When you operate a business, there are many regulations that you must follow. Both federal and state governments regulate what businesses need to do to stay in compliance. In this article, we will review what is required of a Maine employer.
Federal requirements of employers
Before we dive into Maine requirements, let’s take a look at what is required at the federal level for all employers. These apply to all business, regardless of the state in which they operate.
The first things employers must be aware of is their payroll tax responsibilities. There are two things employers must do in terms of taxes.
- deduct a portion of employees pay to pay the tax liability on their behalf. This includes:
- federal and state income tax based on your employees W4 form.
- the employee portion of social security and Medicare taxes.
- pay the company share of payroll taxes on each employee. This includes:
Employee classifications and overtime
Next, employers must know how to classify their employees correctly. Employees must either be classified as a W-2 employee or a 1099 independent contractor. For those employees that are W-2 employees, employers must decide whether the employees will be non-exempt or exempt employees. Differences between these two types of employees can be found here.
For those employees that are classified as non-exempt, federal requirements state that employees must receive overtime pay for hours worked over 40 in a workweek at a rate of 1.5 times their regular rates of pay. Furthermore, employees who work multiple positions with multiple pay rates must be paid using the blended overtime method.
Federal labor laws
There are certain federal labor laws that must be followed depending on the size of an organization. Labor law posters must be displayed in the workplace in an area visible to employees. These laws include:
Employers with 1+ employee
- Fair Labor Standards Act (FLSA)
- Immigration Reform and Control Act (IRCA)
- Equal Pay Act
- Civil Right Act & Title VI
- Employment Retirement Income Security Act (ERISA)
- Occupational Safety and Health Act (OSHA)
- Health Insurance Portability and Accountability Act (HIPAA)
- Uniformed Services Employment and Reemployment Right Act (USERRA)
- National Labor Relations Act (NLRA)
- Employee Polygraph Protection Act (EPPA)
- Worker Adjustment Retraining Notification Act (WARN)
- EEO-1 Survey Filing (Title VII, Civil Rights Act)
What is required of a Maine employer?
In addition to the above federal regulations that employers must follow, Maine has their own set of labor requirements.
Employers in Maine must pay their workers at least the minimum hourly wage or minimum weekly salary threshold. Non-exempt employees are paid at least a minimum of $13.80 per hour in 2023. Tipped workers must earn at least $6.90 per hour for the hours in which they are performing tipped worked (read this article for more clarification on this topic). Exempt, or salaried, employees in Maine must earn at least $796.17 per week in 2023. To be considered eligible to be an exempt employee, there are certain duties tests that must be met.
The State of Maine requires all business with one or more employees to purchase workers’ compensation insurance. Maine allows employers to purchase through private companies and has strict penalties, such as a penalty of up to $10,000, for non-compliance. Generally, benefits received from workers’ compensation insurance are not taxable. Only a portion of benefits may be taxed if employees are also receiving Social Security Disability Insurance (SSDI) benefits. From a business standpoint, employers may deduct insurance premiums on their tax returns. The insurance is used to cover things like:
- Lost wages
- Medical bills
- Job retraining
- Disability benefits
- Funeral services
Each business pays a different premium for workers compensation insurance. The final amount is based on the business’ gross paid wages and employee job classification codes.
Maine labor laws
Just like federal labor laws, Maine has laws that businesses of certain sized must adhere to.
Employers with 5+ employees
How Paper Trails can help
At Paper Trails, we work with your business to not only pay your employees in a timely and accurate manner, but to be the resource your business needs to navigate all of these, and any upcoming, challenges. Our team of dedicated payroll and HR experts will work side-by-side with you to make sure your business is always in compliance. You can download our HR Compliance Guide here or contact us today to learn more.