The Maine Department of Labor has adopted the final rules for the state’s paid family and medical leave program, and the new law is set to take effect when tax collections begin in January.
Starting next month, the state will impose a new 1% payroll tax, split evenly between employers and employees. Benefits will be paid out beginning May 1, 2026, to give time for the fund to build up a reserve. The law was originally passed in 2023 and signed into law by Gov. Janet Mills, but it has taken more than a year to put together the complex rules and regulations to launch the program.
Business groups, including the Maine State Chamber of Commerce, had objected to some of the proposed rules, including language that said businesses that offered their own private leave program were not permitted to opt out of the tax collections until April, 2026. But the Department of Labor changed that provision to allow businesses to opt out in 2025 if they could prove they were giving their employees an equivalent private paid leave benefit.
The fund created with the payroll tax revenue would be used to pay up to 90% of regular wages for up to 12 weeks for workers who are ill or need to take care of newborns or other family members, among other reasons. Employers with 15 or fewer workers are exempt from paying into the program, but workers at small businesses still will pay a 0.5% payroll tax and will be eligible for benefits.
Maine is one of 13 states, plus the District of Columbia, to have enacted paid family and medical leave. The federal government approved an unpaid leave program in the 1990s, allowing workers to take up to three months off without pay
The Department of Labor received more than 1,600 comments about the proposed rules.
“We are excited to now have a final rule in place as we continue to stand up this program that will have such positive impacts for Maine’s workforce,” said Luke Monahan, director of the paid leave program.
The labor department will host webinars in December to walk employers through the process. For more information on paid leave, go to www.maine.gov/paidleave/
This story will be updated.
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