No “Reasonable Dispute” Defense in Wage Claims

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No “Reasonable Dispute” Defense in Wage Claims

The Nebraska Wage Payment and Collection Act (Neb. Rev. Stat. §§ 48-1228 -48-1234) provides that an employee has a wage claim, when wages are earned but not paid within thirty days of the regular payday designated. Wages include compensation for labor or services rendered, fringe benefits and unused vacation. The amount can be determined by time, fee, commission or other basis agreed between employee and employer. If the wage claim is successful, the employer is liable for for the employee’s attorney fees for at least 25 percent of the unpaid wages.

If there is a reasonable dispute as to the agreement of wages, do employers have a defense to wage claims by arguing that since there is a reasonable dispute there is no agreement for wages? The Nebraska Supreme Court (Professional Firefighters Association of Omaha v. City of Omaha, 290 Neb. 300 (2015)) ruled against that argument. The Court held:

“In virtually every case brought under the Act, the employee and the employer dispute whether wages are owed based on an existing contract or agreement of some sort. The court then determines which party’s interpretation of that agreement is correct. The fact that there is a reasonable disagreement between the parties as to how the agreement regarding compensation should be interpreted does not mean that no agreement as to wages due exists until the dispute is resolved by a court.”

The City of Omaha in the above case was in a difficult position because if it did not pay the wages under the Union’s interpretation of the agreement then it could expose itself to having to pay attorney fees on the wage claim if the Union’s interpretation is correct; however, if the City did pay according the Union’s interpretation and if it was determined that the Union’s interpretation was wrong, the City of Omaha would then have to try to recover the over payments.

Therefore, employers need to be careful and ensure they are paying employees the correct amount of wages because there can be significant consequences for incorrect payments, and employees should check there paychecks to ensure they are being paid properly.

 

July 10th, 2015|Uncategorized|