All:
I have been asked to give advice about longevity pay for city employees. I understand from reviewing some letters from the State Auditor that municipalities sometimes run into issues with Article III, Sec. 19 of the Nebraska Constitution, regarding gratuitous payments to public employees. I understand further that the Nebraska Supreme Court has explained, "A payment of compensation to a public servant constitutes extra compensation whenever there is no legal obligation to pay such compensation." Myers v. Neb. Equal Opp. Comm'n, 255 Neb. 156 (1998). The AG's office has further clarified that the purpose of this provision is "to prevent payments in the nature of gratuities for past services." Op. Att'y Gen. No. 94064 (August 22, 1994)
One audit letter stated the "prohibition against gratuities does not necessarily apply to certain types of salary adjustments, such as longevity pay granted pursuant to the explicit terms of a valid contractual agreement – which, unlike an impermissible gratuitous bonus, is earned compensation."
Brief research also indicates many cities in Nebraska have longevity pay provisions in their city code.
My questions are:
1) Can employees that are not under contract be paid longevity pay if the City Council approves the practice and implements a policy? Or must it be pursuant to an employment agreement?; and
2) If the City were to implement a longevity pay policy, would each employee's clock for purposes of the longevity payments have to begin to run at the implementation of the policy, lest longevity payments for past service before the policy was implemented be viewed as compensation for past services?
Thank you in advance for any insight.
Best regards,
Michael Sholes
