Trends in Labour and Employment in Maine

The State of Maine continues to experience significant shifts in labour and employment practices as the trend towards employee-friendly workplace cultures, policies, and laws in the state, for the most part, moves forward. Given the diverse economy in the state, Maine’s labour and employment landscape often undergoes shifts. Current shifts appear to be moving toward employee-friendly laws and appear to reflect the social beliefs of an increasingly diverse and younger workforce. These shifts also appear to be the result of the growth of technology companies and startups that are adding to traditional industries such as forestry, fishing, and tourism in the state. This article examines the key trends and legislative initiatives currently shaping labour and employment in the State of Maine.

Between recently passed laws in 2023 and pending legislation in 2024, Maine is experiencing a significant trend towards employee-friendly laws becoming effective in the state. Employers that do not recognise and comply with these new or expanding state laws may become subject to penalties and fines, which can be significant, as well as lawsuits. Employers that are either considering opening a location in Maine or employing individuals who will be working remotely in Maine, which is a trend that appears here to stay, also need to be aware of the myriad of effects of these new laws, including the potential for increased liability for employers in the state.

Stronger move towards unionised workforces

The changing workforce demographics in Maine have led to an uptick in employee unionisation in the state, particularly in industries such as healthcare, education, and retail sales. At least in part, this uptick appears to be the result of an overall increase in awareness and support for labour rights in the state, the liberal trend in the legislature, and an increase in social activism, particularly by younger workers coming to the state. Employees also increasingly appear eager to share the terms and conditions of employment with co-workers in order to collectively work together to improve those terms and conditions. 

On their end, employers appear to be more inclined than in years past to voluntarily recognise unions supported by a majority of employees. Employers likely find voluntarily recognition simpler than engaging in an often costly and lengthy anti-union campaign against employees. An employer’s choice to voluntarily recognise a union also can often result in a smoother and shorter process when the union and employer engage in bargaining over the initial union contract.

Potential ban on non-compete provisions

Employers breathed a sigh of relief on 29 March 2024, when Governor Janet Mills vetoed a bill entitled An Act to Prohibit Noncompete Clauses, a veto that was sustained by the Maine legislature on 2 April 2024. The proposed law would have led to a near statewide ban on non-compete provisions. In her veto letter, Governor Mills called non-compete provisions “a critical tool” in preventing employees from taking advantage of their former employers and highlighted a largely negative response from employers across the state. Governor Mills also stated that she found “no evidence” that the state’s current statute restricting non-compete provisions was inadequate.

Despite this, employers in Maine are carefully monitoring the status of the final rule on non-competes issued by the Federal Trade Commission (FTC) on 23 April 2024. That rule, if it becomes effective, bans employers’ use of all non-compete provisions in agreements, with limited carveouts. The FTC rule is scheduled to go into effect 120 days after it is published in the Federal Register, or 4 September 2024. Importantly, the rule will supersede all state and local laws – including the current Maine statute on non-competes – unless they provide greater protection to employees. 

However, there is hope on the horizon for employers using non-compete provisions. Specifically, the US Chamber of Commerce and other groups have already filed suit challenging the rule and requesting an injunction preventing enforcement of the rule while litigation is pending. While awaiting rulings from the courts in this litigation, employers are reviewing their existing agreements that include non-compete provisions, as well as other restrictive covenants such as non-solicit and non-disclosure provisions, to determine whether they will need to make significant changes if the rule stands.

Increase in salary threshold for exempt employees

The US Department of Labor (DOL) issued a long-awaited rule for the new salary levels for administrative, professional, executive, and highly compensated employee exemptions under the Fair Labor Standards Act (FLSA). The rule significantly raises the salary threshold for employees to be considered exempt from overtime pay to a level higher than originally forecasted. This will affect Maine employers because, while the annualised salary threshold under Maine law is currently USD42,450, which exceeds the federal threshold under the FLSA, that amount will fall below the new salary threshold of USD43,888 effective 1 July 2024, at which point Maine employers will have to use the new federal threshold rather than the state threshold. Employers expect the rule to be challenged in court and should carefully monitor this litigation. If the rule moves forward, employers will need to review their exempt employees and determine whether these salary increases are management or whether employees will need to be transitioned to non-exempt status.

Increase in statutory damages caps already above federal limits

The Maine Human Rights Act (MHRA) generally prohibits discrimination or harassment in employment because of race, colour, sex, sexual orientation, age, physical or mental disability, genetic predisposition, religion, ancestry, gender identity, and national origin, along with other protected characteristics. The statutory damages caps on compensatory and punitive damages under the MHRA have recently been higher than the caps under the corresponding federal laws. However, on 22 June 2023, the legislature passed An Act to Increase the Limits on Awards for Compensatory and Punitive Damages Under the Maine Human Rights Act. 

This Act became effective on 19 September 2023, and significantly increased the statutory caps on awards under the MHRA to between USD100,000 and USD1 million depending on the size of the employer as follows:

• 15–100 employees – USD100,000 from USD50,000;
• 101–200 employees – USD300,000 from USD100,000;
• 201–500 employees – USD500,000 from USD300,000; and
• more than 500 employees – USD1 million from USD500,000.

This increase is expected to lead to larger jury verdicts and/or larger settlement demands from plaintiff’s counsel and expose employers to greater financial risk in discrimination cases. This new legislation also passed after recent caselaw in the US District Court for the District of Maine and the US Court of Appeals for the First Circuit where the courts held that “stacking” of damages under the MHRA and corresponding federal laws is allowed, so that plaintiffs may be able to recover damages under both state and federal law for the same claims.

Broadening of equal pay law to include race

On 22 June 2023, Governor Mills signed An Act to Amend the Maine Equal Pay Law by Prohibiting Pay Discrimination Based on Race. This Act expands the state’s equal pay law to prevent pay discrimination based on race as well as sex. This Act also follows case law in the US District Court for the District of Maine and the US Court of Appeals for the First Circuit where the courts essentially held that employers are strictly liable under the law with only limited specific exceptions that will infrequently apply – specifically, established seniority systems or merit increase systems or difference in the shift or time of day worked are the only exceptions allowed for differential pay. This revision is expected to lead to a heavy influx of equal pay litigation in the state.

Expansive paid FMLA law enacted

On 11 July 2023, the Maine legislature joined other states when it passed An Act to Implement the Recommendations of the Commission to Develop a Paid Family and Medical Leave Benefits Program. The Act implements a paid family and medical leave benefits programme based on the recommendations of the Commission to Develop a Paid Family and Medical Leave Benefits Program established by a prior Maine Legislature. The programme is one of the most expansive paid leave programmes in the US and may be costly for employers to implement.

On 22 May 2024, the Maine Department of Labor (MDOL) released proposed rules for administration of the programme. Public comments on the proposed rules are due by 8 July 2024. In March 2024, Governor Mills appointed a 15-member board to monitor the programme’s solvency and make recommendations on programme rules.

The programme will provide nearly all public and private sector employees up to 12 weeks of family leave and up to 12 weeks of medical leave to eligible covered individuals, with the maximum weekly benefit amount capped at 120% of the state average weekly wage and 90% of the individual’s average weekly wage. The Act requires that payroll contributions by employers begin on 1 January 2025, with benefit claims to be processed beginning 1 January 2026. The proposed rules contain comprehensive requirements and factors that allow an employer to deny leave based on undue hardship to its operations.

The programme offers paid medical leave in the event of an employee’s serious health condition, as well as paid family leave for employees caring for individuals with a medical condition, paid family leave for bonding with an employee’s child after birth or adoption, and safe leave for employees who have experienced violence, sexual assault, assault, or stalking, among other things. A family member is defined broadly under the law to include an individual with whom an employee has a “significant personal bond that is or is like a family relationship, regardless of biological or legal relationship”. Employers are hoping for additional clarification on this definition as well as other items through rule-making or guidance.

The programme allows employees to take intermittent leave in blocks of no less than eight hours. An employee’s right to accrue vacation time, sick time, bonuses, advancement, seniority, length of service credit, or other employment benefits, plans, or programmes may not be affected by the employee taking leave. Employers must continue to pay the employer portion of health benefits during the leave period.

Employers that offer “comparable” private paid leave plans may apply to the administrator to opt out of the programme, as long as the private plan does not impose a cost to employees greater than the payroll tax under the state programme. Employers will have to carefully determine whether private leave programmes are “comparable” to ensure they confer the same breadth of protections and benefits as the state programme. While employers will be required to contribute to the state programme starting on 1 January 2025, they will not be permitted to switch to a private programme until the spring of 2026. Employers are hoping that the proposed rules are revised to allow them to opt out of the state programme before contributions begin.

Employers also must post a workplace notice of the benefits available under the programme and must issue written notice to each employee within 30 days of the start of employment, which notice must include an explanation of benefits as well as information on employees’ rights and obligations. This programme is one of the most generous state-managed paid leave programmes in the country and employers will need to consider their options and act well before claims begin being processed in 2026.

Civil actions for sexual harassment and related claims in employment

Effective 4 June 2023, the legislature passed An Act to Ensure Accountability for Workplace Sexual Harassment and Sexual Assault by Removing Certain Intentional Torts from Workers’ Compensation Exemptions. This Act revised Maine’s workers’ compensation law to allow employees to bring civil actions for work-related intentional acts and omissions. Previously, Maine law required employees to pursue such claims under Maine’s workers’ compensation law. The Act also makes clear that an “employee, supervisor, officer or director” of an employer also can be liable for “sexual harassment, sexual assault or an intentional tort related to sexual harassment or sexual assault”. This expands the potential scope of vicarious liability for an employer for unlawful conduct by supervisors or agents.

What does this mean for employers?

As Maine moves towards employee-friendly workplace cultures, policies and laws, current Maine employers must – more than ever – stay informed and adapt to maintain compliance with these new and expanded laws. Similarly, potential Maine employers must ensure they consider this myriad of new and expanding laws when planning and budgeting for their move into the state.