Earlier this year, three bills were introduced to the Nebraska Legislature, which may have lasting effects on employers.
Bill 961- Non-Compete Clauses
First, Legislative Bill 961 was introduced, which would prohibit non-compete clauses for lower-wage employees. This follows the U.S. Federal Trade Commission’s 2023 proposal to ban all non-compete clauses in employment contracts. Unlike the US FTC’s proposal, LB 961 would only prohibit non-compete clauses for “lower wage -employees,” meaning employees who earn no more than one hundred thousand dollars annually.
A non-compete clause is a contractual term between an employer and an employee that forbids an employee from working for a competing employer or starting a rival company/business. Typically, this applies within a particular geographic area and for a specific period of time after the worker’s employment ends. Firms use non-compete clauses to protect their interests, including confidential information such as trade secrets and customer identities. However, many find the non-compete clauses to be an unfair method of competition.
Now, what does this mean for employers? If this bill were to pass, there could be several effects on employers who use non-compete clauses. First, employers will need to investigate the measures in place to protect sensitive data and information. Without a non-compete clause, employers will likely need to limit access to company information and bolster employees' confidentiality agreements. Employers may also expect a need to increase salaries to keep employees from “shopping around.” However, there may be positive effects for employers. If non-compete agreements become prohibited, employers have more access to top talent for hiring. Employers can look to employees at competing businesses rather than be limited to a less experienced pool of employees.
Although it is still being determined whether the bill is to pass, it would be advantageous for employers to examine their current structures and plan their response to non-compete agreements becoming unenforceable.
Bill 977- Discrimination of Military and Veteran Status
Next, Legislative Bill 977 was introduced to prohibit discrimination based on military and veteran status. As you may be aware, military veterans are a sizable social group, given that there are approximately 17.9 million veterans in the U.S. (Bureau of Labor Statistics, 2023), with many looking to join the workforce. Unfortunately, veterans often struggle to transition into the civilian workforce and find employment. Veterans are stereotyped and perceived as “damaged” from their wartime experiences.
Currently, Federal protections are in place, as the U.S. Equal Employment Opportunity Commission (EEOC) created the Uniformed Services Employment and Reemployment Rights Act (USERRA), which applies to veteran employees and those employing them.
Under USERRA, it is unlawful for employers to discriminate against service members based on their military service and expressly forbids retaliatory and related adverse discriminatory actions based on military status. Similarly, LB 977 looks to provide the state with the power to regulate, suppress, and prevent discrimination on the basis of military or veteran status.
Under the proposed bill, counties would be able to create local agencies to handle discrimination claims similar to the EEOC. These agencies would ultimately be able to order appropriate penalties and provide equitable relief for veterans found to be subject to discrimination.
Bill LB1213 - Annual Paid Leave
Lastly, LB1213 has been proposed and would require employers to provide annual paid leave for school-related activities. Specifically, employers with at least 15 employees would be required to provide a minimum of 20 hours of paid annual leave for employees to participate in activities such as parent-teacher conferences, volunteer and extra-curricular activities and athletic competitions. However, the bill excludes U.S. government employees, Indian tribes, or tax-exempt private membership clubs. LB1213 was proposed in hopes of increased parental involvement to promote better behaviors and increased student achievement.