Maine Legislative Update: Back to Work Incentives, Ban the Box, Tip Minimum, and Other Developments Affecting Employers

The First Special Session of the 130th Maine Legislature ended on July 19, 2021 with a flurry of votes on pending bills. Many of the newly-enacted laws, which were adopted with little debate, will significantly impact almost all employers in the Pine Tree state. Below is a brief summary of the most important changes enacted this session. We also highlight the Back to Work incentive program and two measures that fell short this year but could return in the future.

Maine LD 1167 (HP 845) – “Ban the Box” – Criminal History Inquiries Prohibited on Job Applications

This “ban the box” legislation follows the nationwide trend of states prohibiting employers from seeking criminal history record information on an initial employee application form. Currently, Maine has no restrictions on private employers that wish to inquire about applicants’ criminal history. The legislature’s intent with LD 1167 is to remove obstacles that preclude applicants with criminal histories from gainful employment.

Governor Mills signed LD 1167 into law on July 6, 2021. It prohibits an employer from requesting criminal history record information on an initial employee application form or stating on an initial employee application form or advertisement that a person with a criminal history may not apply or will not be considered for a position. LD 1167 also prohibits an employer from otherwise specifying prior to determining a person is qualified for the position that an individual with a criminal history will not be considered. The law provides exceptions to those prohibitions, including instances in which federal or state law, regulation, or rule mandates that a criminal conviction disqualifies an applicant from a position, imposes an obligation on an employer not to hire an applicant who has been convicted of a certain type of offense, or requires that an employer conduct a criminal history record check. An employer that violates this prohibition is subject to a penalty of not less than $100 nor more than $500 for each violation, to be enforced by the Maine Department of Labor.

LD 1167 will take effect October 18, 2021. In the interim, employers should review their job application materials to ensure that they are not asking about criminal history on the initial application or in advertisements. Employers also may wish to consider training for personnel who participate in the hiring process.

Maine LD 1489 (HP 1103) – Service Industry Tip Minimum Increased

LD 1489 increases the amount of tips an employee must receive to be considered a service employee from $30 per month to $175 per month, which may have a significant impact on employers that rely on tip income to pay less than minimum wage.  In addition, the new law provides that this amount be increased proportionately based on increases in the cost of living, beginning January 1, 2022. As noted above, this change affects employers that calculate their employees’ hourly rate using tip credits, since some low tip earners may no longer qualify as service employees and therefore will need to be paid the minimum wage in addition to any tips received.

This law takes effect October 18, 2021, so employers with service employees that pay less than the minimum wage before the tip credit is calculated should ensure that their policies and practices are updated.

Maine LD 61 (HP 27) – Expanded Eligibility for Protected Family Leave

During the COVID-19 pandemic, many grandparents spent more time providing childcare for their grandchildren to allow parents to remain in the workforce. This intergenerational care model is more prevalent around the world than in the United States, though this bill seeks to change that by providing protected leave under Maine’s Family Medical Leave Requirements Act to grandparents in order to care for a grandchild or a domestic partner’s grandchild who has a serious health condition. Previously, such leave was available only to parents, children, spouses/domestic partners, and siblings of the individual requiring care.

Governor Mills signed LD 61 into law on June 14, 2021. It takes effect October 18, 2021.

Maine LD 183 (HP 136) – Establishing Juneteenth as a Paid State Holiday

Governor Mills signed LD 183 into law on June 10, 2021 designating June 19 each year as Juneteenth – a paid state holiday on which all nonessential state offices, including courts, must be closed. Maine joins other states, such as Massachusetts and Louisiana, in recognizing Juneteenth as a holiday. Because the law does not take effect until 90 days after the legislature adjourns, the first official Juneteenth holiday in Maine occurs on June 19, 2022. Private employers may want to consider adding Juneteenth as a paid holiday now that it is a state holiday. 

Maine LD 1106 (SP 367) – Prohibiting Employers from Charging for Direct Deposit of Wages

On June 10, 2021, Governor Mills also signed a brief bill into law that explicitly prohibits all employers from charging a fee for the payment of wages by direct deposit. The prohibition will take effect October 18, 2021.

Back to Work Program – State Will Make One-Time Payment to Encourage New Employees to Enter the Workforce

On June 14, 2021, Governor Mills announced the rollout of the “Back to Work” program, administered by the Maine Department of Labor and the Department of Economic and Community Development. The program will provide a one-time $1,500 payment to eligible full-time employees who start jobs between June 15 and July 25 or a $750 payment for part-time new hires (20+ hours per week) during the same time period to encourage unemployed Mainers to return to the workforce. The first-come, first-served program will utilize $10 million in Federal funding and could reach up to 7,500 people in Maine.

To be eligible, people must:

  1. Have received unemployment compensation for the week ending May 29, 2021;
  2. Start a full-time job between June 15 and July 25, 2021 that pays less than $25 per hour and remain in the job for a period of at least eight consecutive weeks, and;
  3. Not receive unemployment compensation during the eight-week period of employment.

The program began June 15, 2021, and applications will be accepted through July 25, 2021. The Maine Department of Labor launched an online portal on its website where businesses can confirm that employees qualify and register their start dates. Once the employee has worked for eight weeks, the employer will provide documentation of the completion of the requirement and grant funds will be issued to the employer to be passed through to the employee.

The program comes after the Maine Department of Labor tightened work search requirements for unemployment insurance recipients on May 23, 2021, reinstating pre-pandemic requirements. People receiving unemployment are required to actively look for work and to accept positions for which they are reasonably qualified. A refusal to accept an offer of suitable work is grounds for disqualifying a person for benefits.

Maine LD 553 – Legislature Rejects Effort to End At-Will Employment in Maine

While they adjust to the new laws mentioned above, Maine employers can breathe a momentary sigh of relief. The Maine House of Representatives overwhelmingly voted down LD 553, “An Act to End Employment at Will,” by a bipartisan margin of 99-35 on June 14, 2021. The bill would have transformed Maine from an “at will” employment state, in which employers and employees can freely enter and exit the employment relationship for nearly any reason, to a state where an employer must have “just cause” to discipline or terminate the employee. The bill would have made Maine only the second state (after Montana) to require employers to follow progressive discipline for all employee misconduct, other than a few enumerated, immediately terminable offenses, making it harder to discipline or discharge problem employees.

The “for cause” bill has been defeated, but employers are not out of the woods yet. The House of Representatives showed continued interest in the concept of ending at-will employment and voted to form a committee to study the concept further.

Maine LD 1711 – Governor Mills Vetoes Bill Aimed at Adding Private Right of Action to Enforce Employment Laws on Behalf of the State   

On the final day of the legislative session, July 19, the Maine Senate sustained Governor Mills’ veto of LD 1711, which would have authorized an additional right of action against employers by aggrieved employees and other interested parties. Currently, employees may bring lawsuits against their employer to address violations of state employment laws, but they must do so in their own name. LD 1711, modeled after a similar California law (the Private Attorney Generals Act, commonly referred to as “PAGA”), would have provided an entirely new right of action where current and former employees and  other specified whistleblowers would act as “private attorneys general” and file lawsuits in the name of the state. The bill, which passed both the senate and house before Governor Mills vetoed it, would have allowed private citizens to bypass certain administrative procedures and, among other things, also rendered mandatory arbitration agreements void as to whistleblower claims under the statute.

The bill was opposed by diverse business interests as well as the Maine Human Rights Commission, but there is no guarantee that it won’t come up in the next session. 

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.