Maine Paid Leave Insurance Fund Contributions to Begin in 2025, Rulemaking Process Imminent

Quick Hits

• Employer contributions to Maine’s Paid Family and Medical Leave Insurance Fund are set to begin on January 1, 2025.
• The Maine Department of Labor is expected to begin the rulemaking process in spring 2024.
• The state has given itself a deadline of January 1, 2025, to adopt final rules implementing the program.

Maine’s PFML program, which was established in October 2023, will entitle qualified, eligible employees to up to twelve weeks of paid family, military, medical, or safe leave, beginning on May 1, 2026. The program’s definitions of family member and qualifying reasons are expansive. Weekly paid benefits will be determined by a tiered system based on the state average weekly wage (SAWW).

While the state will begin assessing a 1 percent payroll tax on January 1, 2025, to contribute to the PFML Insurance Fund, questions about the program abound.

Unresolved questions include how the PFML program will impact more generous existing employer-provided paid leave policies and private plans, and whether employers should expect adjustments to the required contribution amounts in the future.

Additional guidance is expected from the Maine Department of Labor (MDOL), which has said it will begin the formal rulemaking process in “Spring 2024.” However, the rulemaking process has not yet been launched publicly and the state’s self-imposed deadline to adopt final rules is January 1, 2025, the date on which contributions start, creating uncertainty for employers.

Insurance Fund Contributions

Effective January 1, 2025, through December 31, 2027, employers with fifteen or more employees must contribute 1 percent of employee wages to the PFML Insurance Fund and may deduct up to 50 percent of their contribution from employee wages. Employers with fewer than fifteen employees will be required to contribute 0.5 percent of wages to the PFML Insurance Fund and may deduct the entire amount from employee wages.

Employers’ quarterly payroll contributions to the PFML Insurance Fund will be pooled for employee claims and administrative costs associated with operating the program. The MDOL will set the premium contributions for each calendar year beginning in 2028 at a rate necessary to maintain the PFML Insurance Fund’s solvency.

Private Plans

Employers that provide paid time off, sick leave, and/or short-term disability benefits may seek approval of their private plans as “substantially equivalent” if the plans are: (1) self-funded and the employer pays a surety bond to the state, or (2) fully-funded and purchased from an insurance company.

Employers with approved private plans will be exempt from quarterly payroll contributions. According to the MDOL, internal leave policies alone are insufficient and will not be approved as “substantially equivalent.” The MDOL will issue additional details regarding the process and requirements for approving private plans at the close of the rulemaking period, prior to January 1, 2025.

Next Steps

Despite some uncertainty over the contours of the PFML program, Maine employers may consider preparing for the insurance fund contributions set to start on January 1, 2025, and explore whether they plan to seek approval of private plans or otherwise revise their existing leave benefit plans to comply with the new rules.

Maine employers may further want to consider commenting on forthcoming draft rules implementing the program. While the rulemaking process has not been launched publicly, employers will have an opportunity to participate in or comment on the forthcoming rulemaking and a public hearing will be held prior to the adoption of the final rules.

Ogletree Deakins’ Portland (ME) office will continue to monitor developments and will provide updates on the Leaves of Absence and Maine blogs as additional information becomes available.

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