- 860 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

Kevin Drought and Kyle Fessler, appellants, v. 

Eric Marsh and The Bar at the Yard, LLC, 

doing business as Longwells 

Restaurant, appellees.

___ N.W.2d ___

Filed January 17, 2020. No. S-19-018.

1. Summary Judgment: Appeal and Error. An appellate court affirms a 

lower court’s grant of summary judgment if the pleadings and admitted 

evidence show that there is no genuine issue as to any material facts or 

as to the ultimate inferences that may be drawn from the facts and that 

the moving party is entitled to judgment as a matter of law.

2. Statutes: Judgments: Appeal and Error. The meaning and interpretation of a statute are questions of law. An appellate court independently 

reviews questions of law decided by a lower court.

3. Statutes: Judicial Construction: Legislature: Intent: Presumptions.

Where a statute has been judicially construed and that construction has 

not evoked an amendment, it will be presumed that the Legislature has 

acquiesced in the court’s determination of the Legislature’s intent.

4. Employer and Employee: Employment Contracts: Wages: Appeal 

and Error. Under Neb. Rev. Stat. § 48-1229 (Cum. Supp. 2018), an 

appellate court will consider a payment a wage subject to the Nebraska 

Wage Payment and Collection Act if (1) it is compensation for labor 

or services, (2) it was previously agreed to, and (3) all the conditions 

stipulated have been met.

Appeal from the District Court for Lancaster County: 

Andrew R. Jacobsen, Judge. Affirmed.

Jennifer M. Tomka, of Amen Law, for appellants.

Brian S. Koerwitz, of Endacott, Peetz & Timmer, P.C., 

L.L.O., for appellees.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

03/20/2020 09:08 AM CDT
- 861 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Cassel, J.

INTRODUCTION

After two employees separated from their employment with 

a restaurant, they sued for “paid time off” (PTO) compensation under the Nebraska Wage Payment and Collection Act 

(Wage Act).1 Upon cross-motions for summary judgment, 

the district court sustained the employer’s motion. Because 

the employees did not meet the written employment agreement’s stated conditions to earn PTO, we affirm the summary judgment.

BACKGROUND

Parties

The Bar at the Yard, LLC, doing business as Longwells 

Restaurant, is a restaurant and bar in Lincoln, Nebraska. Eric 

Marsh is the owner of Longwells Restaurant. We will refer to 

The Bar at the Yard, LLC; Longwells Restaurant; and Marsh 

collectively as “Longwells.”

Kevin Drought worked as the general manager of Longwells 

from October 2013 to October 22, 2015. He was paid a yearly 

salary of $80,000. Kyle Fessler worked as Longwells’ head 

chef from October 2013 to December 8, 2015. His annual salary was $49,999.99.

Employment Agreement

Drought and Fessler were required to sign a “Longwells 

Employee Agreement” in order to obtain employment. Under 

“Work Hours,” the agreement stated in part that “you will be 

expected to work a minimum of 40 hours per week other than 

paid time off which is addressed below.” The “Termination” 

provision of the agreement stated that “if, at any point, 60 days 

1 See Neb. Rev. Stat. § 48-1228 et seq. (Reissue 2010, Cum. Supp. 2018 & 

Supp. 2019).
- 862 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

pass with you billing no hours to a client, this agreement will 

be considered terminated.”

The “Compensation” section of the agreement included the 

following provisions:

1. You will be paid weekly

2. Your earnings will be based on your billable hours

3. You will be paid <<employee’s hourly wage rate>> 

. . . for every hour billed to and approved by the client

4. Billable hours are determined based on the 

Company’s understanding with its clients

5. You will be required to provide the Engagement 

Manager with a timesheet signed off by the client designee in order to be paid

6. The Company will provide the timesheet template to 

you separately

7. If you do not produce an approved time sheet then 

you will not be considered to have earned billable hours

8. Approved timesheets are to be submitted per the 

“Time and Expense Reimbursement Policy and Procedure” 

which will be provided to you separately

The PTO section specified that PTO included vacation, sick 

days, and holidays. A table showed that when the “Employment 

Anniversary” is “[l]ess than 2 years,” an employee would earn 

4 hours of PTO “per 40 hour + week billed.” Once the employment anniversary reached 2 years, the amount of PTO earned 

increased to 5 hours.

Lawsuit

After separating from employment, Drought and Fessler 

requested compensation for PTO that they claimed had 

been earned but not paid. Longwells refused the requests. 

Drought and Fessler then sued Longwells, alleging a violation of the Wage Act. They asserted that the employment 

agreement governed PTO to be paid. The complaint alleged 

that Longwells owed PTO of $16,430.86 to Drought and 

$10,027.61 to Fessler.
- 863 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

As an affirmative defense, Longwells asserted mutual mistake. But Longwells also asserted that if the court found that 

the employment agreement should not be rescinded or reformed 

based upon mutual mistake, Drought and Fessler’s claims were 

barred by the terms of the agreement. Specifically, Longwells 

contended that no PTO accrued under the agreement, because 

Drought and Fessler did not have billable hours and did not bill 

hours to a client.

Summary Judgment

The parties filed cross-motions for summary judgment. The 

evidence was undisputed that as salaried employees, Drought 

and Fessler were not required to keep track of their hours 

worked. It was also undisputed that Drought and Fessler did 

not have clients or billable hours.

Drought and Fessler claimed to have “easily worked at 

least 40 hours per week,” but Marsh stated that Drought 

worked less than 30 hours in a week on multiple occasions. 

Drought testified in a deposition that he was paid a salary 

every week regardless of the number of hours he worked. 

Drought took 1 week of vacation in 2014, and Longwells paid 

him for that vacation time. Fessler took 1 week of vacation in 

2014 and in 2015, and he similarly stated that Longwells paid 

him for that vacation time. Marsh testified that Drought and 

Fessler took time off, but that there was never a PTO offer or 

policy. Marsh testified that he “never docked anyone’s salary 

when they were off for sick time or vacation time.” According 

to Marsh, PTO was not discussed at the time of hiring, was 

not a term of employment, and neither he nor Drought or 

Fessler knew the PTO clause was in the agreement when it 

was signed.

Marsh stated that he asked Drought and Fessler to sign the 

employment agreement for the sole purpose of the noncompete provision. The employment agreement was based off a 

document used by an information technology company that 

employed independent contractors who serviced clients of the 
- 864 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

information technology company. According to Marsh, the 

agreement contained a number of provisions that were never 

intended to apply to employees of Longwells.

The court found that there was no dispute payment for 

accrued PTO is compensation for labor or services and that 

Drought and Fessler each signed the employment agreement 

containing a provision for PTO. The court framed the dispute 

as whether Drought and Fessler satisfied the terms of the 

employment agreement in order to be entitled to PTO. The 

court found that Drought and Fessler could not have earned 

any PTO because they did not have timesheets signed by clients nor did they have billable hours. The court determined 

that hours worked did not equate to hours billed and that there 

was no agreement to provide PTO based on hours “worked.” 

The court reasoned that because Drought and Fessler did not 

bill any hours to clients, they could not have earned any PTO 

under the plain language of the employment agreement. Thus, 

the court sustained Longwells’ motion for summary judgment, overruled Drought and Fessler’s motion, and dismissed 

the complaint.

Drought and Fessler filed a timely appeal.

ASSIGNMENTS OF ERROR

Drought and Fessler assign that the court erred in (1) failing to find that they were entitled to their earned but unused 

PTO; (2) failing to find that there were terms in the employment agreement that were inapplicable to their employment 

situation, in finding that they did not earn PTO because they 

could not prove billable hours, and in failing to address that 

there could be no mutual mistake in a unilateral employment 

agreement; (3) failing to find that the parties’ understanding 

and agreement of how PTO was earned was demonstrated by 

the fact that both Drought and Fessler had been paid for PTO 

before their terminations; and (4) sustaining Longwells’ motion 

for summary judgment and overruling Drought and Fessler’s 

motion for summary judgment.
- 865 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

STANDARD OF REVIEW

[1] An appellate court affirms a lower court’s grant of summary judgment if the pleadings and admitted evidence show 

that there is no genuine issue as to any material facts or as 

to the ultimate inferences that may be drawn from the facts 

and that the moving party is entitled to judgment as a matter 

of law.2

[2] The meaning and interpretation of a statute are questions 

of law. An appellate court independently reviews questions of 

law decided by a lower court.3

ANALYSIS

Wage Act

The Wage Act requires an employer to pay “unpaid wages” 

to an employee who separates from the payroll.4 It defines 

“[w]ages” to include “fringe benefits, when previously agreed 

to and conditions stipulated have been met by the employee.”5

The Wage Act further provides that “[p]aid leave, other than 

earned but unused vacation leave, provided as a fringe benefit 

by the employer shall not be included in the wages due and 

payable at the time of separation, unless the employer and the 

employee or the employer and the collective-bargaining representative have specifically agreed otherwise.”6

[3] In Fisher v. PayFlex Systems USA,

7

 a majority of this 

court determined that because the employees in that case could 

use PTO hours for any purpose, the unused PTO hours must 

be treated the same as earned but unused vacation hours, i.e., 

a wage that must be paid upon separation of employment. 

2 Williamson v. Bellevue Med. Ctr., ante p. 312, 934 N.W.2d 186 (2019).

3 Professional Firefighters Assn. v. City of Omaha, 290 Neb. 300, 860 

N.W.2d 137 (2015).

4 § 48-1230(4)(a).

5 § 48-1229(6).

6 Id.

7 Fisher v. PayFlex Systems USA, 285 Neb. 808, 829 N.W.2d 703 (2013).
- 866 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

The dissent identified two difficulties in applying the law to 

the facts of the case: (1) The Legislature did not define the 

term “‘vacation leave’” and (2) the employer’s PTO policy 

allowed employees to use PTO for both vacation and other 

purposes in the employee’s discretion.8 Although the dissent 

invited clarification by further amendment of the statute and 

the Legislature indeed amended § 48-1229 the following year,9

it did not provide any clarification regarding vacation leave or 

fringe benefits payable upon separation. Where a statute has 

been judicially construed and that construction has not evoked 

an amendment, it will be presumed that the Legislature has 

acquiesced in the court’s determination of the Legislature’s 

intent.10 Thus, PTO which can be used as vacation leave should 

be treated the same as earned but unused vacation leave under 

the Wage Act.

Entitlement to PTO 

Under Agreement

The crux of Drought and Fessler’s argument is that Longwells 

owed them PTO because the employment agreement—which 

they were required to sign—contained a section concerning 

PTO. We disagree.

[4] The statute imposes three requirements. Under § 48-1229, 

an appellate court will consider a payment a wage subject to 

the Wage Act if (1) it is compensation for labor or services, (2) 

it was previously agreed to, and (3) all the conditions stipulated have been met.11 Here, the decision turns upon the third 

requirement.

Drought and Fessler’s claim fails the third requirement, 

because they did not satisfy the conditions set forth in the 

8 Id. at 824, 829 N.W.2d at 716 (Stephan, J., dissenting; Heavican, C.J., and 

Cassel, J., join).

9 2014 Neb. Laws, L.B. 765, § 1.

10 Heckman v. Marchio, 296 Neb. 458, 894 N.W.2d 296 (2017).

11 Fisher v. PayFlex Systems USA, supra note 7.
- 867 -

Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

DROUGHT v. MARSH

Cite as 304 Neb. 860

agreement. Under the agreement, an employee earned PTO 

“per 40 hour + week billed.” The agreement specified that 

earnings were based on billable hours and that an employee 

will not be considered to have earned billable hours if the 

employee did not produce an approved timesheet “signed off ” 

by a client designee. But Drought and Fessler were paid a set 

salary—they did not have clients, did not have billable hours, 

and did not submit timesheets.

Drought and Fessler attribute significance to the past payment of vacation time. They argue that if billing clients and 

proving a 40-hour workweek had been required to earn PTO, 

Longwells would not have paid them for their PTO during their 

employment. But it appears from the evidence that as salaried 

employees, Drought and Fessler were paid the same amount 

each week no matter how many, if any, hours they worked.

Drought and Fessler assign that the district court erred in 

failing to address Longwells’ assertion of a mutual mistake, 

which they argue does not apply to a unilateral employment 

agreement. However, the court had no need to do so. Drought 

and Fessler claimed they were entitled to PTO due to the 

inclusion of a PTO section in the employment agreement. But 

because they did not meet the conditions required under the 

written employment agreement to earn PTO, it is not a wage 

subject to the Wage Act.12

CONCLUSION

There is no dispute that Drought and Fessler did not bill 

to clients more than 40 hours of work per week. Accordingly, 

they did not earn PTO under the terms of the employment 

agreement. We affirm the order of the district court which 

granted summary judgment in favor of Longwells.

Affirmed.

12 See id.