged paper or instrument;
• Possession of cocaine; and
• Breaking or entering a motor vehicle.

Further, H.B. 774 imposes a duty on individuals who obtain Certificates of Relief to inform their employers within 10 days if:

• They are convicted of any crime after obtaining a Certificate of Relief;
• A court modifies their Certificate of Relief; or
• A court revokes their Certificate of Relief.

With lowering unemployment rates and a growing economy, many employers have found it difficult to fill positions with qualified candidates. H.B. 774 should effectively increase the number of individuals in the workforce. Employers may want to critically review how they conduct background checks in the wake of H.B. 774, and determine whether they should take advantage of the incentives offered by the North Carolina Legislature for hiring individuals who have obtained a Certificate of Relief. Now, employers may determine that some individuals they previously deemed unqualified, may be ideal candidates if they have obtained a Certificate of Relief. 

If your company may be interested in hiring employees with Certificates of Relief or if you have any questions regarding H.B. 774, please contact the Labor and Employment Law Practice Group.