If Pain, Yes Gain – Part 134: Nebraska Paid Sick Time Law Goes Into Effect TODAY

What You Need to Know:

• As we previously reported, in November 2024, Nebraska voters adopted a paid sick time ballot initiative that called for a paid sick time law to go into effect October 1, 2025. The law is known as the Nebraska Healthy Families and Workplace Act (the “Act”).
• As of today, October 1, 2025, Nebraska employers must allow employees to earn and use up to 40 or 56 hours of paid sick time per benefit year, depending on employer size. Specifically, the 40-hour annual accrual and usage caps apply to employers with between 11 and 19 employees, while the 56-hour annual accrual and usage caps apply to employers with 20 or more employees.
• Although employees’ sick time entitlement under the Act officially began today, over the last four months Nebraska paid sick time has been incredibly active. Activity included amendments to the statute, multiple rounds of FAQs from the Nebraska Department of Labor (“NE DOL”), a separate “guidance document” from the NE DOL, model posters and notices, and a revamped website.
• As a reminder, Nebraska was not the only state to have a paid sick time ballot initiative passed last November. Joining Nebraska were Missouri and Alaska. In terms of Missouri, although the law went into effect on May 1, 2025, it was overturned by the state legislature and the formal repeal went into effect in late-August 2025. Unlike Missouri, the Alaska paid sick time law went into effect as scheduled on July 1, 2025 and will remain in effect for the foreseeable future.

As noted above, Nebraska has been busy as it ramped up for today’s paid sick time “go live” effective date. First, in early June 2025, Nebraska amended the Act in several significant ways. See below for several examples. Second, the NE DOL released multiple rounds of paid sick time FAQs. The most recent version was issued in August. Then, last month, the NE DOL published a new paid sick time “Guidance Document,” which contains further details and instructions on the paid sick time mandate. Finally, a model notice and poster were issued in both English and Spanish for employers to use to comply with the Act’s notice and posting obligations.

Key amendments, FAQs, and provisions from the Guidance Document provide the following insights and reminders for employers:

Model Notice and Poster: The FAQs reiterate that employers were required to provide existing employees with written notice of certain paid sick time rights by September 15, 2025, and to new hires upon commencement of employment thereafter. Employers must also display a poster in a conspicuous and accessible location in the workplace. If employers have remote employees, they can post the poster on an online platform and provide the notice in electronic format.

Employer Coverage: One of the major amendments to the Act involved employer coverage. Specifically, the Act only applies to employers with 11 or more employees.

While the Act allows for reduced paid sick time obligations for “small businesses,” the threshold to qualify is employing fewer than 20 employees (i.e., between 11 and 19 employees), and even then the majority of the paid sick time standards still apply. An employer meets the 20-employee threshold (i.e., it is not a “small business”) if it employs 20 or more employees.

Notably, in counting the number of employees, the FAQs highlight that the NE DOL only includes individuals who work at least 80 hours in Nebraska for the employer in a calendar year.

Employee Eligibility: The amended Act also added exemptions for several groups of workers – individual owner-operators, independent contractors, seasonal or temporary agricultural workers, and workers under the age of 16. These exemptions are reiterated in the NE DOL FAQs.

The FAQs and NE DOL Guidance emphasize that the Department will view someone as an employee for purposes of paid sick time if they have worked at least 80 hours in Nebraska. This is regardless of whether they are full-time, part-time, or temporary.

Accrual and Year-End Carryover: The amended Act explains that paid sick time accrual begins today (i.e., October 1, 2025), or after an employee has completed 80 hours of consecutive employment, whichever is later. Eligible employees must accrue at least one hour of paid sick time for every 30 hours worked. Accrual is capped at 40 or 56 hours per year, depending on employer size (see above).

All accrued, unused paid sick time must be carried over from year to year. Employers can avoid year-end carryover if they pay out accrued but unused paid sick time at year-end and provide the employee with a sufficient upfront grant of paid sick time at the start of the new benefit year.

A notable update on accrual rate occurred between versions of the NE DOL FAQs. In particular, while an earlier version of the FAQs stated that “An employee accrues the same benefits during time taken for paid sick time as they typically earn during hours worked,” this language no longer exists in the current version of the FAQs.

Accrual During 2025 Transition Year: The FAQs note that paid sick time provided to an employee between January 1 and September 30, 2025 counts toward an employer’s obligations under the Act for calendar year 2025.

Annual Usage Cap: Regardless of the amount of paid sick time accrued or carried over at year-end, an employer is not required to permit an employee to use more than 56 hours of paid sick time in a benefit year. Small businesses may limit paid sick time use to 40 hours per benefit year.

Frontloading: Employers may provide the total amount of paid sick time at the beginning of the benefit year (i.e., a frontloaded grant) in lieu of accrual.

Reasons for Use: Employees can use available paid sick time under the Act (a) for their own or a covered family member’s illness, injury, or health condition, including preventive medical care, (b) to attend a meeting at the employee’s child’s school or place of care dictated by the child's mental or physical illness, injury, or health condition, or (c) certain public health emergency related absences.

Rate of Pay: Under the Act, employers must pay employees for used sick time at the same hourly rate as the employee typically earns during hours worked. The amendments and FAQs instruct that for employees paid on a commission, mileage, piece-rate, or fee-for-service basis, sick time is paid using the employee’s average weekly rate calculation under Nebraska law, which shall then be reduced to an hourly rate based on a 40-hour workweek. The Guidance contains instructions on proper payment of tipped employees.

Increments of Use: An employee may use available paid sick time in either hourly increments or smaller increments if the employer’s payroll system accounts for absences or use of other time in those smaller increments. Employers must allow sick time to be used in at least hourly increments.

Notice and Documentation: An employee is only required to provide notice of their intent to use available paid sick time if the employer’s policy requires such notice. The written policy must include reasonable notice procedures for the employee to follow.

Employers may require reasonable documentation for use of paid sick time only if an employee has used paid sick time for more than 3 consecutive workdays.

Existing Employer Policies: The amended Act makes clear that employers with equivalent paid time off policies are not required to provide additional sick time. The NE DOL Guidance includes detailed information on this alternative compliance avenue, including what is considered “equivalent” by listing explicit conditions that must be met by the employer’s paid time off policy.

In addition, the Guidance states that employers may be able to use unlimited paid time off policies to comply with the Act if the policy meets or exceeds the accrual and usage requirements of the Act.

Payout Upon Separation: The amended Act explains that employers are not required to pay an employee for earned, unused paid sick time at separation of employment. Relatedly, the FAQs and Guidance remind employers that if they use a non-sick paid time off policy (i.e., PTO, vacation time, etc.) for paid sick time compliance, all accrued unused paid time off is considered wages and must be cashed out at separation due to the Nebraska Wage Payment & Collection Act.

Any paid sick time that is not cashed out upon separation of employment must be reinstated to an employee who is rehired within 12 months of separation.

Balance Notification: Under the Act, employers must provide employees with notice of their available sick time balance, their amount of sick time taken year-to-date, and the amount of pay they have received as sick time. This notice must be provided in, or on an attachment to, the employee’s regular paycheck.

Private Right of Action / Enforcement: Per the amended Act, there is no private right of action for employees under the Act. However, administrative enforcement remains. The NE DOL will issue a citation to an employer that, after an investigation, is found to have violated the Act. The administrative penalty will be up to $500 for a first violation and up to $5,000 for second and subsequent violations. Other potential penalties exist as well. Notably, it appears that the NE DOL will maintain a paid sick time enforcement webpage and list the names of violating employers on the page.

Next Steps: With the Act in effect today, October 1, 2025, here are some next steps for employers to consider:

• Review existing sick leave or PTO policies and practices, and either implement new policies and practices or revise existing policies and practices to ensure compliance with the Act while doing the same for any related attendance, conduct, anti-retaliation, and discipline policies and practices.
• Train supervisory and managerial employees, as well as HR, on the new requirements.
• Monitor the NE DOL’s website for the release of additional administrative guidance, updated FAQs, and enforcement activity.

With the paid leave landscape continuing to expand and grow in complexity, companies should reach out to their favorite Seyfarth attorney for solutions and recommendations on addressing compliance with nationwide paid leave requirements. To stay up-to-date on paid leave developments in Nebraska and beyond, click here to sign up for Seyfarth’s Paid sick time mailing list. Companies interested in Seyfarth’s paid sick time laws survey should reach out to paidleave@seyfarth.com.