Compliance Update for Employers and Employees – Non-Competes under the Federal Trade Commission

Yesterday, the FTC issued a significant rule regarding non-compete agreements. This is a nationally applicable rule.

In a nutshell, the FTC's rule aims to bring more transparency and fairness to non-compete agreements, ensuring they're used appropriately and not to stifle competition or restrict an employee's ability to change jobs. While this is a new rule nationally, any stricter rules under state law will still apply to those under such a state's jurisdiction.

Here are the basics to know about the new federal rule:

• Non-competes must be tailored to protect legitimate business interests.

• They should be disclosed before a job offer is accepted.

• Employees should have ample time to review and seek legal advice.

• Unreasonable restrictions could face scrutiny.

• Employers should review past non-compete agreements and may need to notify employees of the new rule's effect on them.

The rule goes into effect in 120 days. We expect legal challenges to be filed in federal courts to invalidate or limit this new rule, so stay tuned!

Nebraska employers who are abiding by Nebraska legal requirements for their non-compete and non-solicitation agreements are likely already compliant with this new federal rule. Nebraska has long required that non-competes be narrowly focused, permitting employers to prohibit from soliciting customers, clients, vendors, and employees for a limited period after their departure. Nebraska courts will not enforce generalized non-competes that amount to industry bans. Of course, some nuances could affect a particular employer or employee differently, and legal advice should always be sought.

The FTC's press release is available here: FTC Announces Rule Banning Non-competes | Federal Trade Commission.

At ES Law, we're committed to helping you stay compliant and navigate these changes smoothly. Contact us today to ensure your non-compete agreements align with the latest regulations.

Nebraska Minimum Wage to Increase January 1, 2023 – Must Know Info for Employers

Nebraska voters approved a ballot measure in November to increase the minimum wage in steps each January 1 from 2023 through 2026. On January 1, 2023, the minimum wage will increase from its current $9.00 per hour to $10.50 per hour. Employers must be aware of this change and must comply with it in paying their employees.

The minimum wage for Nebraska employees will increase according to the following schedule:

• January 1, 2023, will increase to $10.50 per hour

• January 1, 2024, will increase to $12.00 per hour

• January 1, 2025, will increase to $13.50 per hour

• January 1, 2026, will increase to $15.00 per hour

This increase in Nebraska’s minimum wage standards follows a trend among many states throughout the country of raising their minimums. Moving forward, Nebraska’s minimum wage will be tied to the consumer price index, or CPI, which measures the average change over time in prices paid by urban consumers for consumer goods and services, influencing inflation.

There are minimal exceptions to the minimum wage, and compliance with wage laws can get complicated. Given penalties and liability risks for non-compliance, it is vitally important that employers understand these laws and have clear policies to meet them. Bonnie Boryca and E|S’s employment attorneys are well-versed in these laws and happy to assist in compliance reviews for employers in Nebraska. Bonnie can be reached at 402-397-2200 or boryca@eslaw.com.

Holiday Party Tips for Employers

The end of the year brings various obligations for employers and also opportunities to spread holiday cheer to employees, whether through end-of-year bonuses, holiday time off from work, or, as discussed here, employer-hosted holiday parties.

Examples of disputes with employers arising out of holiday parties are not hard to find. Holiday parties can give rise to claims, sometimes more than other environments because of the festive atmosphere that encourage one to “eat, [drink,] and be [too] merry.” The following tips are offered to help avoid troublesome situations that could give rise to a claim.

Be open to all viewpoints in hosting your party.

When planning and inviting employees to your holiday party, it is a good idea to call it just that, a holiday party, rather than tying the event to a particular holiday, like Christmas or Chanukah. The purpose of doing so is to ensure that employees of all religions and backgrounds are equally encouraged to participate in the out-of-office event. Even if supervisors are aware that a particular employee’s beliefs prevent him or her from celebrating, everyone should be welcomed to attend.

But don’t make attendance at holiday events mandatory.

With that said, everyone should be welcomed to attend, but no one should be required to attend. If attendance is mandatory, then the party may be considered work-time, in which an employer has to pay wages for non-exempt employees. Also, employees who do not celebrate holidays should not be required to attend and celebrate. Numerous cases have been litigated against employers in which an employee alleged she was required to participate in a holiday event that was contrary to her religious beliefs. Encourage employees to come, but do not require that they do.

Consider how to restrict excess consumption of alcohol.

Many problems that arise at out-of-office events, whether harassment or injuries, stem from over-indulgence of alcohol. A proactive employer should think about how to limit excessive drinking by employees, both to protect employees and to protect itself from potential liability.

For catered events or parties held at event centers, it can be a good idea to have a cash bar, rather than an open bar. Another way to try to limit excess consumption is to ask bartenders to be aware of who they are serving and decline to serve anyone who appears inebriated.

Also, serve appetizers, dinner, and dessert if you intend to have alcohol available throughout the evening. Employers may also want to have taxis or shuttles available for employees who need assistance getting home at the end of the evening. A party held over an extended lunch hour can also discourage excessive drinking and may be appreciated by employees who often have multiple family, church or other events to attend in the evenings during the holiday season.

Review policies with employees in advance of any party.

Your anti-harassment, dress code and other employee conduct policies apply to an out-of-office holiday event. It is a good idea to review these with employees a couple of weeks in advance of an event, by way of e-mail or memorandum summarizing the relevant policies.

Another idea to avoid inappropriate attire at parties is to hold the party right after business hours. This can encourage employees to come in their ordinary work attire, which can be a reminder that conduct at the party reflects on their professional lives.

Check your insurance coverage.

Good to do any time of year, but particularly when planning any large scale event for employees, is checking in with your insurer on the scope of your coverage. Does your policy contain exclusions for off-site events, or attendance-optional events held after hours? Does serving alcohol trigger any exclusion? Always best to be prepared.

Be vigilant and ask your team leaders to set a good example of conduct.

While you surely want everyone to spread the holiday cheer, consider asking your team leaders or supervisors to keep any eye on their teams at the party. If your business’s leaders set a good example at the party, other employees are likely to act professionally and still have fun.

Have fun!

And, of course, encourage everyone to have a good time. End of year celebrations can be a great way to encourage team building and boost morale for a great start to the New Year. 

Bonnie Boryca is an employment law attorney at Erickson | Sederstrom, PC. She can be reached at (402) 397-2200.

Late Paycheck or Unpaid or Withheld Wages? Nebraska Laws Might Be on Your Side

Nebraska Revised Statute §§ 48-1228 to 48-1234 constitute the Nebraska Wage Payment and Collection Act. The Act applies to employees and a broad range of employers, including the state or any individual or entity that employs anyone in Nebraska as an employee. It defines wages as compensation for labor or services, including fringe benefits, when previously agreed to and conditions stipulated have been met by the employee, whether such wages are on a time, task, fee, commission, or other basis. Wages include earned but unused vacation leave. And wages include commissions on all orders delivered or on file with the employer at the time of an employee’s separation, unless the employer and employee agreed otherwise in an employment contract.

Fringe benefits include sick and vacation leave plans, disability income protection plans, retirement, pension or profit-sharing plans, health and accident benefit plans, and any other employee benefit plans or benefit programs regardless of whether the employee participates in such plans or programs.

The substance of the Act is its requirement that an employer designate and timely pay employees on regular paydays, and that an employer must pay a terminated employee all unpaid wages on the next regular payday or within two weeks of termination, whichever is sooner. See § 48-1230. If the wages consist of commissions, the employer must pay the employee any earned commissions on the next regular payday following receipt of payment for the goods or services on which the commissions were based. See § 48-1230.01.

The enforcement mechanism in the Act is it authorization of employee lawsuits for unpaid wages in § 48-1231. As an incentive to bring wage claims, which may consist of only a couple of week’s wages in some instances, the Nebraska Legislature has authorized awards of attorney’s fees to employees who prevail in court. If the employee prevails and he or she has employed an attorney to do so, the must award attorney’s fees in an amount not less than 25% of the unpaid wages. Courts can award more if they determine a higher fee is justified; 25% is the minimum required by the statute. In addition, if the case is appealed, and the employee wins on appeal, the employee can recover a 25% attorney’s fee for the appeal, as well. An employee cannot recover fees if the employer had tendered the unpaid wages within thirty days of the regular payday when they were due. 

If the employee prevails in the lawsuit, damages are equal to the wages owed. If nonpayment of wages is found to have been willful, then an employer may be held liable for twice the amount of unpaid wages (though the employee only recovers the amount of wages and the "doubled" amount is remitted to the Nebraska State Treasurer because it amounts to punitive damages, which may not be retained by private parties under the Nebraska constitution). 

The potential for the "double" damages and attorney’s fees can transform a wage claim seeking a couple weeks of unpaid wages into a much larger liability for employers who do not tread carefully. 

Whether you are an employee who is owed wages by his or her employer, or an employer dealing with wage issues, attorneys at Erickson | Sederstrom can assist you. Attorneys Bonnie Boryca or Paul Heimann can be reached (402) 397-2200.

No Double Liability to Amputee for Loss of Foot and Toes in Workers’ Compensation Matter

In a recent decision, the Nebraska Supreme Court considered whether the discontinuance of temporary partial disability benefits triggered the payment of permanent partial disability payments in a Workers’ Compensation case involving an employee who endured an amputation below his knee as a result of a work-related injury. 

In Melton v. City of Holdrege, Mr. Benjamin Melton (“Employee”) was employed by the City of Holdrege (“City”) as a journey-man lineman where he sustained a work-related injury resulting in an amputation of his left leg just below the knee.  309 Neb. 385, 386-87 (2021).  Thereafter, Employee obtained a prosthesis; however, he endured issues with the prosthesis including shrinking, swelling, sweating, and obtaining a good fit.  Just over six years later, Employer provided City medical documentation from his physician indicating he reached maximum medical improvement (“MMI”).  City paid Employee permanent partial disability benefits for a one hundred percent loss of his foot and an additional five percent loss to his leg upon receipt of such documentation. 

The trial court waded through conflicting evidence concerning Employee’s impairment rating and when Employee reached MMI.  It was determined Employee’s amputation below the knee entitled him to statutory benefits for 150 weeks under Neb. Rev. Stat. Ann. § 48-121(3).  The trial court reasoned that Employee had not lost all functional use of his left leg, but his loss of thigh strength and atrophy combined with his knee pain reduced the function of his leg beyond the loss of his foot.  Employee suffered a twenty percent loss of function to his leg, entitling him to forty-three weeks of disability benefits.  Employee was awarded a combined total of 193 weeks of compensation, rejecting Employee’s argument that he was entitled to an award for the loss of each toe on his left foot in addition to the loss of that foot.   

On appeal, Employee argued the trial court (1) failed to evaluate loss of use of his leg without the prosthesis attached when determining his impairment; (2) should have awarded him compensation for the total loss of use of his leg; and (3) erred in failing to award him consecutive disability benefits for a total loss of all his toes, his foot, and use of his left leg.   

The Nebraska Supreme Court held the trial court did not err in failing to evaluate Employee’s loss of use of his leg without his prosthesis attached since Employee did not lose all functional use of his left leg.  The court reasoned Employee, without his prosthesis, could pick his left leg up waist high, crawl up stairs, climb ladders, and navigate uneven terrain by crawling, scooting, or sliding.  Accordingly, the trial court was not in error in determining Employee’s loss based on the use of his prosthesis.   

To bolster his argument in favor of an award for a total loss of use for his left leg, Employee turned to the practical intents and purposes test, which derived from Pennsylvania, and was cited in Jacob v. Columbia Ins. Group, a Nebraska Court of Appeals case.  2 Neb. App. 473, (1994).  In essence, the test has been used to determine whether a disability to a claimant’s body renders such a body part to serve “no real purpose.”  Applied in Melton, Employee argued he sustained a 100 percent loss of use of his left leg.  However, the court held Employee’s left leg could not be rendered “useless” because he retained enough strength in his left leg to successfully use the prosthetic device by being able to bend his knee and support weight on the residual limb.  Therefore, although Employee’s leg was not useless, Employee suffered an additional twenty percent loss of function in his leg that went beyond what would have otherwise been expected after amputation of his left leg below the knee.   

Finally, Employee asserted he was entitled to consecutive amounts of disability benefits for the loss of his five toes, the loss of his left foot, and the total loss of his left leg under Neb. Rev. Stat. Ann. § 48-121(3).  However, the court directed Employee to the four corners of the law and held § 48-121(3) explicitly stated a below-the-knee amputation was the equivalent of a loss of a foot and did not equate to the loss of one’s entire leg.  The court turned to the policy behind the law and reasoned a party may not have double recovery for a single injury.  Accordingly, Employee’s loss of his leg below-the-knee would obviously include the loss of his toes under § 48-121(3) since the legislature limited the loss to the foot.   

Ultimately, the court upheld the trial court’s determinations that Employee did not suffer a total loss of use of his leg because it appropriately compensated Employee for the functional loss of his leg that was not already accounted for in the compensation for the loss of his foot.  Further, the court upheld the trial court’s award of loss of use benefits for the leg and refused to extend double recovery to Employee.   

This article was prepared by Erickson Sederstrom’s law clerks Alison Clark and Rob Toth under the direction of employment attorney Bonnie Boryca, who can be reached at 402-397-2200.