December 11, 2020

Maine Mandatory Paid Leave

By Patrick O'Reilly, Principal, Tax & Business Services

Maine Mandatory Paid Leave State & Local Tax

On January 1, 2021, a new law requiring certain Maine employers to provide paid leave for employees will take effect.

Signed by Governor Janet Mills in 2019, L.D. 369, An Act Authorizing Earned Employee Leave, requires private employers employing 10 or more employees for more than 120 days in a calendar year to provide 1 hour of paid leave for every 40 hours worked, up to a maximum of 40 hours of paid leave per year. Employers whose employees are covered by a collective bargaining agreement are exempt. The law provides that eligible employees would be able to take paid leave for any reason. Their leave starts accruing as soon as they are hired, but there is a 120-day waiting period before they can use the leave.

The state anticipates nearly 80% of the state’s businesses will be exempt from the law; however, approximately 85% of Maine’s workforce will be covered by the Act.

Employees already receiving leave (vacation, personal, sick, or generic PTO) in an amount of at least 40 hours annually will not be eligible to receive additional time off as a result of this law.

Employers affected by this law should review their current leave policies to ensure compliance, paying particular attention to the following:

  • The employer must provide “the same benefits as those provided under established policies of the employer pertaining to other types of paid leave.” Meaning, if an employer pays out unused leave or has carry over allowances etc., the employer would have to apply those policies to employees covered by the new law.
  • If an employee takes earned leave, the employer must pay the employee at the same pay rate the employee received immediately prior to taking earned leave.
  • If an employee takes earned paid leave, this should not affect his or her right to receive health benefits “on the same terms and conditions as applicable to similarly situated employees.”
  • Employers that fail to comply with the law can be liable for up to $1,000 per violation.

Marcum suggests all Maine employers check with their payroll service providers to see if the payroll service will address leave tracking as required for the business. Click here for an overview of the new law, FAQs and more.

For questions and additional information, consult your Marcum tax advisor.