Many states have already enacted legislation, or are in the process of putting legislation into place, regarding earned paid leave for employees. Whether or not your state requires you to offer earned leave, it is a great benefit to offer and will help in retaining your top employees. Maine’s Earned Paid Leave law went into effect in January of 2021. This law requires all small businesses in Maine with 10 or more employees to provide up to 40 hours of Paid Leave annually to all employees.
Below are the details regarding Maine’s Earned Paid Leave:
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.
This earned time may be used for sick, vacation, personal, or 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.
There are specific requirements that businesses must fall into for them to be required to comply with this law.
All employers with 10 or more employees are required to offer Earned Paid Leave. This is 10 bodies, not 10 full time equivalent (FTE) or any other count of employees.
Common ownership rules apply. Consequently, if you own two businesses with a total of more than 10 employees, you are required to offer earned paid leave to all employees of both businesses.
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
Creating a policy on how you will track this time off is critical. Below are some tips if you are providing the minimum 40 hours of earned time.
You may give employees a lump sum of 40 hours at the beginning of the year OR accrue earned time with every payroll.
For accrual purposes, employee earn 0.025 hours of earned time for each hour worked (including overtime). This accrual can be setup within a payroll system like isolved.
Every 40 hours worked = 1 hour of earned time.
Earnings are capped at 40 hours per year.
Decide whether employees can use time before it is accrued or only use the time off once it has been accrued.
Paper Trails will track Earned Paid Leave for our clients at no charge.
Using Earned Time
The Earned Paid Leave law also establishes rules on how earned time can be used. The rules are as follows:
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.
Employers may require employees 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.
Employers may deny non-emergent leave based on business need.
Additional Details of Maine’s Earned Paid Leave Law
Some additional notes and tips for your Earned Time policy include:
Set a 1-year period and be consistent (calendar year, employee anniversary or other period based upon business need – think seasonal)
Employers can allow time to carry over, but employees can still only earn/use 40 hours in the subsequent year.
Payout of earned time upon employee termination is determined by your policy.**Update** As of April 7th, 2022, Maine law requires the payout of unused, accrued vacation time (only vacation time) for employers with more than 10 employees. Read more here.**
If you front load the 40 hours, you may deduct un-earned hours from the employee with last paycheck (but you must have tracked earned time correctly).
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.
Employers shall not deny an employee the right to use paid leave, but there are exceptions.
HR rule #1: Consistency, consistency, consistency!!! Your policy should state: eligibility requirements (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.