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New Minimum Wage and Overtime-Exempt Minimum Salary Take Effect in Maine Jan. 7

December 15, 2016

FOR IMMEDIATE RELEASE: December 15, 2016
MEDIA CONTACT: Julie Rabinowitz, 207-621-5009

Labor Department will take temporary non-enforcement position on tip credit and minimum overtime-exempt salary pending legislative or federal action

AUGUSTA?The Maine Department of Labor advises employers of their legal obligations to workers related to the passage of changes to the state minimum wage via the ballot initiative Question 4.

?Many employers and employees are unaware of the relationship between the minimum wage in Maine and the minimum salary that an exempt worker must be paid, and many legislators have announced a bill to restore the tip credit,? said Governor Paul R. LePage. ?It is entirely appropriate for the Department of Labor to take time to help employers and workers understand and comply with the law without taking them to task.?

?Of course we expect employers to comply with the law,? explained Commissioner of Labor Jeanne Paquette. ?However, as we have seen with the federal overtime-exempt rule announced this year, employers did a lot of work to comply, and then the injunction put everything on hold, creating confusion for both workers and employers. We want to avoid a similar situation under state law.?

Here is what employers need to know about the minimum wage law in Maine.

Effective date: Jan. 7, 2017 (30 days after the Governor has certified the election results).

Employers affected: Maine statutes incorporate by reference the salary requirements under the Fair Labor Standards Act (FLSA). The FLSA has ?enterprise and individual coverages? to determine whether a business is subject to the law; however, Maine labor laws do not have such thresholds. Any business operating in the state with one employee is automatically covered by state law. This includes all public and private employers regardless of profit or size.

Minimum Wage for overtime-eligible employees: $9 per hour. These employees can be paid by several different methods, including by salary. See the guidance here http://www.maine.gov/labor/labor_laws/overtime.html regarding different pay methods allowed under state and federal law. Employers have the right to allow or deny overtime, but if overtime is worked, it must be paid at 1.5 times the regular rate of pay. Compensatory or ?comp? time cannot be used by private-sector employers, although private-sector employers can allow employees to flex their time within the work week (but not the pay period if the pay period is longer than a seven day cycle).

Minimum Salary for overtime-exempt employees: The new minimum salary requirement will be $519.24 per week, up from the federal minimum of $455 per week. State law requires that overtime-exempt employees be paid an annual salary that ?exceeds 3,000 times the State's minimum hourly wage or the annualized rate established by the United States Department of Labor under the federal FLSA, whichever is higher? (26 MRS ?663(3)(K)). Salary is only one factor in determining whether a worker is exempt from overtime under federal or state law. The duties of each worker must be considered as part of this analysis. Failure to adhere to both requirements?meeting the duties test and the weekly salary threshold?will result in violations of both federal or state law or of one jurisdiction or the other depending on the discrepancies in the laws.

Tip Credit: Starting Jan. 7, 2017, the minimum direct service wage for tipped employees must be increased from one-half the minimum wage (currently $3.75) to $5 per hour and increased by an additional $1 per hour each year until it reaches the same amount as the annually adjusted state minimum wage. The tip credit an employer may take in 2017 for service employees who customarily earn more than $30 a month in tips will be $4.

Municipal Minimum Wage Ordinances: Employers with employees who work in Bangor and/or Portland may be subject to additional regulations and should check with municipal officials.

Poster Requirements: All employers are required to post the most recent federal, state, and any applicable minimum wage poster. The department provides the mandatory and optional posters through its website http://www.maine.gov/labor/posters/index.html at no charge with links to the federal posters as well. These posters can be printed off and posted in either color or black and white.

Temporary Non-Enforcement Position of the Maine Department of Labor Regarding Specific Elements of the Laws Related to the Minimum Wage: After careful consideration, the Maine Department of Labor has decided to adopt a time-limited, non-enforcement policy. This approach will best serve the goals of providing the legislature time to address the changes relating to the minimum wage referendum that are being proposed while not disrupting business operations of Maine?s employers.

From Jan. 7, 2017, when the new minimum wage law is scheduled to go into effect, and until Jan. 31, 2017, the department will not bring enforcement actions against any employer who fails to comply with the change in the tip credit or the minimum salary requirement for overtime-exempt workers. Employers are expected to follow the law and pay the minimum hourly wage of $9.

Note, however, that as of the effective date, although the department may not bring enforcement actions, employers may be subject to a private right of action by an employee who believes she or he has been harmed by the employers? actions; such lawsuits may result in the award of back wages, treble damages, attorney?s fees and court costs to an affected worker. Employers should consult an attorney to have a more complete understanding of the interplay between this non-enforcement position and employees? private right of action.

The department will continue to provide robust compliance and technical assistance to both employers and workers in understanding the ramifications and intersection of these changes.

The Department of Labor enforces state wage and hour laws. Employers with questions about the law should visit the department?s webpage on the minimum wage at http://www.maine.gov/labor/laborlaws/minimumwagefaq.html and overtime exemptions at http://www.maine.gov/labor/laborlaws/overtime.html or call (207) 623-7900.

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