The Maine Paid Family and Medical Leave (PFML) program, effective January 1, 2025, represents a major policy shift for employers in the state. The final rules governing the program were adopted by the Maine Department of Labor on December 4, 2024. These rules provide clarity on employer contributions, employee eligibility, and the administration of benefits, setting the stage for implementation in the coming years. Understanding these finalized regulations is essential for compliance and planning.
Program Highlights
The PFML program provides up to 12 weeks of paid leave annually to Maine workers for various personal and family needs. Employees can access the following types of leave:
- Medical Leave: Serious health condition where they are unable to work.
- Family Leave: To care for a family member with a serious health condition, such as a spouse, parent, child, or other person described under the law.
- Safe Leave: For situations involving domestic violence, sexual assault, or stalking.
- Military Leave: To address needs related to a family member who is a covered service member.
This program is funded through payroll contributions that can be shared between employees and employers. Funding and withholding for the new program begins in the first quarter of 2025, while benefits are expected to begin May 1, 2026.
Eligibility, Benefits, and Requirements
To qualify, employees must earn at least six times the state’s average weekly wage during a defined base period. Leave is flexible, allowing employees to take it continuously, intermittently, or on a reduced schedule.
Contribution rates may be split equally between employers and employees for organizations with 15 or more employees (0.5% each, totaling 1% of wages). For smaller businesses with less than 15 employees, the contribution rate is 0.5% of wages, and employers may deduct that entire amount from employees’ wages. Contributions and withholding begin with the first pay period that ends in January 2025, and apply to gross wages, excluding amounts above the Social Security wage base.
Employer obligations for employers with at least one employee in Maine include:
- Register with the PFML portal: Launching in early 2025, this portal is essential for reporting wages and remitting contributions.
- File quarterly wage reports: Contributions and reports are due by the last day of the month following the quarter’s end.
- Inform employees: Workers must be notified about deductions before implementing payroll changes.
Other requirements under PFML include:
- Job Protection: Employees must be reinstated to their position or a comparable one after leave if employed for at least 120 consecutive days prior.
- Private Plan Substitution: Employers may apply to use private plans offering equivalent or greater benefits.
- Non-Compliance Penalties: Late wage reports or contribution payments can incur penalties of 1% of total quarterly payroll.
These requirements underscore the importance of proper planning and adherence to program regulations to avoid penalties and disruptions in employee relations. Employers should act now to update payroll systems, revise employee handbooks, and educate staff. Smaller businesses should evaluate the financial impact of covering employee contributions, while larger organizations may need to integrate state benefits with existing leave policies. Proactively addressing compliance can minimize operational disruptions.
Looking Ahead
The Maine Department of Labor continues to provide resources, including webinars and guidance documents, to assist employers. Staying informed through updates and proactive engagement will ensure smooth implementation and compliance. If you haven’t started planning for PFML, resources are available at MDOL: Paid Family and Medical Leave. To discuss the financial planning around PFML, contact a qualified financial advisor. ARB will continue to provide updates on this and other issues important to your business as they happen.
Holly Ferguson is a principal at ARB and the Practice Leader of the firm’s Accounting & Attest, Manufacturing, and Credit Union Services Teams. She provides industry-specific services for manufacturers, distributors, credit unions, businesses, and nonprofit organizations. She is the former Treasurer on the Board of Directors and Finance Committee of the Manufacturers Association of Maine.
