North Carolina Gov. Bev Perdue has blocked the implementation of a new law that would reform the state's unemployment agency, saying it would violate federal law, the Charlotte Observer reports.
The U.S. Department of Labor informed Perdue that four provisions in the legislation would threaten the eligibility of employers in the state to qualify for tax credits under the Federal Unemployment Tax Act, thus increasing their taxes, the newspaper reports.
Perdue vetoed the bill this summer, but the state legislature overrode that veto. Lawmakers did, however, give the governor the ability to suspend the provisions until they returned in May, according to the Observer. Perdue's office repeated on Wednesday that those provisions should never have been included in the final bill.
The provisions included: a merger of the unemployment office and the state Department of Commerce and an expansion of the definitions for work misconduct and other conduct that would disqualify terminated employees from receiving benefits, the Observer reports.
North Carolina currently owes the federal government about $2.5 billion for initial unemployment benefits during the recession, the Observer reported.