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December 30, 2022

Maine's increased minimum wage and other measures go into effect Jan. 1

As 2022 rolls over to 2023, the Maine Department of Labor is reminding employers of labor law changes, including an increase to the minimum wage and changes to vacation payouts.

Effective Jan. 1, the state minimum wage will increase more than a dollar from $12.75 to $13.80 an hour, based on data by the U.S. Department of Labor's Bureau of Labor Statistics.

Maine law, amended by referendum in 2016, requires annual adjustments to the minimum wage based on the cost-of-living index for the Northeast Region.

In addition to the minimum wage, the new "tip wage," or minimum wage for service employees such as waitstaff, will be $6.90 an hour next year. Service employees must receive at least a direct wage of $6.90 per hour from their employers. Employer also must be able to show that employees receive at least the minimum wage of $13.80 per hour when the direct wage and tips are combined at the end of a work week.

The minimum salary for exempting a worker from overtime pay is also based on the state minimum wage. Beginning Jan. 1, the new minimum salary threshold is $796.17 per week, or $41,401 per year.

The minimum salary threshold is only one of the factors used in determining whether a worker is exempt from overtime under federal or state law. The minimum wage and overtime law can be found here. The Maine Department of Labor also has more information available here.

Vacation payout

Also beginning Jan. 1, all unused accrued paid vacation must be paid to employees on their next regularly scheduled pay day after employment ends. The law does not apply to employers with fewer than 11 employees or a public employer. If employees are covered by a collective bargaining agreement that addresses payment of vacation pay at the end of employment, the collective bargaining agreement will determine if the unused accrued vacation pay is paid out at the end of employment.

This law change raised several interpretive questions about how the amended law interacts with Maine's earned paid leave law and the MDOL published interpretive guidance that to address the interaction of the laws. 

General reminders

  • Earned paid leave: An employer that has more than 10 employees for more than 120 days in any calendar year shall permit each employee to earn paid leave based on the employee's base pay. An employee is entitled to earn one hour of paid leave from a single employer for every 40 hours worked, up to 40 hours in one year. Accrual of leave begins at the start of employment, but the employer is not required to permit use of the leave before the employee has been employed by that employer for 120 days during a one-year period.
  • Time of payment: Employees must be paid in full at least every 16 days. Employees must be notified of any decrease in wages or salary at least one day prior to the change.
  • Payment of wages: Employees who leave a job must be paid in full on the next payday or within two weeks, whichever is earlier, and could include unused paid vacation accrued after Jan. 1 and all accrued earned paid leave if it's company policy or practice.
  • Unfair agreement: Employers cannot require that an employee pay for losses such as broken merchandise, bad checks, or bills not paid by customers, nor for special uniforms and certain tools of the trade.
  • Rest breaks: Most employees must be offered a 30 consecutive minute paid or unpaid rest break after six hours of work.

More information on these and other labor laws can be found here.

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