Quick Hits

• January 1, 2025, is the start date for payroll withholdings and submission of quarterly wage reports under the Maine Paid Family and Medical Leave Program.
• Employers may not apply for private plan substitutions until after April 1, 2025, and will be responsible for payroll contributions until their plans are approved.
• Employers with fifteen or more employees must contribute 1 percent of wages and may deduct up to half of this contribution from employee wages. Employers with fewer than fifteen employees will contribute 0.5 percent of wages and may deduct the entire amount from employee wages.

Payroll Contribution Amounts

Employers with fifteen or more employees must contribute 1 percent of wages and may deduct up to half of this contribution from employee wages. Employers with fewer than fifteen employees will contribute 0.5 percent of wages and may deduct the entire amount from employee wages. At present, the employee count includes the total number of persons on payrolls employed full- or part-time, including temporary and intermittent employees, and workers on paid sick leave or paid holiday. “Wages” includes all forms of compensation for personal services, such as regular salary, tips, commissions, bonuses, and severance pay.

Wages ‘Earned’ in Maine

To calculate payroll and MPFML contributions, the Maine Department of Labor (MDOL) recently explained that wage calculations will be based on a larger segment of employees who are not traditionally subject to the Maine unemployment contributions tax. The MDOL further listed four factors, taken in sequence, to determine whether wages are reportable in Maine for MPFML purposes:

1. Place Where Work Is Performed: If the employee performs all work in Maine, or if the work outside Maine is incidental (temporary or minor), then Maine law applies. If this does not apply, continue to next factor.

2. Base of Operations: If the employee performs work in Maine and other states, if the base of operations is in Maine, Maine law applies. The base of operations is the primary location from which the employee starts work and returns regularly. If this does not apply continue to next factor.

3. Place From Which Service Is Directed or Controlled: If the employee has no base of operations or no work is performed in the base state, but the service is directed or controlled from Maine, Maine law applies. This refers to the place of general authority rather than direct supervision. If this does not apply, continue to next factor.

4. Place of Residence: If none of the above criteria apply, and the employee performs work in Maine and other states, and resides in Maine, then Maine law applies. If none of the above apply, the employment is not reportable in Maine.

Employer Considerations

Employers, particularly those operating in other paid family leave jurisdictions, may want to consider the impact of this new law on their workforces and also the option for private plan substitutions, as the MDOL has made clear that internal leave policies, however generous, will not meet the requirements of the MPFML law. The MDOL is currently accepting comments regarding the second version of proposed rules for Maine’s Paid Family and Medical Leave Program through September 30, 2024, and is expected to issue revised rules prior to the start date for employer contributions.