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Updated: November 13, 2023 Focus on Law

Feuding over family leave: Businesses fear bigger staffing headaches under Maine’s new law

Photo / Tim Greenway Steve DiMillo, manager of DiMillo’s On the Water, fears that Maine’s new paid family leave law will make staffing challenges worse for his family’s restaurant.

Keeping a restaurant afloat is hard enough with today’s staffing challenges, but Steve DiMillo of DiMillo’s On the Water fears that things are about to get harder under Maine’s new paid family and medical leave law.

“We support workers but let’s face it, without business there’s no workers,” he says. “Now all we can do is comply.”

Along with several other business owners and representatives of groups including the Maine State Chamber of Commerce, DiMillo testified against LD 1964, while leaders of EqualityMaine, the Maine Women’s Lobby and others expressed their support.

Despite the outcry, the bill passed both houses in June with easy majorities and was signed into law in July as part of a two-year state budget. The budget sets aside $25 million for Maine’s new paid medical and family leave program, which comes on top of existing state and federal statutes governing unpaid leave.

The new benefit is set to kick in on May 1, 2026, entitling nearly all employees in Maine to take up to 12 weeks of paid family and medical leave annually no matter how long they have been with an employer. Full-time, part-time, seasonal and temporary workers are all covered, and those who are self-employed can opt in.

Funding will come from a 1% payroll tax starting Jan. 1, 2025, split evenly between employers and employees at businesses with more than 15 employees; smaller employers will be exempt from contributing, though their employees will still have to pay their share. Employers with private plans that go beyond the state-sponsored one will be allowed to keep those plans in place pending approval from the Maine Department of Labor. The issue remains highly divisive.

“Many employers, I believe, look at it as a tax that employees and employers are forced to bear even though not all employees will take advantage of the benefit,” says Tawny Alvarez, a partner at Portland-based law firm Verrill.

Photo / Tim Greenway
Tawny Alvarez, a partner at Portland-based law firm Verrill, urges Maine employers to calculate their 2025 payroll cost now and add 1% to the total in preparation for the tax set to take effect at the start of that year.

With opponents seeing little chance of repeal, Maine employers, lawyers and human resources professionals are anxiously awaiting guidance from the Maine Department of Labor on how to implement what’s being called one of the country’s broadest and most generous paid family and medical leave programs.

In joining a dozen other states and Washington, D.C., with universal paid leave, Maine is embarking on what the Maine State Chamber of Commerce predicts will be “the most impactful and significant workplace legislation enacted in the last four decades.” In the meantime, there’s a lot to digest.

The new law in a nutshell

To be eligible for paid leave, workers will need to have earned at least six times the state average weekly wage in total over the base period. (In 2022, the state average weekly wage was $1,103.)

Benefits are portable, as noted by the Washington, D.C.-based Center for American Progress in a July report, meaning that someone who recently changed jobs could count income from their past and current job, while someone with two jobs could count income from both.

Since there’s no requirement to take the 12 weeks all at once, the leave time could be spread out via a reduced schedule. The arrangement becomes more complicated for part-timers who put in fewer than eight hours at a time, the minimum increment allowed under the new regime. Where possible, 30 days’ notice to the employer is required, otherwise the notice period would be “as soon as practicable.”

The maximum weekly benefit amount is capped at the state average weekly wage ($1,103 in 2022), with the actual payout dependent on where the employee sits on the wage scale. (Find the final version of the law on the Maine Department of Labor website here.)

After taking leave, the employee concerned has the right to right to return to his or her job without any retaliation from the employer as long that employee has been with the company for at least 120 days before taking leave.

The Maine Department of Labor has yet to decide whether it will administer the program itself or contract a third party via a competitive bidding process; the department also plans to start the required rulemaking in spring 2024.

Photo / Courtesy of the Maine State Chamber of Commerce
Patrick Woodcock is president and CEO of the Maine State Chamber of Commerce.

“The calendar is very tight for implementation,” especially if the program ends up being state-run, warns Patrick Woodcock, president and CEO of the Maine State Chamber of Commerce.

“For a lot of businesses, the last few years have been overwhelming [so] we’ll be doing our part to ensure through all the channels that people can get prepared for this,” he says. “The last thing you want is that this becomes a surprise in 2025.”

Businesses ‘need people now’

The new law covers medical, caregiving and parental leave to bond with a newborn.

One aspect that rankles some employers is the law’s broad definition of “family member.”

For purposes of the benefit, the term applies to worker’s spouse or domestic partner, child, grandparent, grandchild, sibling as well as “any other individual with whom the covered individual has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship.” Based on that language, an eligible employee could get paid leave to care for an incapacitated neighbor, family friend, distant cousin or pet-sitter — all of whom could be considered family in the law’s broad definition.

That worries business owners like Steve Hanington, president of Hanington Brothers Inc., a third-generation logging company with 35 employees in the Aroostook County town of Macwahoc. The business was founded by his father and uncle in 1958 with a work horse rented from his grandfather, and staffing is a constant hurdle.

“In our situation as logging operators, we have log load operators who work daily with three to four truck drives. If we lose a crane operator [on leave], what’s the poor truck driver going to do? There’ll be nobody there to load the truck.”

Photo / Fred Field
Steve Hanington, president of Hanington Brothers Inc. in northern Macwahoc, employs 35 people at the logging company founded by his father and uncle in 1958.

While Hanington considers the 1% payroll tax as part of the cost of doing business, he says “the cost of lost production is insurmountable” at his seasonal business, which operates only 40 weeks a year.

“I’m pro-labor,” he says, “but we’re all human beings, and if someone can get 90% of their full-time compensation [via paid leave], it can be very easy to come up with ways to get 12 weeks of vacation,” he says. “For us, the state lacks an understanding on how our operations run.”

Hanington, who works with his son, also employs a lot of older workers and says he struggles to find replacements when someone is out sick or retires.

“If we don’t produce, we don’t get paid,” he laments, “and how can you produce with no help? We need people now.”

Similarly at DiMillo’s, where the restaurant staff has shrunk to 112 from 200 before the pandemic, Steve DiMillo worries about the possibility of staff taking time off for “questionable” reasons under the new law, and the cost that he’ll have to bear for a “very expensive program with rich benefits,” as he told lawmakers in May.

“My wife and I are generous people,” helping an elderly neighbor for years, DiMillo says now. “We didn’t take any time off. We just figured it out.”

The reform, and heightened concerns about what it may mean for staffing, comes as Maine unemployment continues to hover near record lows. The jobless rate, at 2.7% in September, has been below 4% for 22 consecutive months, the third-longest timeframe of such low rates.

Balance and inclusiveness

Among the law’s supporters, Kate Beever of Maine Music & Health says the law is “incredibly important for families who are struggling to balance their lives as caretakers.”

To employers still railing against the changes, she says, “As business owners, we need to balance our concerns about the bottom line with concerns about the future of the state.”

Gia Drew, executive director of Portland-based nonprofit EqualityMaine, also champions the new program, deeming the provisions to be of critical importance for lesbian, gay, bisexual, transgender and queer (LGBTQ+) individuals, who are heavily reliant on their chosen families and face unique challenges because of their sexual orientation from health disparities to employment insecurity.

“The broad family definition will benefit all workers, given the diversity of family structures here in Maine,” Drew said in her testimony. “The evidence is clear: paid family and medical plans like this one work. They will improve the health of Mainers across generations, add stability to our workforce, and reduce the stress on families.”

What the experts say

Regardless of where employers stand on the new law, it’s on the books and change is coming.

“As with any new program, there are learning curves and unknowns that go along with ensuring compliance,” says Amy Harkins, of Falmouth-based KMA Human Resources Consulting.

Her firm has fielded client concerns over the time it may take to administer and manage, and around the risk of employees manipulating or taking advantage of the program.

“Our recommendation, as with any new program, is to establish easy-to-understand guidelines and ensure everyone involved is thoroughly educated on the process, the potential pitfalls and the areas where the confusion may be greatest,” she says.

Courtesy / Murray, Plumb & Murray
Maria Fox, a partner with Portland law firm Murray, Plumb & Murray says, “We are advising employers to begin reviewing their policies now.”

Maria Fox, a partner with Portland law firm Murray, Plumb & Murray, says, “We are advising employers to begin reviewing their policies now in anticipation of the new law, so there is time to consider and prepare for the impact and be ready to answer employees’ questions.”

Verrill’s Alvarez suggests that employers calculate their 2025 payroll now and add 1% to the total, as well as update leave policies to comply with the new law.

“They [employers] should also be considering operationally the effect that absences of certain team members for 12 weeks could have on the operations and how they will supplement the workforce if necessary,” Alvarez says.

That’s easier said than done for small businesses already starved for workers.

Editor's note: Article updated and corrected to clarify the weekly benefit amount, and to add the link to the law as enacted on the Maine Department of Labor website.

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