Paid Leave: State + Federal Updates

Reprinted with permission from The Maine Nonprofit Law E-Bulletin September 2020, by Robert H. Levin, Attorney-at-Law with the Law Office of Robert H. Levin.

Paid Leave Under Maine’s New Law…

Heads up to all Maine nonprofit employers having 11 or more employees: Maine’s earned paid leave law takes effect on January 1. I wrote about the basics of the new law in the May 2019 E-Bulletin. Maine’s law is the first in the nation to provide paid leave for any reason—including vacation—and not just sick leave. Over the past year, the Maine Department of Labor has been working on administrative rules to flesh out the details, and the Final Rules and a detailed Frequently Asked Questions are hot off the press. Here are five key takeaways:

1. Think of earned leave in terms of hours, not days. Leave time is accrued at an hourly rate—one hour accrued for every 40 hours worked, up to a maximum of 40 hours per year. In turn, employees can use accrued leave in increments of one hour, and even smaller increments at the employer’s discretion.
2. The statute requires that employees provide “reasonable notice” to take earned leave, except for emergencies and illnesses. The proposed rules clarify that an employment policy may require up to four weeks’ time for such notice. Furthermore, aside from illnesses and emergencies, the employer can place reasonable limits on the scheduling of earned leave, to prevent undue hardship (defined in the rules) on the employer. Meanwhile, for illnesses and emergencies, the employee must make a “good faith effort” to provide as much notice as feasible under the circumstances.
3. If an employee doesn’t use up all of her earned paid leave from a previous year, those hours do not disappear at the beginning of the next year, but the total doesn’t exceed the maximum of 40 hours in the next year. As the example in the FAQ explains: If an employee rolls over 8 hours of unused leave from the previous year, then the employee will earn only 32 hours of earned leave in the present year, regardless of how much leave the employee uses in the current year and when it is used. Remember, though, the law sets out minimum requirements, and I would encourage organizations to be more flexible than the law on carryover rules.
4. If earned leave is accrued but not used at the time of cessation of employment, the unused hours generally must be added to the employee’s last payday, similar to the already existing law for vacation time under 26 M.R.S. 626.
5. Will an organization’s existing leave policy satisfy the requirements of the new law? That depends. In general, as long as the policy allows the minimum amount and doesn’t restrict the reasons for taking leave, it will qualify, although it also must meet the other details spelled out in the law and the Rules. Thus, a policy that grants “vacation time” but allows an employee to use those days as sick time or other reasons is fine. But a policy that allows only sick leave, for example, will not qualify. The FAQ spells this out in more detail.

Most Maine nonprofit organizations have leave policies that are more generous than the provisions of the new law, both in terms of total earned leave time and carryover of unused time from prior years. But in any event, many policies will need at least some tweaking to conform to the details of the new law, and the time to ensure compliance is now, not in January. Penalties of up to $1,000 per violation apply, with each improper denial for each employee treated as a separate violation.

…And Paid Leave Under Temporary Federal Covid Law

Meanwhile, when Covid showed up last March, one of the initial responses by Congress was the Families First Coronavirus Response Act, which established a temporary Covid-related paid leave law that applies to all employers, nonprofit and otherwise. The law requires up to 80 hours of fully paid leave for an employee who is quarantined or has Covid symptoms, or 80 hours at two-thirds rate for an employee who has to care for an individual subject to quarantine or for a child whose school is closed or switched to remote learning. In addition, employees employed for at least 30 days are eligible for up to 10 more weeks of paid family leave to care for a child under certain circumstances related to Covid, including schools that have transitioned to fully or partial remote learning. This federal paid leave law overrides any state employment laws, and is in effect until December 31, 2020, unless extended by Congress, which is certainly a possibility given the continued impact of Covid.

However, subsequent guidance (see Questions 58 and 59) issued by the federal Department of Labor established a limited exemption for employers having fewer than 50 employees. To claim this exemption, the employer must internally document that it meets at least one of the following three criteria:

1. The leave would result in expenses exceeding available revenues, causing the business to cease operating.
2. The absence of the employees requesting the leave would entail a substantial risk to the capabilities of the operations because of the employees’ unique skills or responsibilities.
3. There would not be enough other qualified workers available to perform the work needed to keep operating.

Claiming the exemption should not be undertaken lightly, as an employee can challenge the employer’s claim of such an exemption with the Department of Labor, in which case certain penalties could apply. See here for a smart take on the nuances of claiming the exemption.

[Editor’s note: The networks of the National Council of Nonprofits are hosting a free webinar, “New Law on COVID-19 Paid Leave & Back to School What Nonprofit Employers Need to Know” just for nonprofits on Thursday, September 24 at 3:00 pm Eastern.]