Upcoming Labor Law Changes in 2023

In preparation for the new year, the Maine Department of Labor is reminding employers of upcoming labor law changes, such as updates to minimum wage and vacation payout.

Maine’s Minimum Wage to Increase to $13.80 Per Hour in 2023

Pursuant to Maine law (Maine statute Title 26, chapter 7, section 664), effective January 1, 2023, the state minimum wage will increase from $12.75 to $13.80 per hour, based on data recently made available by the U.S. Department of Labor’s Bureau of Labor Statistics. Maine law, amended by citizen’s referendum in 2016, requires annual adjustments to the minimum wage based on the cost-of-living index (CPI-W) for the Northeast Region.

In addition to the minimum wage, the new “tip wage,” or service employee minimum wage, in 2023 will be $6.90 per hour. This means that service employees must receive at least a direct cash wage of $6.90 per hour from the employer. The employer must be able to show that the employee receives at least the minimum wage of $13.80 per hour when the direct wage and tips are combined at the end of the week.

The minimum salary threshold for exempting a worker from overtime pay is also based on the minimum wage. Starting January 1, 2023, the new minimum salary threshold is $796.17 per week, or $41,401 per year. This is only one of the factors used in determining whether a worker is exempt from overtime pay under federal or state law. An individual can earn more than the minimum salary threshold and still be eligible for overtime. The duties of each worker must be considered as part of this analysis.

The minimum wage and overtime law can be found here: http://legislature.maine.gov/legis/statutes/26/title26sec664.html. The Department also has more information available on its website at https://www.maine.gov/labor/labor_laws/wagehour.html.

Interpretive Guidance – Vacation Payout

Title 26, chapter 7, section 626, Cessation of Employment, was amended by P.L. 2022 c. 561, to address the circumstances in which vacation must be paid out upon cessation of employment. Beginning January 1, 2023, all unused paid vacation time that had accrued must be paid to the employee on their next regularly scheduled pay day after employment ends. This law does not apply to employers with less 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 existing earned paid leave law. To assist employers and employees, the Maine Department of Labor published interpretive guidance addressing the interaction of the laws for vacation payout upon cessation of employment and earned paid leave.

The Departments guidance and answers to frequently asked questions can be found here: https://www.maine.gov/labor/docs/2022/laborlaws/BLSInterpretiveGuidancePolicy22-01.pdfMin Wage MGFPA