On May 28, 2019, Maine Governor Janet Mills (D) signed into law a groundbreaking new statute requiring Maine employers (even small businesses) to provide paid time off beginning January 1, 2021.  The law is the first of its kind in the nation to require paid time off, for any reason, including vacation time.  Unfortunately, for employers, the law is short on specifics, leaving it to the state labor department to – hopefully – issue rules that will assist employers with many open questions about the their rights and obligations under the act.

Covered Employers and Employees

The law requires employers with 10 or more employees in the “usual and regular course of business for more than 120 days in any calendar year” to provide “paid leave.” Maine’s unemployment compensation laws generally determine who is a covered employee. Employees exempt from the Earned Leave Act include, but are not limited to, seasonal employees, agricultural labor, certain commission-only employees, direct sellers, and hairdressers or tattoo artists with booth rental agreements.  The law does not apply to employees covered by a collective bargaining agreement in effect on January 1, 2021, until expiration of the agreement. 

Accrual, Caps, and Carryover

Employees begin to accrue leave when employment begins at a rate of one leave hour for every 40 hours worked, which varies from the more common one leave hour for every 30 hours worked requirement found in many paid sick and safe time laws. Unless an employer chooses a higher annual limit, it must allow employees to accrue up to 40 hours of leave in “one year of employment.” There is no guidance on whether carryover of unused accrued paid leave is required, whether frontloading 40 hours annually is permissible or whether such frontloading relieves an employer of tracking accrual and/or carry-over.

Covered Uses and Using Leave

As noted above, Maine’s law allows employees to use leave for any reason. This differs from other state and local paid sick and safe time laws, which generally limit use to circumstances when an employee is sick, is a victim of domestic violence, sexual assault, or stalking, or needs to care for or assist a covered relative. 

Employers may impose a waiting period of 120 days before an employee may use accrued leave. The law does not expressly limit the number of hours an employee may use in a year, nor does it address whether an employer may require employees to use a minimum amount of leave for an absence. 

Absent “emergency, illness or other sudden necessity,” an employee must give “reasonable notice” to his or her supervisor of the intent to use paid leave.  Employees must schedule leave to prevent “undue hardship” on the employer, as “reasonably determined by the employer.”  The law, however, does not define, or provide any guidance as to the meaning of, the terms “reasonable notice,” “undue hardship,” “emergency,” “illness,” or “sudden necessity.”  This broad language suggests that an employee may provide limited notice to an employer of a need to use paid leave in a variety of circumstances.  There is likewise no guidance on whether a request for paid leave under the Earned Leave Act must comply with an employer’s customary notice procedures or whether an employer may require an employee to specify the leave’s duration.

The law is silent on whether an employer may request documentation to substantiate an employee’s need for paid leave.  As employees may use paid leave for any purpose, a request for such documentation may not be practicable depending on the reason the employee uses leave.  Conversely, there are no provisions in the law limiting an employer’s ability to ask for documentation of the need for paid leave.  

Payment for Leave

Employers must compensate employees for paid leave at “the same base rate of pay received immediately before taking leave.”  The law provides no guidance concerning what “base rate” or “immediately before taking leave” means. This language raises a number of important questions about how to pay employees who, e.g., receive commission, are paid a piece or service rate, or have multiple rates of pay for different services or “jobs” performed.

Furthermore, the law requires that employees receive the same benefits provided under the employer’s established policies pertaining to other types of paid leave when taking paid leave under the Earned Leave Act.  Thus, employers with existing PTO or other paid time off policies should look to these policies for guidance regarding employee benefits while on paid leave. Taking paid leave cannot result in the loss of any benefit accrued before the date on which the leave commenced, or affect the employee’s right to health insurance benefits on the same terms and conditions applicable to similarly situated employees. 

End of Employment Issues

The law is silent on whether unused accrued paid leave is forfeited or must be paid out when employment ends. It also does not address whether an employer must reinstate such leave if an employee is later rehired, or whether paid leave must follow an employee who is transferred.

Notice Requirements

An employer must post in a place accessible to employees a copy of the state-created poster regarding Earned Leave Act rights. The law is silent as to whether employers must provide any other kind of notice, or any related information on employee paystubs. 

Penalties, Damages, and Enforcement

Although original versions of the bill included explicit anti-discrimination and anti-retaliation provisions, the final version omits those provisions.  Similarly, the final bill contains no private right of action for violations; instead, it vests exclusive enforcement authority with the Maine Department of Labor, Bureau of Labor Standards. The Department may assess a forfeiture against any employer, officer, agent or other person who violates the law, which may not exceed $1,000 or the amount provided in law or rule as a penalty for the specific violation, whichever is less.  

What’s Next?

The Maine Department of Labor must adopt regulations to implement and enforce the law, including rules regarding the receipt, investigation and prosecution of complaints, but there is no hard deadline for when rules must be final or a mandate that rules address specific issues. It is hoped the Department addresses the numerous uncertainties addressed above, and other relevant issues, such as:

• Can employers use a calendar year or another employer-specified 12-month period for purposes of determining what is “one year of employment” or must each employee’s anniversary date be used?
• How does the law impact employers with existing PTO or other paid leave policies?
• How do employers calculate accrual for overtime-exempt employees whose hours may not be tracked?
• Can employees be disciplined for misusing paid leave or failing to follow an employer’s reasonable notification policies?

In the interim, businesses with Maine operations should monitor the Department’s website for guidance and regulations. Employers with multistate or nationwide operations should keep an eye out for a similar new law in Nevada that the governor has committed to signing, as well as proposed amendments to New York City’s Earned Safe and Sick Time Act that would require employers to provide “personal time” in addition to paid sick and safe time.