Maine HR Compliance: A Complete Guide

Running a small business in Maine involves managing your team, serving your customers, and trying to grow — all while keeping up with state and federal employment laws. HR compliance probably wasn’t what you had in mind when you started your business, but small business owners cannot experience success without keeping their businesses in line.

At Paper Trails, we’re here to help small businesses feel less overwhelmed by payroll, HR, and compliance. This guide breaks down what HR compliance actually means, why it matters, and how you can build systems that protect your business — and your people.

Whether you’ve got five employees or 500, this article will walk you through:

• The key areas of HR compliance in Maine
  
• Employment laws every employer should know
  
• Common mistakes to avoid
  
• Strategies to make compliance less stressful
  

Let’s take the mystery (and fear) out of HR compliance.

Importance of HR compliance for Maine businesses

HR compliance might not be the flashiest part of running a business, but it’s one of the most important. Let’s dive into what HR compliance is and why it is important.

What is HR compliance?

HR compliance is the process of making sure your business follows certain labor laws, workplace regulations, and employment standards set forth at the federal and state levels. That includes things like minimum wage, overtime, safety requirements, non-discrimination rules, employee documentation, and so much more.

But beyond just “following the law,” HR compliance is also about building a better workplace. When you treat your employees fairly and document your processes properly, you reduce legal risk, improve retention, and create a stronger foundation for growth.

Why is HR compliance important?

There are many reasons for keeping your business in compliance. The cost of getting it wrong can be high. Non-compliance can lead to:

• Fines and penalties from agencies like the DOL or IRS
  
• Lawsuits from employees
  
• Reputational damage
  
• Lost productivity and trust among employees
  

And maybe even more importantly, staying compliant helps you run a better business. It builds trust with your team and ensures that all employees are being treated fairly and consistently.

Key areas of HR compliance in Maine

Understanding the areas of compliance that affect your business is the first step in protecting it. While many employment laws are set at the federal level, Maine has its own specific regulations that employers must follow. Below, we’ll break down the core areas where businesses in Maine must stay compliant.

Maine wage and hour laws

Monitoring employee wage and hour laws is a key part of HR compliance. For Maine businesses, staying on top of state-specific minimums, exemption rules, and payment timing is essential to staying compliant.

Minimum wage

Let’s start with the basics: all businesses are required to pay their non-exempt employees at least the state minimum wage. While the federal minimum wage is still $7.25 per hour, most states — including Maine — set their own, higher rates.

As of January 1, 2025, Maine’s wage thresholds are:

• Statewide Minimum Wage for non-exempt employees: $14.65 per hour
  
• Rockland and Portland Minimum Wage for non-exempt employees: $15.50 per hour
  
• Tipped Minimum Wage (Statewide): $7.33 per hour
  
• Tipped Minimum Wage (Rockland and Portland): $7.75 per hour
  
• Minimum Salary for exempt employees in Maine: $845.21 per week

So, what is the difference between exempt and non-exempt employees?

Employees fall into two primary categories when it comes to how they’re paid: exempt and non-exempt.

• Non-exempt employees are paid hourly and must receive overtime pay (1.5x their hourly rate) for any hours worked over 40 in a 7-day workweek. Blended overtime is required for those employees who work multiple positions with multiple rates of pay.
• Exempt employees are paid a salary and do not receive overtime pay. But to be considered exempt, employees must meet specific job duty requirements, called EAP exemptions, and be paid at least the weekly salary threshold—$845.21/week in Maine for 2025.

Here’s a quick comparison:

It’s important to classify employees correctly. Misclassification is one of the most common compliance mistakes we see — and it can lead to big fines and back pay.

Tipped employee compliance

Restaurants and other service-based businesses that employ tipped workers have some extra compliance responsibilities — and it’s important to get them right. In Maine, the 2025 tipped minimum wage is $7.33 per hour ($7.75 in Portland/Rockland) and employers are allowed to take the FICA tip credit as long as the employee’s total earnings (hourly wages + tips) meet or exceed the full minimum wage of $14.65 per hour for each shift.

Additionally, overtime rules still apply. If a tipped employee works more than 40 hours in a 7-day period, they must be paid time and a half based on the full minimum wage, and then the tip credit can be applied. In 2025, that means:

• Overtime rate = $14.65 x 1.5 = $21.98/hour
  
• Minus the tip credit = $21.98 – $7.33 = $14.65
  
• Employer must pay at least $14.65/hour for each overtime hour

What about tip pooling?

Tip pooling is allowed in Maine — but only under specific circumstances. If you want to include back-of-house employees like cooks or dishwashers in a tip pool, you must pay everyone (including servers) the full minimum wage. The tip credit can’t be used in this case. If just the servers and bartenders are in the tip pool, then the tip credit can be used.

And here’s a big one: managers, supervisors, and employers cannot participate in the tip pool. The only tips they’re allowed to keep are those they solely and directly earned from their own tipped work.

According to the U.S. Department of Labor, someone is considered a manager or supervisor if they:

• Manage a business or department as their primary duty,
  
• Regularly direct the work of at least two employees, and
  
• Have authority to hire or fire (or their input is given significant weight)
  

Maine businesses in the hospitality industry should make sure tip practices are clearly documented and that managers and staff understand the rules. Tip compliance is another common area where we see employers trip up—but with the right setup, it’s easy to stay on the right side of the law.

Child hour laws in Maine

Maine has strict child labor laws to protect minors in the workforce. These laws cover when young people can work, what jobs they can perform, and whether a permit is needed.

Minors under 16 can only work:

• Between 7 a.m. and 7 p.m. during the school year
• Between 7 a.m. and 9 p.m. during summer vacation
• Not during school hours

Minors 16–17 can work:

• After 7 a.m. on school days / after 5 a.m. on non-school days
• Until 10:15 p.m. before a school day / until midnight if no school the next day
• Not during school hours (for minors under 17)

Always check that you have the right permits and documentation in place before hiring minors, and keep detailed records of their hours.

Other wage-related requirements in Maine

• Payment of Wages: Employers must pay employees at regular intervals — no less often than every 16 days. Each paycheck must include all wages earned up to 8 days before the pay date.
  
• Severance Pay: If your business has 100 or more employees and closes or relocates a facility, you must provide severance pay to affected employees. The requirement: one week’s pay for every year of service.
  
• Rest Breaks: Employees must receive a 30-minute unpaid rest break after working 6 consecutive hours. However, this requirement doesn’t apply if:
  
  • There’s an emergency threatening health, safety, or property
  • Fewer than three employees are working, and the nature of the job allows for frequent informal breaks

Workplace safety regulations

Providing a safe and healthy work environment is another key legal requirement. Maine employers are required to follow state and federal safety laws designed to protect employees from workplace hazards.

Workers’ compensation insurance

One of the core requirements is workers’ compensation insurance. All public and private employers in Maine must maintain this insurance to cover medical expenses and lost wages when employees experience work-related injuries or illnesses. The following are some items that are potentially covered by this insurance:

• Lost wages
• Medical bills
• Rehabilitation
• Job retraining
• Disability benefits
• Funeral services

Failing to carry workers’ comp coverage can result in steep penalties and personal liability for business owners.

Occupational Safety and Health Administration (OSHA)

Maine also requires employers to follow Occupational Safety and Health Administration (OSHA) guidelines. While smaller businesses may not face regular inspections, they are still responsible for maintaining a safe workplace and documenting incidents. This includes posting required safety notices, offering training where needed, and taking immediate action on known hazards.

If an employee reports unsafe working conditions, they are protected under whistleblower laws and cannot be retaliated against for bringing forward a concern.

Non-discriminatory practices

Employers must be aware of both federal and state anti-discrimination and anti-harassment laws.

Under Maine law, it is illegal to discriminate against employees or job applicants based on:

• Race or color
• National origin
• Religion
• Sex or pregnancy
• Disability
• Age
  

These protections extend across the entire employment lifecycle — from recruitment and hiring to decisions about promotions, discipline, and termination. Employers should ensure their hiring processes are free from bias and that all employment decisions are documented and based on job-related criteria.

In addition, employers are required to maintain a harassment-free workplace. This includes creating policies that prohibit harassment, offering training, and clearly communicating how employees can report concerns. Investigations into complaints should be handled promptly and thoroughly.

Employee benefits compliance

Benefits can be a huge asset when it comes to attracting and retaining employees — but they also come with important responsibilities.

Earned Paid Leave

In Maine, businesses with more than 10 employees are required to offer earned paid leave. Employees must accrue at least 1 hour of paid leave for every 40 hours worked. This leave can be used for any reason, making it one of the most flexible policies in the country. Employers must also ensure that leave accrual and usage are tracked properly and communicated clearly to employees.

Vacation Time Payout

If your business offers vacation time, be aware that Maine law requires payout of unused, accrued vacation time at the time of separation — regardless of the reason for departure. This applies to employers with 10 or more employees.

Paid Family & Medical Leave (PFML)

Beginning January 1, 2025, Maine’s PFML program takes effect. This new state-run program provides paid time off for qualifying family and medical reasons. Here’s what employers need to know:

• All Maine employees contribute a 0.5% payroll tax
  
• Employers with 15+ employees must match this 0.5% contribution
  
• Employers are responsible for withholding and remitting these taxes and must provide notice to employees about the program
  

Retirement Plan (MERIT)

Maine has also introduced the Maine Retirement Investment Trust (MERIT). If you are a covered employer and do not already offer a retirement plan, you are required to enroll your employees in this state-sponsored savings program. Employers who offer their own qualified retirement plans are exempt, but must file proof of exemption with the state.

Health Insurance Compliance

While Maine does not mandate private employers to offer health insurance, federal law does apply: businesses with 50 or more full-time equivalent employees are required to offer affordable health insurance that meets minimum essential coverage standards. Failure to comply with this Affordable Care Act (ACA) requirement can result in IRS penalties.

Offering benefits can be a powerful tool — but make sure you’re clear on the rules to avoid compliance missteps.

The role of HR in maintaining compliance

HR plays a critical role in keeping your business compliant. Whether you’re a small business owner wearing the HR hat yourself or have a dedicated HR manager, this function is responsible for understanding and applying federal and state employment laws, maintaining accurate documentation, and building workplace policies that protect both the business and its employees. HR ensures proper classification of workers, oversees wage and hour practices, administers benefits in line with regulations, and so much more. It’s a lot — but when done right, a strong HR foundation ensures your business can focus on what it does best, without fear of penalties, audits, or lawsuits.

Common HR compliance issues

Even well-intentioned businesses can run into trouble with HR compliance. Some of the most common mistakes we see include:

• Misclassifying employees as exempt when they don’t meet the job duty requirements
• Having minors work past legal hour limits
• Inaccurately calculating overtime and blended overtime rates
• Failing to pay out unused vacation time
• Withholding payroll deductions incorrectly
• Not displaying the most up-to-date labor law posters

Unfortunately, many businesses don’t realize they’ve made an error until it’s flagged during an audit or brought forward by an employee complaint. Staying ahead of these issues starts with awareness — and having the right systems and support in place.

Improper training practices

It’s not enough to just have HR policies — your team needs to understand them. A lack of proper training can quickly lead to compliance failures, especially when it comes to harassment prevention, safety procedures, and employee rights. Investing in management training and ongoing education helps ensure compliance is practiced.

Record-keeping errors

Accurate, timely recordkeeping is one of the most overlooked aspects of HR compliance. Whether it’s tracking time cards and paid time off, storing I-9s and tax forms, or documenting disciplinary actions, employers are required to maintain certain records — often for at least 3 years. Missing documents, incomplete employee files, or inconsistent payroll data can cause serious issues during an audit or investigation.

Strategies for improving HR compliance

With the right mindset and a few smart practices, getting HR compliance right can protect your business, support your employees, and stay ahead of changes before they become problems. Whether you’re handling HR yourself or have a small team, here are a few practical strategies to help you improve your compliance game.

1. Conducting regular audits

One of the best ways to avoid issues before they become real problems is by conducting regular internal audits. This could mean reviewing your employee classifications, checking time card accuracy, confirming that required labor posters are up to date, ensuring all personnel files include the necessary documents like I-9s, or updating policies to met the latest regulations.

Audits don’t have to be massive— even a quarterly check-in can help you stay proactive instead of reactive. Consider using a simple checklist to make this process more manageable.

2. Staying updated on legal changes

Employment laws are constantly evolving. In the past few years alone, Maine has introduced big changes like the PFML program and the MERIT retirement plan. Staying current on these changes is key to remaining compliant. 

Subscribe to state updates, follow trusted HR and payroll sources, and don’t underestimate the value of a local partner who knows the ins and outs of Maine law. You don’t need to be a legal expert — but you do need to stay informed and prepared to update your policies when necessary.

3. Leveraging technology in HR practices

The right technology can make a world of difference when it comes to staying compliant. A good HR and payroll platform (like isolved, for example) helps you automate key compliance tasks like: tracking paid leave accruals, securely storing employee documents, classifying employees, calculating overtime, generating reports, and managing benefits enrollment. It also creates a digital audit trail, which can be a lifesaver during a state or federal audit. 

4. Fostering a culture of compliance

At the end of the day, compliance isn’t just about checklists and policies — it’s about creating a workplace where everyone understands the rules, feels respected, and knows how to do the right thing. That’s what we mean by fostering a culture of compliance. When your team sees that you take things like safety, fairness, and accountability seriously, they’re more likely to do the same.

When compliance becomes second nature, your business isn’t just protected — it’s stronger, more trustworthy, and better positioned for long-term success.

Conclusion

HR compliance may seem complex, but with the right tools, knowledge, and support, it becomes a manageable — and even strategic — part of running your business. Remember, you don’t have to figure it all out on your own. At Paper Trails, we’re here to help you navigate compliance with confidence — so you can spend less time stressing about rules and more time growing your business. Contact us today for help!