Nebraska Supreme Court Weighs in on Tax Implications of Jury Verdicts


The Nebraska Supreme Court issued a decision in Heckman v. Burlington Northern Santa Fe Railway Co., No. S-12-335, --N.W.2d—(Aug. 16, 2013), determining that a general verdict award in favor of an employee for on-the-job injuries is an award of compensation that required the employer to treat the entire verdict as wages for purposes of tax withholding. In Heckman, the plaintiff, an employee of defendant Burlington Northern Santa Fe Railway (BNSF), was injured on the job and filed a claim for personal injury pursuant to the Federal Employees’ Liability Act (FELA), seeking, inter alia, lost earnings and benefits. The court instructed the jury to consider awarding plaintiff damages to compensate for his injury, including lost wages, and neither party requested a special verdict instruction. The jury returned a general verdict for plaintiff, but did not specify how it attributed damages. BSNF paid the judgment, but withheld plaintiff’s share of, what it asserted, were the applicable taxes and then filed a motion for satisfaction and discharge of the judgment. The plaintiff opposed the motion, arguing that BNSF was not required to withhold any taxes (but did not dispute the accuracy of the computations). The district court agreed and ordered the parties to agree in writing that no portion of the award would be considered lost wages. BSNF appealed.

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