Senate committee substitute to the 1st edition substantially rewrites the prior edition. Makes technical and organizational changes throughout.

Removes the following provisions:

GS 126A-1 (titling new GS Chapter 126A the Public Workforce Modernization Act).

GS 126A-4 (career state employee defined).

GS 126A-33 (State employee appointment types).

GS 126A-34 (probationary or permanent experiential appointment to career State employee).

GS 126A-105 (application).

GS 126A-130 (definitions pertaining to Article 13 of the new chapter).

GS 126A-135 (legislative and judicial branch safety and health programs).

New Article 17 (exemptions from the act).

Changes to GS 135-48.23(c1).

Provisions in new GS Chapter 126A reserved for future codification purposes.

Provisions requiring the Office of State Human Resources (OSHR) to submit a revise disciplinary policy to the State Human Resources Commission (SHRC) and the Governor, as described in prior Section 3.2 of the act.

Part IV (the appropriations portion of the act).

Adds or amends the following modified, reorganized content:

Part I.

Article I.

Part 1.

Goals, definitions.

Makes technical changes to the statutory depiction of new Chapter 126A, now titled the NC Human Resources Act. Revises statutory section numbers.  Divides articles in the chapter into parts. Makes technical and conforming changes to statutory section titles.

Sets forth the purpose of new GS Chapter 126A in GS 126A-1, including to establish a decentralized human resources (HR) system, where appropriate, without additional cost to the State under the direction of the Governor, based on modern principles of personnel administration, that applies the best methods evolved through government and industry.  Enumerates three core principles governing the State’s HR system.  Lists 23 defined terms in GS 126A-2.  

Part 2.

Appointment Types

Provides for the following three main appointment types in GS 126A-10: permanent, non-permanent, and exempt. Provides for at least 12-month probationary appointment for non-permanent, and exempt employees moving into permanent appointment.  Sets forth three exceptions relating to time-limited appointments or career employees assigned exempt positions, as described. Specifies that the appointment types do not apply to local employees, except for career and probationary appointments.

Details qualifications to be met for a career employee from either probationary appointments or permanent experiential appointments in GS 126A-10.1. Specifies that when an employee transfers employment between two local agencies, or between an executive branch agency and a local agency, that employee resets the period of consecutive service. Provides for continuation of career service for UNC exempt employees who attained career status before September 1, 2023, as specified.        

Part 3.

Application of the NC HR Act.

Sets forth ten defined terms in GS 126A-15. Applies GS Chapter 126A to all executive branch and local employees in GS 126A-15.1 except six enumerated categories of employees:

1. Public school superintendents, principals, teachers, and other public school employees, except for GS 126A-71 and Article 14.  
2. Employees of community colleges whose salaries are fixed and employees of the Community Colleges System Office whose salaries are fixed by the State Board of Community Colleges, except for GS 126A-71, GS 126A-103, GS 126A-104, and Article 14.
3. Employees of the Office of Proprietary Schools whose salaries are fixed by the State Board of Proprietary Schools in accordance with GS 115D-89.2.
4. Officers, employees, and members of the governing board of a North Carolina nonprofit corporation with which the Department of Commerce (DOC) has contracted.
5. Constitutional officers, officials, and employees of the Judicial Department.
6. Constitutional officers, officials, and employees of the General Assembly.   

Lists exemptions for the following fifteen categories of employees from various provisions of new GS Chapter 126A, depending on the employee type in GS 126A-15.2: 

• Probationary employees;
• Permanent experiential employees;
• Non-permanent experiential employees;
• Temporary employees;
• Time-limited appointments;
• Employees in a position with an experience-based salary schedule, as described;
• Limited exception employees;
• Specialized Treasurer's Office employees;
• Exempt policymaking employees and designated employees of policymakers;
• Exempt managerial employees and exempt wardens;
• Statutorily exempt employees;
• State employees compensated as teachers;
• University health employees;
• University police employees;
• Local employees.                                                                                                                            

Allows for additional exemptions for good cause or based on the requirements of an experiential program set by the federal government or an external funding source in GS 126A-15.3. Sets forth processes for designating exempt managerial and policy positions (i.e., a significant managerial or programmatic responsibility that is essential to the successful operation of an agency) in GS 126A-15.4. Clarifies that an exempt policymaking employee is a person with authority to implement a settled course of agency action, and does not include personnel professionals. Authorizes the Governor to designate a total of 425 exempt policymaking and exempt managerial positions throughout the thirteen listed departments and offices. Provides for designation of exempt policymaking and exempt managerial positions by the eight listed members of the Council of State, in the amounts described. Provides for exempt policymaking and exempt managerial positions in the Office of State Controller (Controller) and the State Board of Elections (SBE), in the amounts described. Allows the Governor or members of the Council of State to request additional exempt positions to the NCGA, as specified. Provides for vacancies, reversal of designations, and the creation, transfer, or reorganization of positions. Prohibits an employee, by whatever title, whose primary duties include the power to conduct hearings, take evidence, and enter a decision based on findings of fact and conclusions of law based on statutes and legal precedents from being designated as exempt. Provides for notice4 of exemption in GS 126A-15.5 and for agencies to adopt policies on exempt positions in GS 126A-15.6, as specified.

Article 2.

Oversight of the State Human Resources System.

Provides for the OSHR in GS 126A-21 within the Governor’s office, including a Director of OSHR who serves at the pleasure of the Governor. No longer specifies that the director is a Cabinet level position. Enumerates ten (was, nine) primary duties of OSHR, including any others founds in new Chapter GS 126A. Amends the authorization of OSHR to charge fees to allow fees to cover full costs of participating in education, training, or consultation services covered by OSHR. Makes clarifying changes to the authorization of OSHR to establish policies to effect the act, including on the fourteen listed matters, as described in GS 126A-22. Authorizes the Director to grant exceptions or variances from OSHR policies. Provides for decentralization agreements with executive branch agencies in GS 126A-23. Provides for both the annual State of State workforce report and compensation survey in GS 126A-24.

Article 3.

Classification and Minimum Qualifications.

Requires SHRC to establish policies on classification and minimum qualifications of positions, including position classification plans, reasonable minimum qualifications, process of classification and reclassification, and procedures for hiring employees based on specific demonstrated competencies rather than years of experience or education, in GS 126A-30. Tasks SHRC to do the following four things to reduce barriers to State employment in GS 126A-31:

• Regularly assess the minimum qualifications for each position in an agency.
• Determine when practical experience and training, such as military service, an apprenticeship, or a trade school education instead of a bachelor's degree is the appropriate qualification for a position.
• Identify jobs for which the minimum qualifications could be reduced from their present level.
• To the extent practicable, remove requirements for a bachelor's degree from position descriptions when the degree is not necessary for the position.

Amends provisions governing agency flexibility in classification in GS 126A-32, by specifying that it does not affect enforcement of corrective actions against those going beyond the allowed flexibilities.

Article 4.

Compensation.

Requires SHRC to establish policies on compensation, as specified, including a compensation system and the setting of compensation, in GS 126A-40 so that the compensation makes State government a competitive and attractive employment option for recruitment and retention, provides substantially similar compensation levels for positions with substantially similar work, and recognizes and rewards performance. Provides for agency flexibility in compensation, in GS 126A-41 and GS 126-42, including the authority to set a salary for an exempt policymaking or managerial position at the range set by SHRC plus 10%. 

Article 5.

Recruitment and Hiring.

Part 1.

General Provisions.

Requires SHRC to establish policies on recruitment and hiring for positions including on the six matters listed in GS 126A-50 and no longer requires the Governor's approval. Amends the posting of positions in GS 126A-51 including adding in local agencies. Authorizes, in GS 126A-52, an agency (was, an employer hiring for State employment) to retain private personnel services to assist in finding candidates for a position, so long as none of those private businesses receive compensation or other value for assisting in helping a person obtain that employment except for those regular and customary fees for services rendered pursuant to a written agreement when the fees are paid by someone other than the agency. Requires agencies to hire from an applicant pool using fair and valid selection criteria as described, in GS 126A-54. Allows for experiential hiring. Limits political hiring in GS 126A-55. Authorizes agencies to directly hire into a vacant position without posting if all four of the enumerated criteria are met, including that the person hired had applied to the previous vacancy and that they meet the minimum qualifications for the position and exempts the hire from the remainder of the Article. Provides for non-permanent to permanent hiring, lateral transfers, and consideration of applications for multiple vacancies. 

Part 2.

Interchange of government employees.

Makes clarifying changes to the “NC Interchange of Governmental Employees Act” in GS 126A-58, encompassing authority to interchange employees, the status of employees of the sending agency, travel expenses, the status of employees of other governments, and administration, including rule promulgation.

Article 6.

Verification and Onboarding.

Part 1.

Verification of Eligibility to Work and Application Materials.

Requires SHRC to establish onboarding policies for all positions, including verification of eligibility to work in the United States and verification of employee credentials and employment history in GS 126A-60. Limits who provides for E-Verify in GS 126A-61 to each agency, community college, and public school unit. Requires SHRC to adopt other onboarding policies in GS 126A-63, including employee onboarding and reference checks.

Article 7.

Benefits, Terms, and Conditions of Employment.

Part 1.

Paid Parental Leave and Bereavement Leave.

Tasks SHRC with adopting policies on paid parental leave and bereavement leave in GS 126A-70. Amends GS 126A-71 to limit the paid parental leave to eligible full-time employees. Removes references to rule making, leaving the establishment of policies.

Part 2.

Benefits, Terms, and Conditions.

Tasks SHRC with establishing policies on the benefits, terms, and conditions of employment for positions subject to Article 7, including the nine matters listed, in GS 126A-72. Amends the voluntary shared leave in GS 126A-75 by no longer reference rule making and making clarifying changes. 

Part 4.

Flexible Compensation Plan.

Provides for a Flexible Compensation Plan in GS 126A-76.

Article 8.

Just Cause, Disciplinary Actions, and Grievances.

Directs SHRC to adopt policies on just cause, disciplinary actions, and grievances including the seven listed topics, in GS 126A-80; no longer requires the Governor's approval. Amends GS 126A-81 (disciplinary actions) to require the listed standards to be used for determining just case for dismissal, suspension, or demotion. Limits adverse employment action for issues of job performance to unsatisfactory job performance or grossly inefficient job performance, as described. Provides for written notice to employee, with appeals. Provides for a grievance proceeding and appeal process for any employee having a grievance arising out of or due to his or her employment. Authorizes the SHRC to adopt policies on alternate dispute resolutions for matters constituting a grievance under the article. Subjects decisions on attorney or witness fees to judicial review in GS 126A-86.

Article 9.

Separation, Offboarding, and Reductions in Force.

Requires SHRC to establish policies on separation for positions subject to the Article, including employee separation, voluntary separation incentives (GS 126A-91), furloughs, and reductions in force (GS 126A-92), GS 126A-93, GS 126A-94).

Article 10.

Inappropriate Political Activity.

Prevents, in GS 126A-100, all employees subject to the Article from (1) taking an active part in managing a campaign, campaign for political office, or otherwise engage in political activity while on duty or within any period of time during which he or she is expected to perform services for which he or  she receives compensation from the State or (2) otherwise use the authority of their position, or utilize State funds, supplies, or vehicles to secure support for or oppose any candidate, party, or issue in an election involving candidates for office or party nominations, or affect the results thereof. Prohibits compelled speech as part of the agency employment application process in GS 126A-103. Provides for nondiscrimination and dignity in State government workplaces in GS 126A-104, including by prohibiting agencies to compel employees from affirming or professing belief of concepts related to race or sex as part of any employee training program. Provides for disciplinary action for failure to comply with the article in GS 126A-105.

Article 11.

Temporary Employees.

Directs SHRC to establish policies, without requiring the Governor's approval, on temporary employments including (1) consistent implementation of the JoinNC Program (detailed in GS 126A-111 and GS 126A-112) and (2) temporary employment.

Article 12.

Local Discretion over Local Government Employees.

Specifies, in GS 126A-120 (local government policies) that local government policies on annual leave, sick leave, hours of work, holidays, and the administration of the pay plan for county local government employees generally, and they are filed with the Director, then those rules will supersede the rules on those matters adopted by the SHRC. Requires county employees to be paid within the salary ranged adopted by the county board of commissioners, as described. Provides for joint exercise of authority of county boards where two or more counties are combined into a district for the performance of an activity. Specifies that when a municipality is performing an activity by or through employees who are subject to the provisions of this Chapter, the governing body of the municipality may exercise the authority granted by GS 126A-120. Authorizes county boards of commissioners to establish a local human resources system for its employees in GS 126A-122. Authorizes local governments to provide employee bonuses in GS 126A-123.

Article 13.

Employee Workplace Requirements Programs for Safety, Health, and Workers’ Compensation.

Directs OSHR to establish a written program for executive branch agencies (was, State employees) for employee workplace environmental, health, and safety, and workers' compensation in GS 126A-131. Enumerates nine requirements for the program in GS 126A-132. Requires OSHR to maintain a model program of safety and health requirements to guide executive branch agencies in the development of their individual programs and to provide technical assistance, as specified, in GS 126A-133. Tasks OSHR with creating committees to perform workplace inspections, review injury and illness records, make advisory recommendations to the agency's managers, and perform other functions determined by OSHR necessary to implement the article.

Article 14.

Protection for Reporting Improper Government Activities.

Provides for posting of notice to employees of their protections or obligations under the Article in GS 126A-144. Specifies in GS 126A-145 that an employee's right to speak to a member of the General Assembly at the member's request may not be directly or indirectly limited by the employee's supervisor or by any policy of the employing agency.

Article 15.

Equal Employment and Compensation Opportunity.

Provides for equal employment and compensation opportunities in GS 126A-150 by executive branch agencies (was, all agencies), including training (GS 126A-151). Limits who must develop equal employment opportunity plans to UNC and the specified principal departments (GS 126A-153). Prohibits retaliation against employees for protesting alleged equal employment opportunity violations.

Article 16.

The Privacy of Employee Personnel Records.

Tasks SHRC with establishing policies on the personnel files subject to the Article in GS 126A-160, removing references to rule making. Specifies those personnel files not subject to inspection under the State public records act in GS 126A-161, which records are open to inspection (GS 126A-162), and certain restrictions on access to records (GS 126A-162.1), clarifies which information in a personnel file is confidential (GS 126A-163). 

Part II.

Enacts Article 7E to GS Chapter 120 (Legislative HR System). Authorizes the Legislative Services Commission (LSC) to adopt policies concerning the seven listed matters, including equal employment opportunity, in GS 120-36.30. Provides for leave for temporary employees, establishment of equal employment opportunity, duty to report improper government activities, privacy of employee personnel records, those records that are open to inspection, confidential information in personnel files, employee objections to placement of information in personnel files, penalties for permitting access to a confidential file by an unauthorized person or accessing a confidential file without authority. Repeals GS 120-32.5 (leave for temporary employees). Makes conforming change to GS 120-32 (duties of the LSC).

Part III.

Enacts Article 28E, the Judicial HR System, to GS Chapter 7A, as follows. Authorizes the Director of the Administrative Office of the Courts to establish policies on the four listed employment related matters. Requires the judicial branch to provide equal opportunity to employment and compensation, as described. Provides for an employee’s duty to report improper government activities, privacy of employee personnel records, those records that are open to inspection, confidential information in personnel files, employee objections to placement of information in personnel files, penalties for permitting access to a confidential file by an unauthorized person or accessing a confidential file without authority.

Part IV.

Makes conforming changes by updating statutory cross-references in the following additional statutes: GS 1-54(a), GS 7A-29(a), GS 7A-146(13), GS 7A-754, GS 7A-759, 7A-760, GS 18C-113(c), GS 18C-120, GS 62-12, GS 62-14, GS 63A-24(b), GS 74-24.19(a), GS 90-270.51(f), GS 90-333(h), GS 90B-5(e), GS 97-77(b), GS 99A-2(e), GS 114-4, GS 114-4.26, GS 114-4.2B, GS 114-4.2C, GS 115C-21(a)(1), GS 115C-218.90(a)(6), GS 115C-238.68(7), GS 115C-302.1(j), GS 115C-336.1, GS 115D-3(a3), GS 116-14(b), GS 116-30.4, GS 116-33.2, GS 116-37.3(b), GS 116-239.10, GS 116-350.30(a), GS 116-360.15(b), GS 120-86.1, GS 122C-112.1(b)(6), GS 128-33.1(a), GS 130A-41(b)(12), GS 130A-45.12, GS 132-1.4A(b), GS 135-3(c), GS 135-5.1(a)(3), GS 135-6.1(a), GS 135-48.23(a), GS 136-4, GS 138A-3(70), GS 138A-12, GS 143-202.4, GS 143-300.35(a), GS 143-554(a), GS 143-652.2(f), GS 143B-53.2(c), GS 143B-168.12(a)(2), GS 143B-168.14(a)(2), GS 143B-216.70(b), GS 143B-216.80(b)(1), GS 143B-394.2(a), GS 143B-431.01(j), GS143B-1209.11(f), GS 143B-1212, GS 143B-1322(b), GS 143C-6-10, GS 147-64.6(d), GS 147-65.2, GS 147-72.1(c), GS 142-118.8(a), GS 150B-23(a), GS 150B-25.1(c), GS 150B-33(b)(11), GS 153A-92(b)(5), GS 153A-439(b), GS 168A-10.1, and GS 169-13(b).

Makes conforming changes to GS 53C-2-3 (Office of the Commissioner of Banks), GS 62-14 and 15(Utilities Commission staff) to reflect portions of GS Chapter 126A applicable to that entity and its employees. Makes conforming changes to GS 128-15(d) (veteran’s preference in hiring)  to update statutory cross references and to specify that exempt policymaking employees and designated employees of policymakers, statutorily exempt employees, State employees compensated as teachers, as defined in GS Chapter 126A, employees of the legislative and judicial branches, and employees covered by GS 126A-15.1(b) are subject to the statute

Repeals GS 116-360.5(2) (definition of career state employee status in the definitions pertaining to East Carolina University Health Care Operations), Article 63 of GS Chapter 143 (State Employees Workplace Requirements Program for Safety, Health, and Workers' Compensation).

Part V.

Section 5.1(a). (formerly, Section 3.1.)

Removes references to the Public Workforce Modernization Act in the five matters that will continue to be governed by the provisions of GS Chapter 126 as it existed immediately prior to its repeal.

Section 5.1(b).

Applies the following provisions only to employees hired on or after October 1, 2026, GS 126A-310.1(a)(2), as enacted by this act and GS 126A-15.2(e), as enacted by this act.

Section 5.1(c).

Specifies that employees designated under GS 126-5 on or before September 30, 2026, are designated as the following under Part 3 of Article 1 of GS Chapter 126A, as enacted by this act, effective October 1, 2026:

(1) Employees designated as confidential assistants or confidential secretaries are automatically redesignated as designated employees of policymakers.

(2) Employees designated as exempt wardens are automatically redesignated as exempt wardens.

(3) Employees designated as exempt policymaking employees are automatically redesignated as exempt policymaking employees.

(4) Employees designated as exempt managerial employees are automatically  redesignated as exempt managerial employees.

Section 5.2. (was, Section 3.2).

Removes provisions instructing OSHR to submit a revised disciplinary policy to SHRC and the Governor. Instead, directs SHRC to review rules in  Title 25, Chapter 01 of the North Carolina Administrative Code (Code) and repeal any rules it determines to be unnecessary after enactment of the act.

Section 5.3. (was, Section 3.3).

Removes references to the Public Workforce Modernization Act. Changes the cutoff date for the specified agreements to remain in effect until modified or terminated from those in effect on the effective date of the Public Workforce Modernization Act to September 30, 2026. Changes the cutoff date for the pending litigation not to be impacted by the enactment of the act from the enactment of the Public Workforce Modernization Act to October 1, 2026.

Section 5.6.

Directs OSHR to submit the first State of the State workforce report by January 15, 2027.

Part VI.

Makes conforming changes to the act’s effective date.

Makes additional organizational, conforming, clarifying, and technical changes throughout.