Practical Advice for Employers Looking at ME’s New Earned Paid Leave Law

By: Peter Herzog, Shiloh Theberge and Tara Walker

In Brief

In 2019, ME became the first state in the nation to require employers to pay up to 40 hours per year in earned leave for any reason when the Legislature passed the ME Earned Paid Leave law (“MEPL”). On September 14, the ME Department of Labor (“MDOL”) adopted the final Rules applicable to Earned Paid Leave, which will go into effect on January 1, 2021. In short, the law provides that any employer with more than 10 employees (whether part-time or full-time), must allow employees to begin accruing paid leave at a rate of 1 hour for every 40 hours worked. Employees are not eligible to begin using that leave until after 120 days of employment. However, that 120 days will begin to run before the law goes into effect on January 1. Employees must give at least 4 weeks’ notice of an intent to use MEPL unless the leave is for an emergency or unforeseen reason. The law also provides that employees may carry over unused, earned leave time, but are only eligible to use a maximum of 40 hours in any given year. Whether employees must be paid out for unused, earned time on termination of employment is governed by the employer’s policy on other kinds of vacation, sick, or personal leave. In addition, employers are required to post this updated workplace posting, reflecting the requirements of the new law.

Trap for the Unwary: The Salaried Employee

One trap for unwary employers is that any salaried employee is deemed to work 40 hours per week, unless you track their hours worked. Many employers in ME have salaried employees working fewer than 40 hours each week. The new regulations make clear that unless you track actual time worked, you must deem for MEPL purposes that they have worked 40 hours each week.

Trap for the Unwary: Using Existing Paid Time Off or Vacation Policies

We have received many questions from employers asking many versions of the same question: If my voluntary PTO or leave policy is more generous than the 40 hours per year required by MEPL, do I need to do anything to prepare for January 1? The short answer is yes. If you are a covered employer under MEPL, you should be taking steps now to adopt a new policy and create a separate leave “bank” of MEPL. Although there has been discussion about the fact that MEPL does not contain provisions similar to the ME or Federal Family and Medical Leave Acts stating that the leave is “job-protected,” or any explicit provision prohibiting retaliation based on the use of this law, employers would be ill-advised to assume that the law has no “teeth.”

MEPL itself references fines if MDOL investigates and finds that an employer is not compliant with the law. In addition, as the MDOL points out in its Responses to Public Comments document,

The Earned Paid Leave Act does not contain an explicit prohibition against retaliation . . . [but] depending upon the specific situation, workers who believe they have been retaliated against for reporting violations of the Earned Paid Leave Act to their employers may have protections under the Whistleblowers’ Protection Act (WPA), 26 M.R.S. §§ 831-840. In those cases, workers may file a complaint with the ME Human Rights Commission for such alleged retaliation.

For example, it is easy to conceive of a scenario of an employee facing performance issues, employment discipline, or even employment termination, “reporting” employment discipline as alleged retaliation for taking MEPL leave. The employee also could “report” other minor, more technical violations of the law’s accrual, carryover, or eligibility provisions. Any employment discipline or other adverse employment action that followed may be argued to constitute retaliation under the Whistleblowers’ Protection Act. In short, because MEPL leave is guaranteed under the law, even if it does not create a separate cause of action or have explicit retaliation provisions, employers should ensure that they have a policy regarding MEPL leave, are providing, and tracking use of MEPL leave.

Further, in order to comply with MEPL, your existing paid leave program must comply with at least the statutory requirements of MEPL, including providing leave for any reason (not just sick leave), providing leave to all part-time, temporary, and regular employees, accruing at the rate of at least 1 hour for every 40 worked, and carrying over from year to year as required by the law. By adopting a policy that follows all the detailed requirements of the law and tracking MEPL separately, employers can ensure they are complying with all of these requirements. Of course, this does not mean that employers need to add an additional 40 hours of leave to their existing leave programs. Employers should review their existing leave benefits, and, absent a collective bargaining agreement, which is outside the scope of this client alert, employers can reduce or recharacterize certain leave time as MEPL.

Trap for the Unwary: Seasonal Employers

Employers also should keep in mind that the definitions of a covered employee and employer track the definitions of ME’s existing Unemployment Compensation law, 26 M.R.S. Chapter 13. For example, employers can only exclude certain seasonal employees from MEPL leave only if they meet the definition for unemployment purposes and have submitted the required report to the Bureau of Unemployment Compensation setting out the applicable seasonal period.

Bottom Line

Employers with more than 10 employees should be reviewing their leave policies now to make sure that they comply with MEPL. Bernstein Shur’s Labor and Employment Practice Group can provide template leave policies and review your existing policies to help you get ready for January. Feel free to contact us and we will be pleased to assist you.