Last year, Governor Mills signed into law Maine’s Earned Paid Leave act. This law requires all small businesses with 10 or more employees to provide up to 40 hours of Paid Leave annually to all employees.
The new law goes into effect on January 1, 2021. Here is what we know!
- Effective January 1, 2021, Employers with 10 or more employees must offer earned paid leave to all employees.
- Employees may earn 1 hour for every 40 hours worked up to 40 hours per year max.
- May be used for sick, vacation, personal, emergency time.
- This is a MINIMUM requirement. Employers may (and many do) offer a more substantial time off package. If you have an existing plan in place and it meets the minimum requirements, you’re in compliance!
- A written policy will become very important!
- All employers with 10 or more Maine employees are required to offer Earned Paid Leave. This is 10 bodies, not 10 FTE or any other count of employees.
- Common ownership rules apply. If you own two businesses with a total of more than 10 employees, you are required to offer earned paid leave to all employees.
- Seasonal businesses (open less than 120 days a year) who are specifically designated by the DOL are exempt. This is an uncommon designation, so be sure before you think you’re exempt.
- All classes of employees are included – full-time, part-time, seasonal, per diem, temporary, etc.
Tracking Earned Time
- You may give employees a lump sum of 40 hours at the beginning of the year OR accrue with every payroll (recommended)
- For each hour worked (including overtime), employee earns 0.025 hours of earned time
- 40 hours worked = 1 hour earned time
- Earnings are capped at 40 hours per year.
- Make sure you have a good system in place. Talk to your payroll provider!
- Paper Trails will track Earned Paid Leave for our clients at no charge.
Using Earned Time
- Employees may use Earned Time for any reason, including unexpected illness, vacation, personal time, emergency, bereavement, etc.
- Earned time must be paid at the same rate as normal pay.
- Tipped employees are paid at minimum wage.
- Employer may require employee to work 120 days before using any time.
- Employees may be required to give up to 4 weeks notice for non-emergent leave.
- Employees should notify employer as soon as practical for emergent leave.
- Employer may deny non-emergent leave based on business need.
- Set a 1-year period and be consistent (calendar year, employee anniversary or other period based upon business need – think seasonal)
- Employees can carry over, but can still only earn/use 40 hours in the subsequent year.
- Payout on employee termination is determined by your policy.
- If you front load the 40 hours, you may deduct un-earned hours from employee with last paycheck (but you must track).
- Employers may require employees to use earned time in 1-hour increments.
- Employees who leave and return within one year are entitled to any earned time they were not paid out upon departure.
- Employees who leave and return within one year are not subject to the wait if they previously worked 120 days.
- Employer shall not deny an employee the right to use paid leave, but there are exceptions.
Be sure to Write a Good Policy!
HR rule #1: Consistency, consistency, consistency!!! Your policy should state: Eligibility (almost everyone), how time accrues, how time may be used, how to request time off, what happens when an employee leaves (payout or no), and who tracks this policy and who to contact in the event questions arise?
Paper Trails can help! We will write a compliant policy for you for $150. Contact us for more info.