• Read the Nebraska Supreme Court decision.
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LINCOLN — In an uncommon split decision, the Nebraska Supreme Court ruled Friday that workers must get paid for earned but unused “paid time off” hours when they leave a job.
The ruling came in a pair of cases filed by Duane Fischer and Jason Norton against their former employer, PayFlex Systems USA of Omaha.
Four judges backed the workers, who sought payment for their unused PTO hours after leaving the company in July 2010.
According to the opinion, Fischer had a balance of 146.64 hours, worth $6,408.45, and Norton had 120.14 hours, worth $3,864.64.
The ruling, written by Judge William Connolly, said those PTO hours should be treated the same as earned vacation time regardless of a provision in the PayFlex employee manual saying the hours would not be paid out.
The opinion pointed out that, like vacation time, the PTO was earned. Also like vacation, it could be used for any purpose the employee chose.
“Regardless of the label that PayFlex attached to its PTO hours, they were indistinguishable from earned vacation time under (state law),” the decision said.
But three judges disagreed, saying the majority opinion went beyond what the Legislature intended with a 2007 change in state law.
The law says employees have to be paid for earned but unused vacation time when they leave a job but do not have to be paid for unused sick leave or other forms of paid time off.
“The question is whether this type of accrued PTO falls within the general rule established by (state law) or the exception in that statute,” Judge Kenneth Stephan wrote in the dissent. “The problem is that it falls neatly within neither.”
The PayFlex manual said the PTO could be used for illness, vacation or personal concerns. The law does not address how such multipurpose time should be handled.
Stephan urged the Nebraska Legislature to clarify the issue.
He was joined in the dissent by Chief Justice Michael Heavican and Judge William Cassel.
Cynthia Michener, a spokeswoman for Aetna, the parent company for PayFlex, said: “We're disappointed, but we certainly will comply with the court's decision.”
PayFlex is an Omaha-based company that administers a variety of employee benefit programs.
Rick Drews, the attorney for the employees, said his clients were happy with the decision.
“They just wanted to get what they had earned,” he said.
Drews said the opinion is the first dealing with benefits payouts since the state law was changed in response to an earlier court case.
In that 2006 case, the state high court ruled that workers have to be paid for unused vacation time under a law that, at the time, defined fringe benefits as wages and required companies to pay wages due to former employees.
The ruling created fears that former employees would have to be paid for unused sick leave and other types of paid leave.
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