Nebraska Legislature Narrows Application of Upcoming Paid Sick Time Law

On June 4, 2025, Nebraska Governor Jim Pillen signed LB 415, which modifies the Nebraska Healthy Families and Workplace Act (HFWA) in advance of its October 1, 2025 effective date. Nebraska’s HFWA was one of three paid sick time ballot measures voters approved in the November 2024 election (along with Missouri and Alaska), and the Nebraska legislature is now the second to modify the provisions of the voter-enacted measure, with Missouri’s legislature repealing its law altogether, pending action from the state governor. 

While the amendments make some welcome changes for employers, they do not resolve some of the major compliance challenges presented by the structure of the law, particularly for multi-state employers. 

Covered Employers & Employees: The amendments now entirely exempt employers with 10 or fewer employees from coverage. Currently, under the law, all employers with at least one employee are covered, but different standards will apply to those with 19 or fewer employees in 20 or more calendar weeks in the current or preceding year (“small employer”). The small employer designation will now apply to employers with 11 to 19 employees only. 

Neither the HFWA nor the amendments address how to count the number of employees for employer coverage or small employer designation. However, recently updated Frequently Asked Questions (FAQs) from the Nebraska Department of Labor indicate that, “[f]or the purposes of determining business size, the Department will only include individuals that worked at least 80 hours of consecutive employment in the State of Nebraska for the out of state employer in a calendar year.” 

The HFWA previously excluded from employee coverage only employees subject to the federal Railroad Unemployment Insurance Act. The amendments now also explicitly exclude owner-operators, independent contractors, individuals employed in agricultural employment of a seasonal or other temporary nature, and individuals under 16 years of age.  

Accrual: Accrual for newly hired employees will now be delayed, and those individuals will not start to accrue paid sick time until they have completed 80 hours of consecutive employment in Nebraska. It appears that there is no retroactive accrual once employees satisfy this initial 80-hour waiting period. This will be a unique provision among all other sick and safe time and mandatory paid leave laws with an hours-worked threshold for employee coverage, as those all provide retroactive accrual credit back to day one of employment (e.g., Minnesota’s law).

The amendments also expand the presumption of how many weekly hours an “exempt” employee works from individuals covered by the executive, administrative, professional, and outside sales exemptions (FLSA 13(a)(1)) to employees who are overtime-exempt because of the federal FLSA’s Motor Carrier Act exemption (FLSA 13(b)(1)), even though, unlike “(a)(1)” employees, employees must keep records of daily and weekly hours worked by “(b)(1)” employees.

Crediting 2025 Paid Sick Time: Employers offering benefits on a calendar year basis now have confirmation that they will receive credit for any paid sick time provided to an employee on or after January 1, 2025 and before October 1, 2025. This means that employers who frontload 56+ hours (40+ hours for a small employer) of paid sick time to their employees on January 1 of each year may not be required to provide any additional hours until January 1, 2026. Likewise, any paid sick time accrued prior to October 1 will count towards the employee’s 40- or 56-hour annual accrual cap under the law. 

Using Existing Paid Leave Policies: Under the HFWA, employers with a paid leave policy, such as a PTO policy, that makes available an amount of paid leave that equals or exceeds the amount of leave the HFWA requires and that can be used for the same purposes and under the same conditions, need not provide additional paid sick time.  The amendments now also explicitly state that these employers are not required to allow an employee to accrue or carry over benefits beyond their existing paid leave policy. As a result, it appears that employers with a single-bank PTO policy can retain their overall accrual caps rather than having to navigate the unlimited paid sick time carryover under the law. It is unclear whether this is a one-time exemption for paid leave policies in effect prior to the HFWA, or if it applies equally to any more generous paid leave policies adopted in the future. 

Requesting Paid Sick Time: The amendments struck the requirement that paid sick time must be provided upon an employee’s “oral” request. Employers can now, it seems, set their own reasonable procedures for employees providing notice – which may or may not include an oral method – by written policy. 

Rate of Pay: The amendments did not modify the HFWA’s provisions that sick time must be paid at the same hourly rate, with the same benefits – including health care benefits – that the employee typical earns, which cannot be less than the state minimum wage. They do, however, provide further detail on the pay rate calculation required for employees paid by commission, piece-rate, mileage, or fee-for-service. For these individuals, employers must use the average weekly rate calculation from the state workers’ compensation insurance law (but, presumably, with no maximum weekly benefit amount). It is hoped the state Department of Labor will issue detailed guidance for employers attempting to implement this new calculation. 

End of Employment: The amended law now explicitly states that employers are not obligated to pay out unused paid sick time when employment ends. 

However, per the updated FAQs, employers using a combined PTO bank for compliance must continue to pay out all accrued but unused PTO upon separation from employment pursuant to the state’s Wage Payment & Collection Act.  If the unused paid sick time (or PTO) is paid out upon separation from employment, there is no obligation to reinstate previously earned leave if an employee is rehired at a later date. 

Enforcement and Remedies: The amendments have altogether eliminated the private right of action under the HFWA. Now, an employee’s sole remedy is to file a complaint with the Nebraska Department of Labor. 

Next Steps: Nebraska’s law will take effect in less than four months, leaving some, but not much, time for employers to review, revise, roll out, and train employees on their policies, practices, and procedures to ensure they comply with the HFWA. In the interim, employers should monitor the Nebraska DOL’s webpage for future changes to its FAQs and, possibly, proposed regulations.