North Carolina Labor Department Challenged Employee Ruling
Managers must evaluate how position reclassifications interact with state human resources protections during terminations.
Updated on Sept. 30, 2026 in Human Resources
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The North Carolina Department of Labor has filed an emergency court petition to stay an order requiring it to reinstate a former employee, Beth Benson. This legal maneuver follows a judge’s decision that reversed the department's justification for her January 2026 firing.
Why it matters
The case highlights the operational risk of reclassifying roles as exempt from state human resources protections, a strategy the department used in this dispute. Operators must understand that such reclassifications may not shield them from administrative oversight regarding termination protocols.
A judge ordered the department to provide back pay dating to Jan. 14, 2026, and restore Benson to her previous salary grade. The dispute hinges on the department's claim that her position was exempt from the State Human Resources Act, a status currently under judicial review.
The players
North Carolina Department of Labor
A state agency responsible for overseeing labor regulations, workplace safety, and enforcement of employment statutes across North Carolina.
Beth Benson
A long-term state employee who previously served at the Department of Labor and currently works as an HR manager in the Department of Natural and Cultural Resources.
Luke Farley
The Labor Commissioner of North Carolina who has held office since January 2025.
The details
The Department of Labor argued that Benson violated the Acceptable Use Policy by using state equipment for personal job searches, subsequently reclassifying her role to bypass standard HR protections. The department now contends that the administrative judge lacked the jurisdiction to rule on her claims of retaliation and discrimination. Should the court deny the stay, the department projects it will need to create a new role to accommodate her while the appeals process continues.
Timeline
Benson began her employment within state agencies in 2004.
The Department of Labor dismissed Benson in January 2026.
An administrative law judge issued a final decision on Sept. 16, 2026.
The department filed a notice of appeal on Sept. 28, 2026.
Market Landscape
This dispute centers on whether an agency can use role reclassification to effectively bypass the procedural requirements mandated by the State Human Resources Act. It follows a recurring pattern in public sector management where agencies attempt to redefine employee status to gain greater flexibility in personnel actions.
Managers should conduct a thorough audit of all roles classified as exempt from standard HR policies to ensure the documentation clearly justifies their status. Relying on such reclassifications during terminations remains a high-risk compliance strategy that often faces intense judicial scrutiny.
The takeaway
The department's attempt to use role reclassification to bypass termination procedures was rejected by an administrative law judge, signaling high stakes for HR compliance. Operators should carefully review their employee classification policies and consult with counsel before pursuing terminations based on exempt status claims.
What happens next
The North Carolina Court of Appeals will determine whether to grant the emergency stay on the administrative deadlines for reinstatement and back pay.
Further reading
For broader context on personnel management and regulatory disputes, see the Human Resources section.
Source note: This article includes information reported by Carolina Journal.
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