Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
After clearing necessary procedural and financial hurdles this week, Maine is set to enact one of the broadest and most generous paid family and medical leave programs in the country.
L.D. 1964 – “An Act to Create the Maine Paid Family and Medical Leave Benefits Program” – provides up to 12 weeks of paid leave per year to all eligible employees in the private and public sector, except for employees of the federal government, regardless of employer size. The leave is also not limited to the employees’ own conditions or the conditions of legal or biological family members. Rather, the plan permits employees to take leave to care for any individual with whom they have “a significant personal bond that is or is like a family relationship regardless of biological or legal relationship.” Additionally, an employee can take the paid leave immediately after starting employment.
To pay for this new program, the state will impose a 1% payroll tax split evenly between the employer and employee.
During the approved leave period, the program will replace 90% of an employee’s wages for income earned that is equal to or less than 50% of Maine’s average weekly wage, which is currently $1,036. The portion of the covered individual’s average weekly wage that is more than 50% of the state average weekly wage must be replaced at a rate of 66% up to the maximum weekly benefit. To calculate the benefit amount, the average weekly wages the individual earned over the preceding four calendar quarters will be used, but any earnings from bonuses will be excluded. The maximum weekly benefit is set at the state average weekly wage, which changes annually. Notably, benefits are not subject to state income tax.
Employers that offer comparable private paid leave plans could opt out of the program and cannot impose a cost to employees greater than the payroll tax under the state plan. Also, businesses with 15 or fewer workers would be exempt from paying into the state plan. However, employees of those small business, including part-time employees, still would be required to pay into the program and could still claim benefits.
Until the morning of June 29, Maine Governor Janet Mills had not taken a position on the plan. However, in an op-ed in the Portland Press Herald, she publicly expressed support for L.D. 1964. With the governor’s support, Maine will become the 13th state to have a mandatory paid family and medical leave program.
Maine’s program is the broadest in New England. New Hampshire law provides paid leave to private sector employees who can voluntarily opt in by purchasing coverage. Vermont also offers a similar voluntary paid family and medical leave scheme. Massachusetts offers a broad paid leave program but exempts small employers and provides a lower benefit capped at 64% of the Commonwealth’s average weekly wage. Maine’s approach would affect all employers since all employees will be eligible for paid leave regardless of whether the employer must pay the payroll tax.
The Department of Labor will administer the program. Oversight authority will rest with a newly created 13-member advisory board appointed by the governor.
Once this bill is signed into the law, Maine will begin assessing the 1% payroll tax on January 1, 2025. Employees will be able to start taking paid family and medical leave on January 1, 2026.
Although Maine’s Department of Labor must still iron out many details through the rulemaking process, the statute provides the following key components:
All public and private full- and part-time employees (as well as self-employed individuals) who have earned at least six times the state average weekly wage in the first four calendar quarters immediately preceding the first day of an individual’s benefit year are covered by the law. In other words, using the current average weekly wage, so long as the individual has earned at least $6,216 in the year prior to taking leave, they are covered.
The bill defines “self-employed individual” as a “sole proprietor, a member of a limited liability company or limited liability partnership or an individual whose net profit or loss from a business must be reported to the [state].”
All public employers (other than the federal government), private employers, and self-employed individuals are covered by the program. Note that although employers with fewer than 15 employees do not have to contribute toward the payroll tax, these small employers must still collect and remit to the state the employee’s portion of the tax. Eligible employees of small employers with fewer than 15 employees may still take paid family and medical leave – and can do so immediately upon commencing employment.
Private employers that offer equivalent or greater paid leave benefits may apply to the state for a waiver to avoid participating in the state’s program.
L.D. 1964 also requires a covered public employer that is a party to a collective bargaining agreement to apply the “rights and responsibilities” of the paid leave program until the existing CBA expires. For private employers that are a party to a CBA, the bill does not “[o]bviate an employer’s obligations to comply with any employer policy, law or collective bargaining agreement that provides for rights to leave greater than or additional to those provided by” the new state program. Rulemaking should clarify the practical effects of this provision.
So long as a covered employee has been employed for at least 120 days prior to taking leave, the employer must restore that employee to the same or equivalent position with the same or equivalent benefits, pay, and other conditions of employment. This requirement also applies to small employers. For example, if an employer has only one employee and that employee has worked more than 120 days, the employee can take 12 weeks of leave and the employer must hold that position open.
A covered employee who takes leave before working at least 120 days does not have the same job restoration rights. However, L.D. 1964 includes an express prohibition against retaliation for an employee exercising their right to paid family and medical leave. As a result, employers may potentially face retaliation claims from employees who take leave during their initial 120 days of employment who do not return to the same or similar job after their leave.
Reasons for Leave
Eligible employees or self-employed individuals may take up to 12 weeks of paid leave for any of the following reasons:
- To bond with the covered individual’s child during the first 12 months after the child’s birth or the first 12 months after the placement of the child for adoption or foster care with the covered individual;
- To care for a family member with a serious health condition;
- To attend to a “qualifying exigency,” which is defined as “a need arising out of a covered individual’s family member’s active duty service or notice of an impending call or order to active duty in the United States Armed Forces, including, but not limited to, providing for the care or other needs of the military member’s child or other family member, making financial or legal arrangements for the military member, attending counseling, attending military events or ceremonies, spending time with the military member during rest and recuperation leave or following return from deployment or making arrangements following the death of the military member”;
- To care for a family member of the covered individual who is a covered service member;
- Safe leave, otherwise known as sexual assault victim leave; or
- Any reason set forth in Maine’s Family Medical Leave Requirements (26 M.R.S. § 843(4)), which includes leave for “employees”1 in the following situations:
- For the serious health condition of the employee;
- For the birth of the employee’s child or the employee’s domestic partner’s child;
- The placement of a child 16 years of age or under with the employee or the employee’s domestic partner in connection with the adoption of the child;
- For the death or serious health conditions of certain family members in the military who died or incurred a serious health condition while on active duty; or
- For the donation of an organ of the employee for a human organ transplant.
Note that the bill defines “family member” as: a biological, foster, step, or adopted child (regardless of age); grandparent; grandchild; sibling; spouse or domestic partner; or “an individual with whom the covered individual has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship.” The state Department of Labor will establish procedures and forms for filing claims for family and medical leave benefits and will specify what supporting documentation is necessary to support a claim for benefits, including any documentation required from a health care provider for proof of a serious health condition and documentation required by the administrator regarding a claim for safe leave or qualifying exigency leave.
Additionally, the bill broadly defines “serious health condition” as “an illness, injury, impairment, pregnancy, recovery from childbirth or physical, mental or psychological condition that involves inpatient care in a hospital, hospice or residential medical care center or continuing treatment by a health care provider.” This is a much broader definition, particularly with respect to pregnancy, than how Maine currently defines “serious health condition” in the state’s Family Medical Leave Requirements (26 M.R.S. § 843(4)). Under the existing law, a “serious health condition” is limited to an “illness, injury, impairment or physical or mental condition that involves” inpatient care or continuing treatment by a health care provider.
Any medical or health information employers receive from employees seeking these benefits must be treated as confidential and may not be disclosed except with permission from the covered individual who provided it. The proposed law tasks the Department of Labor with determining what supporting documentation is necessary to support a claim for benefits.
A covered individual may take up to 12 weeks of family leave and up to 12 weeks of medical leave in an application year, but may not take more than 12 weeks, in the aggregate, of family leave and medical leave in the same application year. “Application year” means the 12-month period beginning on the first day of the calendar year in which an individual files an application for family leave benefits or medical leave benefits.
Covered individuals may take leave m intermittently in increments of not less than eight hours or if the employer and the employee agree, on a reduced leave schedule.
The state will impose a 1% payroll tax, split equally between employers and employees. Employers are responsible for collecting and remitting to the state the employees’ portion of the payroll tax.
An employer must post a workplace notice of the benefits available under the program. An employer must also issue written notice to each employee within 30 days of the start of employment that includes an explanation of benefits as well as information on employees’ rights and obligations.
The bill requires employees provide only reasonable notice of their intent to take leave.
The penalty imposed on individuals who take paid leave based on false statements or misrepresentations is a one-year disqualification from the program and potential that the administrator will seek repayment of the benefits received.
Employers and employees (as well as self-employed individuals) must start paying the payroll tax beginning January 1, 2025. Covered individuals can start taking paid family and medical leave on January 1, 2026.
What Can Employers Do to Prepare?
Assuming the governor signs L.D. 1964 into law, employers should begin reviewing their leave policies to prepare to comply with the impending new law. Employers should also monitor the state rulemaking process and contact counsel to ensure compliance with the forthcoming rules.
1 Maine’s existing Family and Medical Leave Requirements refers to “employees” while the new Paid Family and Medical Leave Benefits Program refers to “covered individuals” because the coverage extends beyond employees to self-employed individuals, including independent contractors, sole proprietors, and partners who elect coverage.