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December 16, 2016

Here's what you need to know about state's new minimum wage

At a glance: Impact of state's new minimum wage law

Here is what employers need to know about the minimum wage law in Maine:

Effective date: Jan. 7.

Employers affected: Maine statutes incorporate by reference the salary requirements under the Fair Labor Standards Act. The FLSA has "enterprise and individual coverages" to determine whether a business is subject to the law; however, Maine labor laws do not have such thresholds. Any business operating in the state with one employee is automatically covered by state law. This includes all public and private employers regardless of profit or size.

Minimum wage for overtime-eligible employees: $9 per hour. These employees can be paid by several different methods, including by salary. Maine DOL provides detailed guidance on its website regarding different pay methods allowed under state and federal law. Employers have the right to allow or deny overtime, but if overtime is worked, it must be paid at 1.5 times the regular rate of pay. Compensatory or "comp" time cannot be used by private-sector employers, although private-sector employers can allow employees to flex their time within the work week (but not the pay period if the pay period is longer than a seven-day cycle).

Minimum salary for overtime-exempt employees: The new minimum salary requirement will be $519.24 per week, up from the federal minimum of $455 per week. State law requires that overtime-exempt employees be paid an annual salary that "exceeds 3,000 times the state's minimum hourly wage or the annualized rate established by the U.S. Department of Labor under the federal FLSA, whichever is higher." Salary is only one factor in determining whether a worker is exempt from overtime under federal or state law. The duties of each worker must be considered as part of this analysis. Failure to adhere to both requirements — meeting the duties test and the weekly salary threshold — will result in violations of both federal or state law or of one jurisdiction or the other depending on the discrepancies in the laws.

Tip credit: Starting Jan. 7, the minimum direct service wage for tipped employees must be increased from one-half the minimum wage (currently $3.75) to $5 per hour and increased by an additional $1 per hour each year until it reaches the same amount as the annually adjusted state minimum wage. The tip credit an employer may take in 2017 for service employees who customarily earn more than $30 a month in tips will be $4.

Municipal minimum wage ordinances: Employers with employees who work in Bangor and/or Portland may be subject to additional regulations and should check with municipal officials.

Poster requirements: All employers are required to post the most recent federal, state, and any applicable minimum wage poster. The department provides the mandatory and optional posters through its website at no charge with links to the federal posters as well. These posters can be printed off and posted in either color or black and white.

More information: Check out Maine DOL's website about the state's minimum wage and overtime rules.

The Maine Department of Labor is advising employers that the new $9 minimum wage approved by voters on Nov. 8 will take effect on Jan. 7.

However, given the likelihood that the 128th Legislature will consider bills that could change some provisions of the new minimum wage related to tipped workers, the department said Thursday that it will pursue a "time-limited non-enforcement policy" of the state's new minimum wage rules.

"This approach will best serve the goals of providing the Legislature time to address the changes relating to the minimum wage referendum that are being proposed while not disrupting business operations of Maine's employers," the Maine DOL stated in its advisory. "From Jan. 7, 2017, when the new minimum wage law is scheduled to go into effect, and until Jan. 31, 2017, the department will not bring enforcement actions against any employer who fails to comply with the change in the tip credit or the minimum salary requirement for overtime-exempt workers. Employers are expected to follow the law and pay the minimum hourly wage of $9."

The department's advisory about its temporary non-enforcement actions included this cautionary note: "Employers may be subject to a private right of action by an employee who believes she or he has been harmed by the employers' actions; such lawsuits may result in the award of back wages, treble damages, attorney's fees and court costs to an affected worker. Employers should consult an attorney to have a more complete understanding of the interplay between this non-enforcement position and employees' private right of action."

Impact on OT pay

Gov. Paul LePage's certification of the Question 4 ballot initiative last week also set into motion Maine statutes that tie the state's minimum wage to overtime pay regulations for eligible employees.

Question 4's overtime pay implications are separate from the federal DOL's new overtime rules that were slated to take effect on Dec. 1 but which remain in legal limbo after a federal judge in Texas authorized a temporary injunction late last month. The U.S. Labor Department moved forward Thursday with its appeal of that federal injunction and the U.S. Court of Appeals in the Fifth District has agreed to fast track the legal proceedings.

Maine Commissioner of Labor Jeanne Paquette, in a statement accompanying her department's advisory, acknowledged that the injunction on the federal OT rules has created a lot of uncertainty for employers. Given all the uncertainties at both the federal and state level, Paquette stated her department will continue to assist both employers and workers in understanding the ramifications and intersection of these changes.

"Of course we expect employers to comply with the law," Paquette said in her statement. "However, as we have seen with the federal overtime-exempt rule announced this year, employers did a lot of work to comply, and then the injunction put everything on hold, creating confusion for both workers and employers. We want to avoid a similar situation under state law."

LePage said in a statement that it made sense for Maine DOL to give employers more time to understand and meet their OT obligations under the new minimum wage, especially given that "many legislators have announced a bill to restore the tip credit."

"It is entirely appropriate for the Department of Labor to take time to help employers and workers understand and comply with the law without taking them to task," he said.

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