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To kick off the New Year, employers with 11 or more employees working in Maine will need to review their policy related to the handling of accrued yet unused paid vacation at the end of employment.
Maine passed an amendment to the Labor Law §626 requiring unused vacation time accrued on and after January 1, 2023, to be paid to the employee at the end of employment. Final wages, now including unused, accrued vacation must be paid no later than the next established payday.
Exceptions in the vacation payout apply to employers with 10 or fewer employees, public employers, and employers with a collective bargaining agreement (CBA) already addressing the payment of vacation pay at termination.
Employers must still continue to comply with the requirements around allowable deductions at the end of employment, such as loans or advances against future earnings or wages.
Employers found in violation of this law are liable for the amount of all unpaid wages and vacation pay as well as a reasonable rate of interest, liquidated damages equal to twice the amount of the unpaid wages and vacation pay, and the costs of the suit, including reasonable attorney fees.
It is notable that the Maine Legislature did not define vacation pay in the amendment so employers that provide PTO with no separation of vacation, Earned Paid Time, sick, or personal time could be included. The Maine DOL website states, “If the employer does not have a policy for Earned Paid Leave, but has a policy regarding unused vacation time, then the policy on unused vacation time will apply to the unused Earned Paid Leave.”
The start of every year is a good time to contact your employment attorney for a review of your policies and compliance, particularly in light of recent developments.
Amy Cann is a licensed attorney in Maine and New Hampshire and a member of McLane Middleton’s Employment Law practice group. She is located in their Portsmouth office and can be reached at amy.cann@mclane.com, or by calling (603) 334-6913.
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