Forty Years Later, Officer Recovers Wages Withheld From Paycheck

Martin Rauscher worked as a police officer for the Lincoln, Nebraska Police Department during two separate time periods. His initial employment began in April 1962 and continued until March 31, 1963, when he terminated his employment. He rejoined the Department in late summer 1965 and retired in 2001.

When he retired, Rauscher filed a wage claim against the City. Rauscher explained that upon rejoining the City’s police force on August 30, 1965, his first 40 hours of pay, from August 30 to September 3, were withheld and not paid to him. Rauscher stated that when he did not receive these wages, he spoke with Walter Mitchell, who was at that time the City’s personnel director. As a result of his conversation with Mitchell, Rauscher testified as to his understanding to the effect that this withholding of wages was “a standard withholding that [the City did] with all of the employees” and that the 40 hours of wages would be paid to him in his final paycheck after he terminated his employment with the City.

Rauscher also sought to recover money not paid him in 1975. In September 1975, the City implemented a new schedule for calculating pay periods and releasing paychecks. As part of that process, Rauscher stated that Mitchell met with the City’s police officers to explain the new schedule. According to Rauscher, he understood that as a result of the new schedule, the City was implementing a pay lag in which the City would withhold seven hours of pay from eight separate pay periods, or 16 weeks, beginning in September 1975 and ending in December 1975, for a total of 56 hours of pay. As a result of the comments by Mitchell, Rauscher understood he would receive the wages withheld as a result of implementation of the pay lag when he terminated his employment with the City.

Not surprisingly, the City’s primary defense to Rauscher’s claim was that a 40-year old claim was barred by the one-year statute of limitations in Nebraska for wage claims. The Nebraska Supreme Court thought differently, though, and awarded Rauscher his claimed wages and thousands of dollars of attorney fees.

The Court’s decision was based on the notion of “equitable estoppel.” The doctrine applies whenever a party engages in conduct that meets three tests: (1) The conduct amounts to a false representation or concealment of material facts, or at least which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts.

The Court found that the doctrine of equitable estoppel barred the City from raising the statute of limitations. The Court reasoned that “it can be fairly said, based upon Rauscher’s testimony, that he was lulled into a false sense of security that his unpaid wages would be paid upon the termination of his employment by the City, thereby causing Rauscher to subject his claim to a statute of limitations defense. We believe that the elements of equitable estoppel have been established and that Rauscher has demonstrated compelling circumstances, such that equitable estoppel should be applied to prevent the City from asserting the statute of limitations, because it would be unjust to allow the City to raise that defense when its own actions led to Rauscher’s delay in pursuing his claim.”

Rauscher v. City of Lincoln, 2005 WL 265262 (Neb. 2005).

This article appears in the May 2005 issue