The State of Maine is enacting more protective laws for its residents in the arena of employment law. It is worth reminding businesses of what’s to come in the near term and in the longer-term future of Maine employment laws. It is the second state in 2023 to set up a state-based paid family and medical leave program (see below). This blog is also meant to update about timing and wage updates quickly approaching in the new year and a reminder of longer-term changes to take place in 2025 and 2026.
Increase to Minimum Wage; Maximum Tip Credit; and Minimum Cash Wages for Tipped Employees:
Minimum Wage Increase
Pursuant to Maine statute Title 26, chapter 7, Section 664, Maine’s minimum hourly wage will increase from $13.80 to $14.15, effective January 1, 2024. Such increase is based on data available by the U.S. Bureau of Labor Statistics. Maine law, which was amended in 2016 in accordance with a citizens’ referendum, requires annual minimum wage adjustments based on the cost-of-living index for the Northwest Region. In Portland, Maine, the minimum wage will increase from $14.00 to $15.00, effective January 1, 2024.
The increase of the cost of living must be “measured by the percentage increase, if any, as of August of the previous year over the level as of August of the year preceding that year in the Consumer Price Index for Urban Wage Earners and Clerical Workers, CPI-W, for the Northeast Region, or its successor index, as published by the United States Department of Labor, Bureau of Labor Statistics or its successor agency, with wage increase rounded to the nearest multiple of 5c.” The statute provides further that “if the highest federal minimum wage is increased in excess of the minimum wage in effect under this section, the minimum wage under this section is increased to the same amount, effective on the same date as the increase in the federal minimum wage, and must be increased in accordance with this section thereafter.”
Maximum Tip Credit and Related Minimum Cash Wages for Tipped Employees
In accordance with the same Section 664, subpart 2, an employer can consider tips as part of the wages of a service employee, but such a tip credit may not exceed 50% of the minimum hourly wage established in accordance with Section 664. Note that an employer who elects to use the tip credit must inform the employee in advance and must be able to show that the employee receives at least the minimum hourly wage when direct wages and the tip credit are combined within the 7-day workweek and that if there is a showing that the actual tips received were less than the tip credit, the employer must increase the direct wages by the difference (the shortfall).
Thus, the maximum tip credit will raise from $6.90 to $7.07 effective January 1, 2024, generally and from $7.00 to $7.50 in Portland and the minimum cash wage for tipped employees will raise from $6.90 to $7.08 generally and from $7.00 to $7.50 in Portland, effective January 1, 2024.
ME Family and Medical Leave
Stay tuned for further reminders and updates in real time as laws previously adopted come into effect. For example, Maine is the second state in 2023 to adopt a paid family and medical leave program. Contributions for the program will commence January 1, 2025 and benefits will become available January 1, 2026. Contributions for the program are to be set at 1.0% of wages up to the social security taxable wage based and are to be split between employers and employees, with an exception for certain small employers (employers with under 15 employees, but whose employees still will contribute their portion). Covered individuals will be able to take up to 12 weeks of combined leave for medical and family reasons in a benefit year. Covered employers can participate in the state program or set up an approved private plan (which is cautioned and must be as favorable as the state program).
At Rogoway Law Group, we are here to remind you of changes as they become relevant. Please feel free to contact us for any of your labor and employment needs. You can set up a complimentary consultation here.