Paper Trails

Understanding Maine Labor Laws

For small to medium-sized businesses in Maine, current and forthcoming labor laws can turn running a business into a compliance nightmare.  While compliance with labor laws is a legal requirement, it also is critical for responsible business management. Understanding these laws creates a fair, safe, and legally sound workplace. In this article, we will cover some pressing Maine labor laws, the impact to small businesses, and how your business can remain in compliance.

For help with Maine labor laws, small to medium-sized businesses can turn to local resources to stay informed and compliant.  That is why, at Paper Trails, we take our responsibilities seriously and work to educate and train employers like you on their requirements.  This article is intended to do just that.  Let’s get started!

Maine labor laws

Like most states, Maine has many complex labor laws that employers must navigate in addition to their other responsibilities. These regulations are designed to protect workers and ensure fair employment practices. For employers, especially in small to medium-sized businesses, staying on top of these rules can be a challenge. As legislators continue to pass new legislation, the landscape of employment law in Maine is constantly evolving, adding additional complexities to an already challenging field.  Let’s take a look at some key labor laws in Maine.

Important Maine Labor Laws

Workers’ compensation

Workers’ compensation is a non-negotiable aspect of Maine labor laws. Every business with 1 or more employee must have workers’ compensation insurance.  It requires employers to provide insurance for employees injured on the job. This law is vital for protecting both employees and employers.  For employees, it ensures that they receive necessary financial assistance if injured on the job.  For employers, it allows them to be protected from potential lawsuits.

Employers can choose traditional workers’ comp plans, or can go with the pay-as-you-go model.  Each model has distinct advantages and disadvantages.  You can read a full article here on each type of workers’ comp plan.  In order to stay in compliance, businesses must work with insurance companies to offer some type of workers’ comp insurance to employees.  Employers without this insurance could be found guilty of a Class D crime, and subject to a civil penalty of up to $10,000 or an amount equal to 108% of the premium that should have been paid during the period the employer failed to secure coverage.

Maine earned paid leave

The Maine earned paid leave law is a big step for employees, mandating paid leave that can be use as needed. Compliance with this law demonstrates a business’s commitment to employee wellbeing and work-life balance.

The earned paid leave law requires employers with 10 more employees to offer a minimum paid time off to those employees.  Employees must accrue at least 1 hour of paid time off for every 40 hours worked.  This is a minimum requirement and employer can, and many do, offer a more expansive paid time off plan.  In order to remain in compliance with this requirement, you should have an paid time off policy included in your employee handbook.  You can read more about the Maine paid leave law here.

Maine vacation payout requirement

Maine’s vacation payout requirement mandates fair compensation for accrued vacation time upon employee separation. Employers with 10 or more employees must pay out any unused, accrued vacation time no matter the reason of separation.  You can read the full requirements of the vacation payout law here.

In order to stay in compliance, be sure to payout any unused, accrued vacation time to your employees no later than the next pay day when they leave your organization.  These requirements only apply to vacation time, so if your business has a PTO policy, or earned leave policy, you are not required to pay this time out.

Maine family medical leave (FMLA)

Maine’s FMLA policy broadens the scope of the federal FMLA, offering more comprehensive protections. Businesses must thoroughly understand these expanded provisions to manage employee leaves appropriately.  To stay in compliance, those businesses that fall into one of the following categories must offer Maine FMLA to their employees:

  • With 15 or more workers at one location,
  • Any state agency, or
  • Any city, town or municipal agency that has 25 or more workers;

Employees must have worked for the same employer for 12 months in a row before taking this leave.  This leave is can be used when:

  • Employees or spouse, domestic partner, child, domestic partner’s child, parent, or sibling who lives with the employee, has a serious health condition
  • An employee, their spouse or domestic partner are giving birth to a child (covers both fathers and mothers)
  • The employee, or their spouse or domestic partner is adopting a child who is 16 or younger
  • An employee is donating an organ for transplant
  • Employees have a family member who dies or is seriously injured in military service

This leave is unpaid, and employees must be able to return to work in a position equal or higher in pay, benefits, and responsibilities.  For more information on Maine FMLA, check out this page.

Maine’s retirement program – MERIT

Under Maine’s retirement law, employers with 5 or more employees must offer an employer-sponsored plan or enroll their covered employees in a state run ROTH IRA.  This program will be implemented starting in January of 2024, with all businesses with 5 or more employees needing to be in compliance by June 3oth.  Penalties for non-compliance on a per employee basis will start in 2025.

To stay in line with these requirements, businesses should look into offering a tax-qualifying employer-sponsored plan.  These plans do come with a cost to employers, but offer tax savings and can be great for attracting and retaining top employees.  If offering an employer plan is not right for your business, then you must enroll your employees in the state plan and begin an automatic 5% payroll deduction from their paycheck.  Employees will then have the option to change the contribution amounts, or opt-out all together.  You can find more information on this program and its’ impact here.

Maine paid family leave (PFML)

The forthcoming Maine Paid Family Leave law represents a significant shift in employee rights. Proactive compliance with this law will be crucial for businesses to support their employees during critical life events.  Under this law, employers in Maine will need to withhold a payroll tax from their employees, and in some cases, contribute a percentage of wages to the Maine state run paid family leave program.  To stay in compliance, employers with 15 or less employees only need withhold a certain percentage of employee pay to fund this program.  Employers with more than 15 employees with need to withhold and match this amount.  Finally, employers can opt-out of the program if they offer comparable private paid leave to their employees.

Employees can use this leave to receive a portion of their wage for up to 12 weeks.  At this time, the leave is not limited to employees’ own conditions or conditions of a direct family member. This means that the plan permits employees to take leave to care for an individual with whom they have “a significant personal bond that is or is like a family relationship regardless of biological or legal relationship.”  While there is still more details to come on this program, you can read what we know so far here.

Maine labor law posters in the workplace

Displaying up-to-date labor law posters in the workplace is an essential aspect of compliance. These posters serve as an educational tool, ensuring that both employees and employers are aware of their rights and responsibilities under the law.  You can download free copies of these posters on our website here.


In summary, adherence to Maine labor laws is fundamental to the success of any business. Compliance not only fulfills legal obligations; it reflects a commitment to your business practices and respect for your employees. For businesses in Maine, seeking guidance from local compliance experts like Paper Trails is a wise step towards achieving and maintaining this compliance.  Contact our team here to learn how we can help!