On January 1, 2021, Maine becomes the first state in the nation to mandate that employers provide their employees with general-purpose paid time off. After over a year of rulemaking and review, the Maine Department of Labor has issued regulations interpreting the new statute. Expecting some certainty in how this law plays out, we are disappointed. The statute and implementing regulations leave many compliance questions unanswered.

The new law generally requires any employer with more than 10 employees to provide up to 40 hours per year of earned paid leave. Covered employees include full-time and part-time employees that are employed for more than 120 days. Seasonal employees will be exempt from the earned paid leave requirement. Employees under a collective bargaining agreement will be exempt only until the expiration of their current collective bargaining agreement.

Although employees begin accruing leave immediately on commencing employment, employers will retain the ability to set policies preventing the use of any leave until an employee has worked for at least 120 days. At a minimum, the law entitles a covered employee to earn up to one hour of paid leave for every 40 hours worked, including overtime hours. Salaried employees will be presumed to have worked 40 hours in a given week in the absence of records to the contrary. Employers that front-load paid time off accrual at the beginning of each calendar year or employment anniversary will eliminate some of the administrative burden created by this new law.

Employees are able to roll over unused time into the next year, with caveats. An employer is only required to permit accrual of up to 40 hours of earned paid leave in any given year and leave rolled over from the previous year will count towards the annual 40 hour requirement.

The law requires employers to permit employees to take the new earned paid leave in increments of at least one hour and to compensate employees on leave at the employee’s usual rate of pay, inclusive of commission and differentials. That rate is to be determined by the pay period immediately preceding the drawdown of leave. Also, the law permits employers to set requirements for reasonable notice of any non-emergency leave.

If an employer’s policies provide for the payment of unused paid time off at termination, accrued earned paid leave must be treated as “wages” and paid out at termination as well.

We are advising our clients to update time off policies to ensure that minimum accrual, rollover, and utilization standards are met in order to bring existing time off benefits into compliance with the new law. Otherwise, there is a risk that an employer will have to provide an additional week off from work.

Businesses still have time to ensure compliance prior to the law’s taking effect. The Bennett Law Firm is here to help your business navigate these changing requirements.