If you have Maine-based employees, get ready for January paid leave tasks

Starting January 1, 2025, any employer with at least one Maine-based employee must begin payroll withholdings for those employees. Maine employees may begin to take the leave on May 1, 2026.

Get ready for January

To prepare, employers with Maine-based employees should follow these three steps:

Step #1: Count employees. Employers determine contribution rates by the number of Maine employees they had between October 1, 2023, and September 30, 2024. Within that period, employers are to count the number of employees to whom they paid wages each week. This includes any Maine employees who were on the payroll for a calendar work week – including full-time, part-time, seasonal, or per-diem.

If they paid 15 or more Maine employees in 20 or more of the weeks, their contribution premium will be 1.0 percent of wages, and they may withhold up to half of the premium from their employees' wages.

If they don't meet this threshold, their contribution premium will be 0.5 percent of wages, and they may withhold all or a portion of the contribution from their employees' wages.

Wages mean all compensation, including tips, gratuities, severance, terminal pay, commissions, and bonuses. Wages do not include payments to independent contractors.

To determine if an individual is a Maine employee, employers are to use the following criteria. If they can answer "yes" to this series of questions, then the individual is a Maine employee.

1. Is the employee's work performed in Maine? If no, go to Question 2.
2. Does the individual perform some work in Maine and the physical base of operations in Maine? If no, go to Question 3.
3. Does the individual perform some work in Maine AND is the service directed and controlled from Maine? If no, go to Question 4.
4. Does the individual perform some work in Maine and live in Maine? If not, the individual is not a Maine employee.

Step #2: Get ready to withhold. Employers may withhold up to 0.5 percent of their employees' wages beginning with the first pay date in January 2025. The payroll system and/or provider must be ready to begin withholding. Employers should tell their employees in advance that this will begin. They may do this with a poster, for example, and the state Department of Labor has a poster available.
Employers must submit contributions and wage reports for the January to March 2025 quarter after the end of the quarter and no later than April 30, 2025. They will submit these through the Paid Leave Portal.

Step #3: Register. In January, all employers must register in the Paid Leave Portal. If they have a payroll provider, they can designate the provider during the registration process. They will also need to identify whether they have 15 or more employees.