Maine law taking effect Jan. 1 will require some employers to make vacation payouts
An amended law will go into effect on Jan. 1, 2023, that requires vacation payouts to be made by certain employers.
In April Gov. Janet Mills signed into law "An Act Regarding the Treatment of Vacation Time upon the Cessation of Employment,” which requires companies with more than 10 employees to pay out any unused, accrued vacation time to employees when they leave.
State law requires employers to pay employees their final wages in full no later than the employee’s next payday. Unused, accrued vacation pay is included in the final wages ruling and must be paid out in the same manner, regardless for the reason of separation.
Employers who fail to comply are subject to interest payments, fines and penalties. Exemptions are employers with 10 or fewer employees, public employers and final wage vacation pay provisions governed by a collective bargaining agreement.
The new law has no affect on business’ earned paid leave or paid time off policies.
Employers in Maine that are subject to these new requirements should make changes to their vacation processes and procedures, according to Paper Trails, a human resources and payroll company based in Topsham.
"Updating or creating a policy to have in a company handbook is key to maintaining compliance," Jon Poranova said in a news release. "Also, be prepared financially to pay out any unused, accrued vacation time to employees upon separation of employment."
Portanova said another way to comply with the new requirement is to change the company's vacation policy to either a paid time off or earned leave policy.
"This law states that only vacation time needs to be paid out upon cessation of employment," Portanova said. "If your business has a earned paid leave or paid time off policy, then you are not required to pay out that time upon separation."
Most Recent
Most Recent
0 Comments