Easily manage employment in North Carolina

Payroll management in North Carolina

North Carolina has a growing economy supported by industries such as technology, finance, manufacturing, and healthcare. With state-specific payroll regulations, including a flat state income tax and right-to-work laws, employers in North Carolina must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in North Carolina

Employers in North Carolina must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: North Carolina follows the federal minimum wage of $7.25 per hour, as the state does not have a higher minimum wage requirement.
• Overtime rules:
• North Carolina follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply based on job classification and industry.

State income tax

• North Carolina has a flat state income tax rate of 4.5% as of 2024.
• Employers must withhold state income tax and remit it to the North Carolina Department of Revenue.

Unemployment insurance (UI) tax

• Employers must contribute to North Carolina’s Unemployment Insurance (UI) program, managed by the North Carolina Division of Employment Security.
• The UI wage base in North Carolina is $29,600.
• UI tax rates vary based on an employer’s experience rating and range from 0.06% to 5.76%.
• New employers typically pay a 1.0% UI tax rate.

Workers’ compensation

• North Carolina law requires most employers with three or more employees to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Some exemptions apply, including certain agricultural and domestic workers.

Payroll tax filing and payment deadlines

• Employers must register for a North Carolina Withholding Tax Account with the North Carolina Department of Revenue.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the North Carolina Division of Employment Security.
• Payroll tax payments can be made electronically through the North Carolina Department of Revenue’s Online Filing System.

Quick facts: Important considerations for employers

• State minimum wage compliance: North Carolina follows the federal minimum wage of $7.25 per hour.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck on the next scheduled payday.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the North Carolina New Hire Reporting Program within 20 days.
• Paid sick leave: North Carolina does not require employers to provide paid sick leave, but employers may choose to offer it as a benefit.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: North Carolina is a right-to-work state, meaning employees cannot be required to join a union as a condition of employment.

Run payroll in North Carolina with Remote

Managing payroll in North Carolina requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.