When Does the Law Become Effective and Who is Covered?
The new Maine earned paid leave law will become effective January 1, 2021 and applies to all employers who employ more than 10 employees in Maine for more than 120 days in any calendar year. (There is an exception for seasonal industries).
A “covered employee” eligible for earned paid leave is essentially any employee covered by unemployment and may include a person who is employed full-time, part-time, or per diem. (If an employer is in a seasonal industry and has submitted the required reports to the Bureau of Unemployment Compensation designating the seasonal period for the applicable year, an employee working only within the designated seasonal period will be exempt from coverage and not eligible for paid leave under the law).
Employees covered by collective bargaining agreements (CBAs) as of January 1, 2021 are excluded until the CBA expires. New CBAs after that date must include the earned paid leave benefit at a minimum.
What is the Paid Time Benefit Under the New Law?
Employees accrue 1 hour of earned paid leave for every 40 hours worked, up to 40 hours in a defined year. Salaried employees are presumed to work 40 hours per week unless there is an actual record of time worked. Employees can use up to 40 hours of earned paid leave in any defined year and may carry over up to 40 hours of accrued, unused time from one defined year to the next, but no more than 40 hours of earned paid leave is required to be available for use during any one-year period. (For instance, if an employee carries over 8 hours of earned time from a prior year, they can earn only another 32 hours of paid leave in the current year to total 40 hours available for use that year).
The paid leave benefit is paid at the same base rate of pay (regular rate) that the employee earned immediately prior to taking earned paid leave (calculated by reference to the week immediately prior to the leave). Be careful to calculate the regular rate correctly by including all earnings, including bonus and commission amounts, earned in the week immediately preceding the leave and dividing the total by the number of hours worked.
Employees can use their accrued earned paid leave for any reason such as a planned vacation, personal time, attending to family matters, illness, an emergency, sudden necessity, etc. The employee does not need to specify any reason for taking earned leave time.
When and How is Earned Paid Leave Accrued?
Accrual of earned paid leave begins at the start of employment, but the employer is not required to permit use of the leave before the employee has been employed by the employer for 120 days in the one-year period. (The employee does not have to actually work 120 days, but rather must only be employed by the employer for 120 calendar days). Employees who were employed by their employer for at least 120 days before the law goes into effect on January 1, 2021 may use their leave as soon as it is earned.
Earned paid leave is accrued ratably, 1 hour for each 40 hours worked, but an employer may choose to frontload earned paid leave at the beginning of the year. Employers that allow employees to use earned paid leave before it is accrued may withhold from the last paycheck any amount that the employee had not yet accrued at the time of termination. (The employer should have a policy putting employees on notice of this possible payback and withholding requirement).
If an employer has a policy or practice of paying accrued, unused vacation time at termination of employment, accrued earned leave time should be treated the same way. If there is no policy or practice and the employee is not paid out accrued time, he or she would be able to recapture any accrued time if they are re-employed by the employer within one year.
Notice and Use of Leave
An employer may have a written policy requiring up to 4 weeks’ notice to the employer of the employee’s intent to use earned leave time. In the event of an emergency, illness, or sudden necessity, the employee is only required to make a good faith effort to provide as much notice as is feasible in the circumstance.
Unless an employer allows use of leave in smaller time increments, earned leave is used in one-hour increments. (Even if an employee only needs half an hour for an appointment, the employer may charge a full hour of earned paid leave time).
An employer is permitted to place reasonable limits on the scheduling of leave, for reasons other than emergency, illness or sudden necessity, to prevent undue hardship to the employer’s business as reasonably determined by the employer. Undue hardship means a significant impact on business operations or significant expense considering the size of the employer and its resources, the size of the workforce, and its particular industry. For example, a business may be permitted to restrict use of earned leave during the holiday rush when “all hands on deck” are required.
If an employer already provides a PTO or vacation leave benefit that provides at least 40 hours of paid leave, and the leave can be taken for any reason, any leave under such policies will count as earned paid leave under the new law. If the employer’s other leave policies allow paid leave only for certain reasons (e.g. only if the employee or a family member is ill) then use of that leave by the employee would not count toward the earned paid leave requirement. Earned paid leave must be unrestricted in terms of reason for use, so any other leave time that an employer offers will not satisfy the requirement to provide earned paid leave unless it is similarly unrestricted in terms of reason for use.
Posting Requirement
Employers must advise employees of their right to earned paid leave by posting notice. An updated Maine Regulation of Employment poster including earned paid leave requirements can be found here.
Penalties for Noncompliance
The Maine DOL, Bureau of Labor Standards has exclusive enforcement authority for violations of the Earned Paid Leave Law. The Bureau may assess a civil monetary forfeiture of up to $1,000 for each violation.
For additional guidance, see:
- Maine’s Earned Paid Leave statute
- Maine DOL Rules Governing Earned Paid Leave
- Maine DOL Earned Paid Leave FAQs
Employers should review and update their policies as necessary to ensure that the obligation to provide earned paid leave is accounted for. Please reach out to Bill Sheils in our Employment Practice Group if you have any questions.