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The countdown is on for when Maine officially becomes the first state to require private employers to provide earned paid leave to employees for any reason.

On January 1, 2021, private employers with more than 10 employees in Maine must provide 1 hour of paid leave for every 40 hours worked, up to a maximum of 40 hours of paid leave per year. This leave is not just sick time. It is for any reason whatsoever.

Since Governor Janet Mills signed L.D. 369, An Act Authorizing Earned Employee Leave, in May 2019, the state’s Department of Labor (MDOL) has worked toward drafting and implementing rules to clarify the statute’s ambiguities and employer responsibilities in this new paid leave era. After more than a year of revisions, public comments, and hearings, the MDOL issued its final rules on September 14, 2020.

With less than three months to comply with Maine’s new earned paid leave law, employers may want to note the following key provisions to determine which employees are covered and how best to implement the new leave requirements.

To Whom Does the New Earned Paid Leave Law Apply?

  • Private employers are covered if they have more than 10 employees working in Maine in the usual and regular course of business for more than 120 days in any calendar year.
  • A covered employee may include full-time, part-time, or per diem employees. This includes students and noncitizens authorized to work in the United States.
  • Domestic workers, even those working in private homes, earning more than $1,000 per year are eligible for leave.
  • Generally, if a worker is a covered employee for unemployment insurance purposes, that worker counts toward the 10-employee cutoff and is covered by the earned paid leave law.

Who Is Excluded?

  • The law does not cover seasonal employees, independent contractors, and employees working fewer than 120 days in any calendar year.
  • Any employee subject to a collective bargaining agreement during the period between January 1, 2021 and the expiration of the agreement is excluded.

When Does Earned Paid Leave Start?

  • Employees begin to earn leave upon hire, but employers may restrict the use of leave until an employee has been employed for 120 days.
  • Employers may front-load the 40 hours of leave at the beginning of a calendar year or on an employee’s anniversary date as long as the employee receives no less earned paid leave than he or she would have earned under an accrual method. If an employer does front-load and an employee terminates his or her employment prior to working sufficient hours to earn the time already taken, the employer may deduct the unearned leave from the last paycheck.

What Is the Rate of Pay for This Leave?

  • Employers must pay employees their regular base rate of pay, including bonuses and commissions. Calculating the base rate of pay requires dividing total earnings for the week prior to the leave by the number of hours worked. Note that this has the potential for employees to take leave at an increased rate should they receive a bonus or commission in the week prior to their leave. The MDOL acknowledged this potential problem, but it did not adopt rules to prevent this possible manipulation.
  • Employers in the service industry, whose employees use the tip credit, will use the state’s minimum wage as the base rate of pay.

May Employees Roll Over Earned Paid Leave?

  • Yes, employees may roll over any unused leave, but employers can cap the total number of hours at 40 per year.

Do Employers Have to Pay Out Unused Earned Paid Leave at Termination?

  • If the employer has an established policy or practice of paying out vacation time upon termination of employment or separation, then the same policy will apply to earned Paid leave benefits.
  • If an employer does not pay out the unused earned paid leave at the termination of employment and an employee returns to work within one year, the employee will be entitled to the amount of his or her unused leave at the time of rehire.

What Kind of Notice or Documentation Must an Employee Provide to an Employer?

  • Notice due to an emergency must be “reasonable.” However, the new law does not define what is reasonable.
  • Absent an emergency circumstance, employers may require up to four weeks’ notice of an employee’s intent to use earned paid leave.
  • Employees may use earned paid leave in increments of at least one hour, unless the employer chooses to allow smaller increments.
  • In a FAQs section on its website, the MDOL, stated that “[u]nless the leave is for more than 3 consecutive days, the employer cannot required a medical note or other documentation.”

Are There Posting Requirements?

  • The updated Maine Regulation of Employment poster is available here.

Employers impacted by the new law may want to reevaluate their current policies to comply with the new law. The January 1, 2021, deadline is a good reminder to update handbooks, ensure proper classification of individuals as independent contractors, train supervisors on dealing with leave requests, and implement time-tracking systems.

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