This blog post is meant to be informative, but not to be taken as legal advice, as every situation is different. We urge you to contact an attorney to seek out how specific aspects of this information apply to your situation. This article does not establish an attorney-client relationship.
Turning our attention to staying compliant for Maine’s Department of Labor. Inevitably, as an employer, you will in some way interface with Maine’s Department of Labor. Please review this brief refresher on some topics that we feel could be pertinent to our clients. Included topics are: Exempt vs. Non-Exempt Workers (what that means for overtime pay), Employing Family (Does that effect overtime?), Non-Payroll Deductions (get them in writing), Time Keeping Records Requirement (save the records for three years).
If these or other questions about staying compliant with Maine’s Department of Labor are keeping you up at night, please don’t hesitate to contact Jill at jill@cohenlawmaine.com
Exempt vs. Non-Exempt Workers
According to Maine DOL: https://www.maine.gov/labor/docs/2020/laborlaws/laborlawsfaq.pdf
“Who can be placed on salary? There are two salary types. One is for employees (commonly referred to as non-exempt) whose job duties do not meet the Executive, Administrative or Professional exemptions established in 26 MRS §663 (K). Non-exempt salaried employees are paid a predetermined fixed amount regardless of the number of hours they work. However, if they work more than 40 hours in any given week, their salary must be converted to an hourly rate that cannot amount to less than the State Minimum Wage and they must be paid overtime for all hours worked in excess of 40 in any given week. The second type is for employees (commonly referred to as exempt) whose primary job duties meet the Executive, Administrative or Professional exemptions established in 26 MRS §663 (K). These employees are paid a predetermined fixed amount regardless of the hours worked. The minimum salary amount must be at least $700.97 per week as of January 1, 2021 (see updated figure below in next citation). Teachers and highly skilled computer staff may also be paid as exempt-salaried employees. Please check the Maine Wage and Hour Division Rules for specific guidance.”
As found on MDOL’s Maine Wage and Hour Division Rules:
“Maine state statute recognizes the exemption from overtime for people working in a “bona fide executive, administrative or professional capacity” and requires that employers pay a salary according to the requirements of the Federal Fair Labor Standards Act (FLSA).
Both Maine and federal law use a three-pronged test to determine if an employee is exempt from the overtime provisions of the law. The three prongs of the test are:
- The employee must be paid on a salary basis. This means an employee regularly receives a predetermined amount of compensation each pay period.
- The salary must exceed a certain salary threshold. In Maine, this salary threshold must exceed $38,250.
- The employee’s job duties must meet certain tests. There are slightly different tests for the administrative, professional and executive exemptions.
Keep in mind:
- “Employer” includes not only businesses, but non-profits and governmental entities.
- “Salary” is a method of pay; paying a worker on salary does not mean that a worker is exempt from overtime.
As a first step, employers should review the job duties currently being performed by their employees—not only job titles or job descriptions—who fall into the salary range between the old and new exempt thresholds. Employers who have questions are encouraged to reach out to their employment compliance advisors.”
Employing Family
According to Cornell Law:
“Section 13(a)(6)(B) of the Fair Labor Standards Amendments of 1966 provides a minimum wage and overtime exemption in the case of “any employee engaged in agriculture * * * if such employee is the parent, spouse, child, or other member of the employer’s immediate family.” The requirements of this exemption, evident from the statutory language, are that the employee be employed in agriculture and that he be a close blood relative, spouse or member of the employer’s immediate family. Reference is made to subpart B of this part as to what constitutes employment in agriculture. The section 13(a)(6)(B) exemption applies to such an individual even though he is employed by an employer who otherwise used more than 500 man-days of agricultural labor in a calendar quarter of the preceding calendar year, as discussed in § 780.305.”
Maine law aligns closely with the federal Fair Labor Standards Act (FLSA) which identifies certain situations where immediate family members of the employer, in a non-incorporated business, are generally exempt from overtime provisions. It’s important to note that this exemption typically applies when the family members are engaged in the management of the business and have a significant role in its operations.
However, if the business is incorporated or if the family members do not have an ownership stake, this exemption might not apply, and standard wage and hour laws could be enforced. Therefore, while employing family members can offer certain advantages, it’s crucial that the business correctly applies these exemptions to avoid potential labor disputes and penalties.
Labor law can be complex and nuanced. While this advice provides a good foundation, it’s always recommended to verify these details with Maine Department of Labor or consult a legal professional to ensure full compliance.
Non-Payroll Deductions
Maine law does permit certain deductions from an employee’s wages, but the key element here is that any deductions must be specifically authorized by the employee in writing. An employee could agree to deductions for things such as:
- Employee benefit plan contributions (health, dental, retirement, etc.)
- Repayment of loans or advances from the employer
- Cost of uniform or equipment necessary for the job
- Charitable contributions
- Purchase of company products or services at the employee’s discretion
- It’s essential that the written agreement for these deductions is specific, clear, and explicit. The agreement should detail the amount to be deducted, the frequency of the deduction, and what the deduction is for. Employers should also remember that these deductions should never reduce an employee’s wages below the applicable minimum wage.
Remember to store these written agreements securely and maintain them as part of your payroll records. This will ensure that you have evidence of the employee’s agreement to the deduction, which could be crucial if there’s ever a dispute or an inspection from the Department of Labor. It’s always a good idea to consult with a legal professional or the MDOL directly to ensure your agreements and deductions comply fully with the law.
Time-Keeping Records Requirement
“Employers shall keep, for three years, accurate records of hours worked and wages paid to all employees.” – Maine DOL
The U.S. Department of Labor published a handy reference guide to the Fair Labor Standards Act here: https://www.dol.gov/agencies/whd/compliance-assistance/handy-reference-guide-flsa#8
“The FLSA requires employers to keep records on wages, hours, and other items, as specified in DOL recordkeeping regulations. Most of the information is of the kind generally maintained by employers in ordinary business practice and in compliance with other laws and regulations. The records do not have to be kept in any particular form and time clocks need not be used. With respect to an employee subject to the minimum wage provisions or both the minimum wage and overtime pay provisions, the following records must be kept:
- personal information, including employee’s name, home address, occupation, sex, and birth date if under 19 years of age;
- hour and day when workweek begins;
- total hours worked each workday and each workweek;
- total daily or weekly straight-time earnings;
- regular hourly pay rate for any week when overtime is worked;
- total overtime pay for the workweek;
- deductions from or additions to wages;
- total wages paid each pay period; and
- date of payment and pay period covered.
Records required for exempt employees differ from those for nonexempt workers. Special information is required for homeworkers, for employees working under uncommon pay arrangements, for employees to whom lodging or other facilities are furnished, and for employees receiving remedial education.”