Employers face new mandates under I-436

McCOOK, Neb. - Last week’s passage of Nebraska Initiative 436, mandating paid sick leave for employees, introduces several new responsibilities for employers, particularly in terms of accrual, usage, and employee rights. While employers are aware changes are forthcoming, questions remain about the specifics and timeline.

So far, the only available guidance is the proposed statutory language that accompanied the ballot initiative. According to the language, employers must provide paid sick time at a rate of one hour for every 30 hours worked. Employees at small businesses can accrue up to 40 hours of sick leave annually, while those at larger businesses are entitled to 56 hours. Sick leave accrual begins at the start of employment or on Oct. 1, 2025, whichever is later, and employees can use sick leave as it accrues.

Under Initiative 436, unused sick time can carry over to the next year, though carryover is limited to 40 hours for small businesses and 56 hours for larger businesses. Employers may also choose to pay employees for unused sick time at the end of the year, provided employees will have sick time available for immediate use in the following year. Employees can use paid sick time for their own illness, injury, or preventive care, as well as to care for a family member.

For smaller employers, mandatory sick leave may or may not increase labor expenses, but the new regulatory requirements will likely add to administrative burdens. Larger employers, meanwhile, are left to determine how the new law will impact existing benefit packages, such as Paid Time Off (PTO) programs. The initiative’s language specifies that if a business already provides paid leave meeting the act’s requirements, no additional sick time is necessary. However, questions remain about whether this leave must be designated specifically as “sick time” or can be interchangeable with other benefits.

Section 10 of the act states it will not affect “more generous paid sick time policies or laws,” clarifying that the act does not limit any law or policy providing greater paid sick time or protections. This leaves open the question of whether employees could use accrued sick time for other purposes, such as vacation, personal days, or parental leave.

Nicole Jilek of AKC Law in Omaha explained, “The way that we are currently analyzing the proposed statutory language is that the language sets the ‘floor’ of an employer’s obligation to provide paid leave; however, an employer may choose to exceed the ‘floor’ by providing paid sick leave in excess of the statutory requirement.” Jilek added, “We anticipate that an already existing PTO policy may meet the statutory requirements for many employers.”

Of the timeline, Hillary Lee of the Nebraska Department of Labor said, “Now that the initiative has passed, the Department will begin drafting regulations and FAQs to provide guidance regarding the Healthy Families and Workplaces Act, which goes into effect Oct. 1, 2025.” She added that the Department anticipates a public hearing on the proposed regulations in early 2025 to ensure employers and employees have adequate notice of the provisions.

“The Department will develop FAQs for employers and employees in conjunction with the adoption of regulations,” Lee told the Gazette.

While it remains uncertain how many Nebraska employees will receive additional protections due to the initiative, small employers may face increased regulatory challenges. If the legislature does not carefully balance these requirements, the added burden may discourage hiring among smaller businesses.