Erickson | Sederstrom partner Matthew D. Quandt recently attended TIDA’s 30th Annual Seminar in Orlando, FL. The Trucking Industry Defense Association (TIDA) is a nonprofit association that is devoted to sharing knowledge and resources for defense of the trucking industry and committed to reducing the cost of claims and lawsuits.
On February 25, 2022, the Nebraska Legislature passed LB 906, which addresses COVID-19 vaccine mandates implemented by Nebraska employers. It allows for certain exceptions for employees who complete a form prepared by the Nebraska Department of Health and Human Services for medical or religious objections, and also permits employers to require wearing of masks and periodic testing at employer expense. The bill has an emergency clause which means that as soon as it is signed by the Governor, it becomes fully effective. The details of this new legislation are set out below.
The new COVID-19 vaccine mandate legislation applies to all private Nebraska employers regardless of size, as well as the State of Nebraska, government agencies and all political subdivisions. However, it should be emphasized that Nebraska employers in the healthcare industry are already subject to the Federal vaccine mandate applicable to healthcare employers, which will take precedence over the new Nebraska COVID-19 legislation. It should also be emphasized that LB 906 only applies to COVID-19 vaccinations, and no other employer mandated vaccinations.
The new law does not apply to the United States and other Federal agencies, Indian tribes, and bona fide private membership clubs exempt from taxes under the Internal Revenue Code.
It requires the Nebraska Department of Health and Human Services to develop a vaccine exemption form for individual employees to submit to claim an exemption from receiving a COVID-19 vaccine. The form is required to contain two separate potential declarations: (1) that a certified healthcare practitioner has provided the individual with a signed written statement that receiving a COVID-19 vaccine is medically “contraindicated for the individual”, or that “medical necessity” requires the individual to delay receiving a COVID-19 vaccination; or (2) receiving a COVID-19 vaccine would conflict with the individual’s “sincerely held religious belief, practice, or observance.”
Once this new law takes effect, any Nebraska employer that requires applicants or employees to be vaccinated against COVID-19 must allow for an exemption to the COVID-19 vaccine requirement for any individual who provides the employer with the completed vaccine exemption form, and for any individual claiming the exemption based upon the statement of a healthcare practitioner, a copy of the health practitioner’s signed written statement.
Nebraska employers may require any employee granted an exemption under this new law to be periodically tested for COVID-19 at the employer’s expense, and to wear and use masks or other personal protective equipment provided by the employer.
This differs substantially from recently proposed Federal vaccine mandate legislation as well as the current Federal vaccine mandate applicable to healthcare employers. Specifically, other vaccine mandates and proposed legislation provide(d) that an employee seeking to avoid the vaccination mandate and be granted an exception would assume the cost of periodic testing in order to be exempt from the vaccination requirement. Nebraska employers who desire to exercise their right to mandate COVID-19 vaccinations are now faced with bearing a considerable cost of periodic testing for employees who submit the exemption form. Business organizations and the Chambers of Commerce were opposed to this provision, but were unsuccessful in keeping it out of the final version of LB 906.
Given that the COVID-19 outbreak is waning, and with much of the population already vaccinated, or immune due to having had COVID, this Legislation may just be a solution in search of a problem. However, the Legislation passed by a vote of 37-5, with 5 abstentions, so there was obviously a strong feeling among the majority of Senators in the Nebraska Legislature that a law limiting employer COVID-19 vaccine mandates was required at this time.
It will be interesting to see how this new law develops, and how many Nebraska employers determine that they will either implement or continue an existing COVID-19 vaccination requirement. Employers in the healthcare industry are still covered by the Federal vaccine mandate applicable to healthcare organizations.
One interesting aspect is the fact that any employee who seeks to declare a religious exemption must simply fill in the form stating that receiving a COVID-19 vaccination would conflict with their “sincerely held religious belief, practice or observance.” There is no threshold requirement to establish such beliefs, which differs considerably from the law in the area of religious discrimination in employment, which requires that any individual seeking to assert a religious discrimination claim establish or prove that they are actually a member of a particular religion, and an active participant in the particular religion’s practices and activities. For purposes of the new law on COVID-19 vaccinations in Nebraska, it is clear that an employee seeking an exemption must simply fill out the form and include that particular section in seeking an exemption.
As noted above, LB 906 has an emergency clause, so it will go into effect as soon as it is signed by the Governor, which will likely be early in the week of February 28th. Therefore, any Nebraska employer that currently has a COVID-19 vaccination mandate or is considering implementing one, should take immediate steps to comply with this new Nebraska law.
In March of 2020 the Coronavirus Aid, Relief and Economic Securities Act (“CARES Act”) was signed into law. The moratorium thereunder originally had a sunset date of July 25, 2020. Congress chose not to extend this deadline, and when the CDC tried to do so by administrative order, the Supreme Court of the United States invalidated it. See Alabama Association of Realtors v. Department of Health and Human Services, 21A23 (Aug. 26, 2021). However, certain portions of the CARES Act did not include any such sunset dates and will continue to impact Nebraska and Iowa landlord until Congress legislatively puts an end to them.
Nebraska and Iowa Landlords should be advised that their normal pre-pandemic practices for recovery of unpaid rents and evictions based upon the same may now be affected by provisions of the CARES Act found in section 4024. If a tenant resides within any of the “covered property” defined under subsection 4024(2), then a landlord will need to provide a thirty (30) day notice before any writ of restitution can be executed and the tenant evicted. “[C]overed property” [under the CARES Act] means any property that—
(A) participates in—
(i) a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994 (34 U.S.C. 12 12491(a))); or
(ii) the rural housing voucher program under section 542 of the Housing Act of 1949 (42 U.S.C. 1490r); or
(B) has a—
(i) Federally backed mortgage loan; or
(ii) Federally backed multifamily mortgage loan.
See Public Law No. 116-136, § 4024(2). Even though it does not affect every landlord and tenant situation, this definition is broad enough to implicate a great number of them.
However, courts across Nebraska and Iowa have interpreted the application of these rules differently when “covered property” is implicated. Some allow for normal notices and cure periods for non-payment provided for by state statute (3 days in Iowa and 7 days in Nebraska; see Iowa Code Ann §562A.27; see also Neb.Rev.Stat. §76-1431), but then delay the issuance of a writ of restitution until thirty (30) days from the original notice, while others require actual service of a thirty (30) day notice for a landlord to avoid having to start the entire process over again. Therefore, it is important that Nebraska and Iowa Landlords obtain proper advice before instituting these actions in this current landscape in to avoid confusion, delay or added expense.
Every Nebraskan business owner (or their trust) should be aware that they are entitled to claim a one-time capital gains exemption from the sale of their stock. The exemption is seemingly not available when there are less than five shareholders and at least two of those shareholders who are not related to each other – but not so fast. Artful drafting of sale documents would allow the placement of strawmen shareholders to meet these requirements which would create substantial tax savings for a just a few additional pages of paperwork. Normally this sort of structuring is a no-no under normal tax rules. But not in Nebraska. The Nebraska Supreme court in 2016 interpreted the statute to allow this sort of structuring and the Legislature has not yet acted to update the statute to prevent this practice. Nebraska business owners should consult their accountants and deal counsel to make sure that if this benefit is available to them that their documents are drafted in a way that takes advantage of the statute as interpreted by the Supreme Court.
The common fund doctrine is a long held common law principle that allows recovery of reasonable attorney fees when legal services are used to recover money to which multiple people share an interest. The doctrine is typically applied where an insurance company makes a payment to its insured to cover certain out-of-pocket expenses. Then, when the insured files suit against the responsible party and recovers these out-of-pocket expenses, the insurance company has a right to recoup its earlier payments made pursuant to the policy, less the fees that the insured incurred to make that recovery.
While the doctrine has been around for decades, there still remain some gray areas in its application. One such gray area is whether the doctrine applies to an insurer's subrogation claim for medical payments under Neb. Rev. Stat. § 44-3,128.01. The Nebraska Supreme Court recently addressed that gray area and has provided some clarity.
In Hauptman O’Brien v. Auto-Owners Ins. Co., the insurer argued that an insurer who makes medical payments under an automobile liability policy is entitled to full reimbursement upon settlement of the case, without reduction for the attorney fees of the insured's lawyers. The basis for this argument was the insurer's position that § 44-3,128.01 preempts the common fund doctrine because the statute and doctrine were inconsistent and incompatible. The Court disagreed.
Applying rules of statutory construction, the Court found that is silent as to recovery of reasonable attorney fees under the common fund doctrine, and that by giving the insurer the right to recover medical payments in subrogation, the legislature did not necessarily rule out a reduction for attorney fees under the common fund doctrine. The Court decided that the legislature's silence in this regard meant that the common fund doctrine applies to allow for a reduction to account for attorney fees where a law firm secured a common fund in a pretrial settlement. The insurer was thus entitled to recover its $1,000 medical payment, less the 1/3 ($333) fee, to which the insured's counsel was entitled.
Thanks to law clerk Ross Serena for assistance in drafting this article. Matt Reilly and Erickson | Sederstrom’s litigation attorneys are ready to assist with a range of civil disputes and can be reached at 402-397-2200.
Erickson | Sederstrom partner Matthew D. Quandt recently attended TIDA’s Annual Seminar in Philadelphia, PA. The Trucking Industry Defense Association (TIDA) is a nonprofit association that is devoted to sharing knowledge/resources for defense of the trucking industry and committed to reducing the cost of claims and lawsuits. This year’s seminar featured presentations regarding the state of the industry, accident reconstruction experts, orthopedic experts, fraudulent claims, fleet management, jury psychology, and more.
From the initial accident investigation, following a rapid response team call in the middle of the night, to pre-suit negotiations and litigation of catastrophic injury and wrongful death cases through discovery and trial, Matt handles all aspects of trucking and transportation litigation. He is committed to making sure his clients are comfortable with the litigation process and emphasizes early resolution of all claims in an efficient, cost-effective manner whenever possible.
On the heels of the boom in cannabidiol (“CBD”) sales, many Nebraska CBD retailers have recently been marketing and selling products containing Delta-8 tetrahydrocannabinol (“Delta-8 THC”), which is an isomer of Delta-9 tetrahydrocannabinol (“Delta-9 THC”). Delta-9 THC is the common compound in marijuana that provides euphoric effects to it users. Marijuana plants and other products containing Delta-9 THC in concentrations high enough to provide users with any such effects are generally illegal under federal and Nebraska law. Delta-8 THC provides a euphoric effect similar to Delta-9 THC, but milder, and due to a loophole in the federal and Nebraska law, as further discussed below, products containing Delta-8 THC are arguably legal in Nebraska and many other states.
The Delta-8 THC market was born when producers began looking for ways to turn extra CBD extracted from hemp into something else profitable. Using a chemical synthetization process, they were able to produce Delta-8 THC from CBD, and incorporate Delta-8 THC into products that could be marketed as a legal recreational drug in many states.
Under the Nebraska Hemp Farming Act (the “Nebraska Hemp Act”), “Hemp” is legal in Nebraska and removed from the Nebraska Controlled Substances Act. Hemp is defined as “the plant Cannabis sativa L. and any part of such plant, including the viable seeds of such plant and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 % on a dry weight basis” (emphasis added) . Thus, as long hemp derivative products (such as CBD and Delta-8 THC) do not contain Delta-9 THC in excess of 0.3%, a plain reading of the statute indicates that Delta-8 THC and products containing Delta-8 THC would be classified as Hemp, and are legal in Nebraska. Many other states have similar industrial hemp statutes that purport to make Delta-8 THC products legal in the same manner.
Under the federal 2018 Farm Bill (the “Farm Bill”), “Hemp” was removed from the federal Controlled Substances Act. In addition, under the Farm Bill, the definition of Hemp is the same as it is under the Nebraska Hemp Act, meaning that Delta-8 THC products that do not contain Delta-9 THC in excess of 0.3% are legal under federal law.
However, despite the purported legality of Delta-8 THC under Nebraska and federal law, Nebraska retailers face a myriad of risks. In 2020, the Drug Enforcement Agency (“DEA”) issued an Interim Final Rule that stated, in part, that “all synthetically derived tetrahydrocannabinols [regardless of THC content] remain schedule I controlled substances.” There is some debate over whether Delta-8 THC is “synthetically derived,” but there appears to be a conflict between this DEA Rule and the Farm Bill. In any event, Delta-8 THC retailers face risk of DEA enforcement for the possession, distribution, or transportation of products containing Delta-8 THC. In addition, the Food and Drug Administration (“FDA”) retains authority to regulate products that contain cannabis or cannabis derivatives under the federal Food, Drug and Cosmetic Act. Currently, Delta-8 THC products do not appear to be prohibited by FDA regulations. However, the FDA recently issued a consumer update warning of the dangers of Delta-8 THC products, including contamination concerns from potentially unsafe manufacturing methods. Thus, Delta-8 retailers also risk that the FDA may take steps to ban or more tightly regulate these products.
At the state level, the tide appears to be shifting, as more states are closing the legal loophole that purports to make Delta-8 THC legal under laws similar to the Nebraska Hemp Act. For example, Colorado (which allows recreational marijuana use) has banned Delta-8 THC since May 2021, and Texas recently did the same in October 2021. As of the date of this article, sixteen other states have restricted or banned Delta-8 THC. In Nebraska, Governor Rickett’s office has generally taken a negative position towards cannabis and its derivative products, and Governor Ricketts recently asked the state Attorney General to review the legality of Delta-8 THC. Recall that prior to the enactment of the Nebraska Hemp Act, certain Nebraska sellers of CBD products were raided and charged with criminal drug trafficking offenses. The Nebraska Supreme Court eventually found in favor of the sellers, but only after years of the defendants expending extensive legal fees. Nebraska Delta-8 THC retailers could face a similar situation.
There is also the risk that Delta-8 THC retailers may inadvertently possess and/or sell products containing Delta-9 THC in amounts greater than 0.3%, in which event they would be subject to potential felonies under the Nebraska Controlled Substances Act. Thus, such retailers are advised to take as many steps as possible to confirm that its Delta-8 THC products fall within the definition of Hemp under Nebraska law, and don’t contain Delta-9 THC in amounts greater than 0.3%.
Persons considering entering the Delta-8 THC market should carefully consider these risks, and be prepared to handle the effects of a Delta-8 THC ban or restriction under Nebraska or federal law. If you have any questions about Delta-8 THC or other cannabis issues, attorneys at Erickson | Sederstrom can assist you. Attorneys Shay Garvin or Andrew Collins can be reached (402) 397-2200.
Erickson | Sederstrom's attorneys practice in Nebraska, Iowa, Kansas, Missouri, and South Dakota. We represent insurance carriers across the nation. Each state has its own discovery rules and caselaw regarding the discoverability of pre-suit investigation, claims files, etc. It is vitally important for our clients to be cognizant of differing interpretations in order to protect their investigations, statements, evaluations, reserves, etc.
On March 18, 2020, in response to the novel coronavirus pandemic, Congress enacted the Families First Coronavirus Response Act to provide Americans paid leave, free testing, and access to certain health benefits in order to protect public health. The Act contains two divisions that specifically detail the responsibilities of the employee and employer:
Division C –Emergency Paid Leave Act of 2020
Division D – Emergency Unemployment Insurance Stabilization and Access Act of 2020
DIVISION C –EMERGENCY PAID LEAVE ACT OF 2020
Division C provides benefits to employees and employers when an employee is unable to work due to COVID-19.
Qualification Criteria
Employee:
• The employee has a current diagnosis of COVID-19
• The employee is quarantined (including self-imposed quarantine), at the instruction of a health care provider, employer, or government official, to prevent the spread of COVID-19.
• The employee is caring for another person who has COVID-19 or who is under a quarantine related to COVID-19.
• The employee is caring for a child or other individual who is unable to care for themselves due to the COVID-19 related closing of their school, childcare facility, or other program.
Employer:
• Government employer
• Companies with 50 – 500 employees
Employers with greater than 500 employees are required to pay the employee during the 80 hours of emergency leave, but are eligible for reimbursement through tax credit.
These benefits are active from January 19, 2020 to January 19, 2021. The benefits can be paid retroactively with applications until July 19, 2020.
The Benefits:
• Regular to two-thirds of the individual’s average monthly earnings (based on the most recent year of wages or self-employment) up to a cap of $4,000.
• Applicants can apply online, by phone, or by mail. In most cases, payments will be issued electronically.
• The beneficiary is responsible for applying.
Summary:
Employees will be compensated for up to weeks (80 hours) of regular pay if they are quarantined or self-quarantined. Employees who are quarantined in order to care for another person who has COVID-19 or for a child is entitled to two-thirds their regular rate of pay for two weeks (80 hours). Covered employers are eligible for dollar-to-dollar reimbursement through tax-credits for all qualifying workers.
DIVISION D – EMERGENCY UNEMPLOYMENT INSURANCE STABILIZATION AND ACCESS ACT OF 2020
Division D provides benefits to individuals who are unemployed due to COVID-19.
In order to slow the rate of novel coronavirus (flatten the curve), many businesses have temporarily or permanently closed which has resulted in massive layoffs. Division D of the Act expands existing Unemployment Insurance to address the current employment environment for many Americans. If an employer cannot retain their current number of employees or must reduce employees’ hours have the follow responsibilities.
Duties and Responsibilities
Employer:
• Must provide notification of potential unemployment insurance eligibility to laid-off employees
• Must ensure that employees have at least two ways to apply for benefits
• Must notify applicants (the laid-off employee) when an application is received and being processed and if the application cannot be processed, provide information to the applicant about how to ensure successful processing. Employee
• Must apply for unemployment insurance
• Not obligated to seek employment between March 22, 2020 and May 2, 2020.
Benefits:
In general, the unemployed worker in Nebraska will receive half their regular weekly wage up to $440 each week and an additional $600 provided by the Act in effort to mitigate the economic impact of the novel coronavirus pandemic. Short Term Compensation may be available to employees whose hours have been cut due to the pandemic. Benefits should be sought through NEworks.nebraska.gov.
Qualifications:
• Unemployed worker has had one unpaid week
• Unemployed worker whose job loss is due to no fault of their own
• Self-employed worker whose earnings have been impacted by the pandemic
Summary:
Employees who are laid off or face reduced hours due to COVID-19 may apply for unemployment benefits or short term compensation and are not required to seek new employment between March 22, 2020 and May 2, 2020. The turn around time for receipt of benefits is not currently known.
If an employment discrimination case makes it way to a jury, and a jury finds discrimination and damages in favor of an employee, reversing that result on appeal is an uphill battle. A recent Nebraska Supreme Court case involving Metropolitan Utilities District of Omaha (MUD) and allegations of sex discrimination in the denial of a promotion illustrate this point.
Background
Plaintiff Kristina Hartley was a long time employee of MUD. She had a bachelor’s degree and began in customer service at MUD in 1984. She was promoted in 1986, 1988, 1991, and in 1994 to senior engineering technician. After sixteen years in that position, she applied to become supervisor of field engineering. The position was open to current MUD employees via an internal job posting. The position involved planning, directing, and supervising the work of 17 field engineering and utility locator personnel of the plant engineering division.
The position required two years of college in an area related to engineering and utility locating experience in the last five years, preferably in an ongoing capacity. This posting was the same as a previous posting for the same position in 2003 except that the utility locating experience in the last five years was a new requirement. Stephanie Henn, Senior Plant Engineer, added the new requirement and made the decision of who to promote to supervisor of field engineering. She had been Hartley’s direct supervisor for many years. Shortly before Hartley applied for the supervisor position, Henn was a promoted and a new direct supervisor was put in place over Hartley and others. Hartley applied to be supervisor of field engineering. Ten other people applied, two of whom were female.
The promotion was awarded to a male colleague, David Stroebele. Hartley’s discrimination claim proceeded to trial and the details of how the promotion was awarded to Stroebele over Hartley and the other two female applicants were put before a jury. The jury found in favor of Hartley, awarding her $61,293 in special damages and $50,000 in general damages. After trial, the court awarded Hartley attorney’s fees of $56,800.
On appeal
MUD appealed to the Nebraska Supreme Court, which was tasked with answering whether sufficient evidence supported the jury’s verdict. The familiar McDonnell Douglas standard applied to Hartley’s case. She had to first establish a prima facie case of discrimination in the failure to promote her by demonstrating: (1) she was a member of a protected group, (2) she was qualified for and applied for a promotion to an available position, (3) she was rejected, and (4) a similarly situated employee, not part of the protected group, was promoted instead.
When an employee establishes these elements, an employer may try to rebut the prima facie case by producing “clear and reasonably specific” admissible evidence that would support finding that unlawful discrimination did not cause the denial of the promotion, i.e., by articulating a legitimate, nondiscriminatory reason for the decision.
Upon providing such a reason, a jury must decide whether the employer acted because of the protected characteristic (here, Hartley’s sex) despite the employer’s proffered reason. In other words, is the employer’s reason a pretext for unlawful discrimination in making the decision not to promote? If so, “[t]he trier of fact can infer that ‘the employer is dissembling to cover up a discriminatory purpose.’”
The first two steps were met in this case: Hartley established a prima facie case and MUD offered a legitimate, nondiscriminatory reason. Its proffered reason was that Stroebele was the better qualified candidate compared to Hartley. Hartley’s new direct supervisor and her prior supervisor, Henn, had expressed issues with her communication skills on a review just before she applied for the supervisor position. Also, they claimed she lacked the five years of locator experience needed for the position. The question on appeal was whether there was sufficient evidence for the final step: were MUD’s reasons pretextual? The evidence was sufficient, according the Nebraska Supreme Court. It recited the following evidence that the jury had before it:
Hartley worked at MUD twice as long as Stroebele.
She had supervised his work.
She had more supervisory experience than him.
She had the requisite skills at locating, though not within the past five years.
She had no “chargeable hits” in locating, but Stroebele did in recent years (showing her locating skills were more accurate).
She had more education than Stroebele.
He had previously worked as a laborer and she had inspected his work while at MUD.
The only complaints about Hartley were tied to her emotionality rather than competency to perform her job.
Other female applicants were also more qualified than Stroebele.
Hartley’s only performance appraisal in the past seven months took place just after she applied for the promotion, as did the other applicants’ appraisals.
The appraisal was not conducted in month of the applicants’ hiring anniversary, contrary to MUD policy.
Hartley’s appraisal showed a dramatic decline compared to her past appraisals.
The appraisal was conducted by the new supervisor recently put in place over Hartley but referenced incidents before he was her supervisor, when Henn was her supervisor.
Hartley’s supervisors showed hostility towards her after she complained about the timing and content of the appraisal.
There was a question of whether the five years’ locating experience requirement was a legitimate and necessary requirement for the position.
Supervisors provided inconsistent or shifting explanations about Hartley’s skills at locating in explaining why she was denied the promotion.
In response to this evidence, MUD argued the jury could not have reasonably found pretext because Hartley admitted that certain events happened. It said she did not refute that in 2008 she had a bad interaction with then-supervisor Henn, which Henn thought was unprofessional. It also said she did not refute the truth of complaints about Hartley that she did not like to do utility locating.
The Court rejected MUD’s argument. It “confuse[d] the falsity of an occurrence cited in support of the employer’s action with the falsity of the employer’s statement that the proffered non-discriminatory reason actually motivated the employer.” Regardless of the truth or falsity of the complaints against Hartley, the evidence could have led a jury to conclude those complaints were not the actual reason for denying Hartley the promotion. Viewing the evidence as a whole and in a light most favorable to Hartley, the Court found that there was sufficient evidence to support a reasonable inference that the employer’s promotional decision was because of Hartley’s gender. Therefore, the jury’s verdict was upheld, including each amount for damages and attorney’s fees. Hartley v. Metropolitan Utilities District of Omaha, 294 Neb. 870 (Sep. 30, 2016).
Takeaway for employers
The evidence put before the jury may have led jurors to conclude that policies were not followed with regard to the plaintiff that illegitimate job requirements were placed in the posting to exclude certain applicants, and that supervisors had improper justifications when excluding female applicants.
This case should show employers the importance of conducting job performance appraisal consistently and in conformity with written policies or past practices. Furthermore, job postings are important and should contain only the actual requirements and considerations involved in reviewing applicants for a position. Bonnie M. Boryca is contributing editor of the Nebraska Employment Law Letter and can be reached at (402) 397-2200.
