The Maine Department of Labor (MDOL) has adopted final rules and issued guidance for the state's paid leave law, which takes effect January 1, 2021.
Background:
In 2019, Maine enacted legislation (Legislative Document 369) that requires employers to provide paid leave to employees. The law applies to all employers with more than 10 employees across all locations in Maine for more than 120 days in any calendar year, except for employers in a seasonal industry who submit the required report/documentation under state law.
All employees are entitled to accrue one hour of paid leave for every 40 hours worked, up to 40 hours in a year. Accrual begins at the start of employment or January 1, 2021, whichever is later. Employers may require employees to wait until they've worked for the company for 120 days before they may use accrued leave. Employees may use accrued leave for any reason.
An employee on leave must be paid at least the same base rate of pay that they received immediately prior to taking the leave and must receive the same benefits as those provided under other company established policies for other types of paid leave.
Final Rules and Guidance:
The final rules and guidance define key terms and clarify various aspects of the law.
Accrual and Carryover:
Employees with accrued and unused paid leave at the end of the year will be entitled to carry it over to the next year, up to a maximum of 40 hours. The final rules clarify that if employees carry over less than 40 hours, they can add to those hours until they reach the 40 cap. For example, if the employee carries over eight hours of this leave from 2021, the employee would be only entitled to accrue 32 hours of this leave in 2022, according to the MDOL guidance.
Frontloading:
The 40 hours of paid leave may be frontloaded at the beginning of the calendar year, or on the employee's anniversary date, as long as the employee receives no less paid leave than if they had earned it week by week. The MDOL guidance states that if the employee uses frontloaded leave before it would have been earned and employment then ends, the leave may be pro-rated and deducted from their final paycheck, provided that the terms of employment or the employer's established practice include provisions addressing such scenarios.
Employee Notice:
Under the final rules, absent an emergency, illness, or other sudden need for taking paid leave, the employer may have a written policy requiring up to four weeks' notice of an employee's intent to use leave. In case of an emergency, illness, or other sudden need, the employee must make a good faith effort to provide as much notice as is feasible under the circumstances.
Pay During Leave:
The base rate of pay for purposes of this leave is identical to the regular rate of pay for overtime purposes, according to the final rules. The base rate is calculated by dividing the total earnings for the week immediately prior to the leave taken by the total hours worked, according to the guidance. For example, if an employee worked 15 hours at $13.00 per hour and 25 hours at $15.00 per hour the week before using paid leave, the base rate would be calculated as follows:
15 hours X $13 = $195
25 hours X $15 = $375
Total earnings = $570
$570 ÷ 40 hours = $14.25 per hour base rate of pay.
Payout at Separation:
At the time of separation, employers must pay employees for any accrued, unused all-purpose paid leave if they have a policy or practice of paying for other types of unused paid leave, such as vacation.
Poster:
The state has also published an updated Regulation of Employment poster that includes the new paid leave law. All employers must display the poster.
Compliance Recommendations:
Covered Maine employers should ensure compliance with the law and final rules by January 1, 2021. Please contact your dedicated service professional with any questions.