Employment Law Update: Maine Becomes One of the Latest States to Offer Paid Leave Benefits

By: Carolyn Liegner and Ann Freeman

Maine recently passed into law the Paid Family and Medical Leave Benefits Program (the “Program”).  Under the new law, covered employers must provide up to 12 weeks of paid leave per year to eligible employees in the event of a serious medical condition of the employee or to care for a family member for a variety of reasons.  This benefit is one of the most generous state-managed paid leave programs in the country, and nearly all public and private sector employees will be eligible for the leave when the Program goes into effect on January 1, 2026.

Employers should note that there are actions they must take prior to that effective date, so they should not just push the snooze button until 2026.

The Maine Department of Labor rulemaking process will begin in January 2024. There may be opportunities for employers’ input to shape the implementation of the Program during the rulemaking process.

At this time, employers should familiarize themselves with the employee protections and benefits provided under the Program.  They also should work with counsel to update existing benefits programs for compliance with the Program.  While there is still a lot of information that is unclear without further guidance, we have provided a brief Q&A below.  Stay tuned for more information as the rulemaking and rollout of the Program takes place.

What benefits and protections are provided by the program?

The Program offers paid medical leave in the event of the employee’s serious health condition.  The program also offers paid family leave for several reasons, including caring for an individual with whom the employee has a significant bond who has a serious health condition, bonding with the employee’s child within 12 months of the child’s birth or adoption, and “safe leave” for employees, or individuals with whom employees have a significant bond, who are experiencing violence, sexual assault, assault, or stalking, among other reasons.

When does the program go into effect?

On January 1, 2025, Maine will begin assessing the one percent (1%) payroll tax.  On January 1, 2026, employees will be eligible to start taking paid family and medical leave.

How is the program funded? 

Maine’s budget includes an appropriation of $25 million to start the program, but benefits will be paid through a one percent (1%) payroll tax, to be split by employers and employees.  Employers with fewer than 15 employees are not required to contribute to the payroll tax.

Who is eligible for leave?

All private and public sector employees and self-employed individuals who have earned at least $6,216.00, or six times the state average weekly wage, in the first four calendar quarters immediately preceding the first day of an employee’s benefit year are eligible, including part-time employees.

How is “family member” defined by the law?

“Family member” is defined broadly under the law.  Notably, the definition includes “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, as designated by the covered individual.”  We are hoping that additional clarification will be provided on this definition through further rulemaking or guidance.

When do employees become eligible?

Employees are eligible for paid leave immediately after starting employment, subject to the earned income requirements discussed above.

How long is the leave period?

Up to 12 weeks paid leave in a benefit year.

How is an employee’s benefit year defined?  Will employees be able to take multiple leaves, and if so, with what frequency?

“Benefit year” is defined by the statute as the 12-month period beginning on the first day of the calendar week immediately preceding the date on which the employee’s family leave benefits or medical leave benefits commence.  Employees are eligible for up to 12 weeks total medical and family paid leave each benefit year.

How much notice is an employee required to provide an employer before taking leave?

The statute requires that an employee give “reasonable” notice to an employer, absent an emergency, illness, or sudden necessity for taking leave.  However, the law does require that the employee schedule leave to prevent undue hardship on the employer, as reasonably determined by the employer.  What is considered a reasonable determination of “undue hardship” is likely to be clarified through further rulemaking and guidance.

Can an individual take leave under the program on an intermittent basis?

Yes, the law permits an employee to take intermittent leave, in increments of not less than eight (8) hours, or on a leave schedule otherwise agreed to by the employee and the employer.

How is the eligible employee paid during the leave period?

The Department of Labor (“DOL”) will administer the program, although the law authorizes the DOL to contract with a third party to conduct claims administration.

After a claim is made and approved, the eligible employee’s benefits are paid directly by the Program.  Payments are not subject to state income taxes.

What portion of an employee’s wages are replaced by the program? 

The program will replace ninety percent (90%) of an employee’s wages or income (to include salary, tips, commissions, and other compensation) for income earned that is less than or equal to fifty percent (50%) of Maine’s average weekly wage (currently $1,103 per week).  For any portion of an employee’s average weekly wage that is greater than fifty percent (50%) of Maine’s average weekly wage, the replacement rate is sixty-six percent (66%), up to the maximum weekly benefit.  The maximum weekly benefit is set at the state average weekly wage, which is $1,103 in 2023 but changes annually.

How is an employee’s benefit amount calculated?

The employee’s benefit amount is based on the average weekly wages the individual earned over the preceding four calendar quarters.  Wages are defined to include salary, tips, commissions, and other compensation, but do not include bonuses.

Can employers opt out of the program? 

The law allows employers that offer “comparable” private paid leave plans, as defined by the statute, to apply to the administer to opt out of the program, as long as the private plan does not impose a cost to employees greater than the payroll tax under the state program.

However, employers should be aware that even the most generous existing private leave programs may not be considered “comparable” as they are unlikely to confer the same breadth of protections and benefits as the Program.

Is the employee entitled to accrue vacation or sick time while on family or medical leave?

The law requires that an employee’s right to accrue vacation time, sick time, bonuses, advancement, seniority, length of service credit, or other employment benefits, plans, or programs, may not be affected by the employee taking leave.  As with leave under the federal FMLA, employers must continue to pay the employer portion of health insurance benefits during the leave period.

My business is exempt from the federal FMLA law and/or the Maine Family Medical Leave based on its number of employees.  Is my business also exempt from the Program? 

No.  Employees of businesses with any number of employees are covered under this program.  Employers with fewer than 15 employees are not required to pay their portion of the payroll tax, but they still are required to collect the employee portion of the tax.  Although self-employed individuals are covered by the Program, they may opt out if they choose.

What other legal requirements should employers be aware of?

Employers must post a workplace notice of the benefits available under the Program and must issue written notice to each employee within 30 days of the start of employment, which notice must include an explanation of benefits as well as information on employees’ rights and obligations.

For more information about the new Maine Paid Family Medical Leave Law, contact Labor and Employment Attorneys Carolyn Liegner at cliegner@bernsteinshur.com or Ann Freeman at afreeman@bernsteinshur.com.