Inside Augusta

The new year brings changes to state and local laws

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In addition to resolutions, 2020 brings new changes to state and local laws. Some examples include an increase to the state’s minimum wage and overtime exemptions, a local polystyrene (Styrofoam) ban and a state ban on single-use plastic bags. Here’s a breakdown of what these new policies entail. 

On January 1, the state’s minimum wage increased from $11 to $12 per hour. The latest increase ties the state with Colorado and Arizona for the fourth highest minimum wage in the country. The only states that have a higher minimum wage are California ($13.00), Massachusetts ($12.75) and Washington ($13.50). While the “Fight for $15” might be a catchy campaign slogan, little evidence exists to suggest that $15 per hour is the magic number that will lift workers out of poverty. 

In fact, the supply and demand curves for the low-skilled labor pool show that increasing the minimum wage will raise wages for workers but will also displace or reduce hours for a portion of workers who are currently employed or would be employed in the future. When Seattle raised their minimum wage to $13, the amount of hours worked by low-skilled workers fell by 9.4 percent while net wages increased by 3.1 percent. 

In practical terms, low-skilled Seattle workers experienced a net loss of $125 from their paychecks per month in 2016. Similarly, the Congressional Budget Office (CBO) estimates that increasing the minimum wage to $15 per hour at the national level would result in 1.3 million workers, who would otherwise have a job, to become jobless. 

By increasing the minimum wage, the threshold for salaried employees to be eligible for overtime is also expanding. According to Title 26, Section 663, employers are only exempt from paying their employees overtime if they make more than 3,000 times the hourly minimum wage. Therefore, employers must pay their employees at least $36,000 (previously $33,000) annually to avoid having to pay them overtime. 

This will require businesses who have salaried employees that work more than 40 hours per week and earn less than $36,000 to increase their employees’ salaries, pay them overtime or reduce their hours to avoid the newly incurred costs. It should be noted that this exemption would have increased to $35,568 under the new federal guidelines had the state not increased the minimum wage to $12 per hour. 

Another law that became effective January 1 was the polystyrene ban in Bangor. According to the new city ordinance, food service establishments will no longer be able to use polystyrene food containers for processing, preparing, distributing, or selling food products. 

An establishment that violates the ordinance will be fined between $100 and $250 for the first offense and between $250 and $500 for the second offense within a one-year period. The state’s ban on polystyrene does not become effective until January 1, 2021.

Along with the increase to the minimum wage and overtime exemptions, the decision to ban polystyrene will further increase costs for businesses. When New York introduced a ban on polystyrene foam food service containers, it was estimated that alternative products would cost 94 percent more than polystyrene products, almost doubling the cost. These costs will likely be passed onto consumers, effectively increasing the price of goods that would normally be packaged in a polystyrene container at the point of sale. 

Speaking of bans — in April 2020, the state will begin imposing a prohibition on single-use plastic bags often used by retailers. While the intent of the ban is to reduce plastic pollution, the bill included several exemptions, including:

  • Pharmacy bags;
  • Bags without handles used to protect items from being damaged or from damaging or contaminating other purchased items placed in a recycled paper bag or a reusable bag;
  • Bags used by customers inside a retail establishment to package loose items, such as fruits, vegetables, nuts, coffee, grains, bakery goods, candy, greeting cards or small hardware items; to contain or wrap frozen foods, meats or fish; or to contain or wrap flowers or potted plants;
  • Laundry, dry cleaning or garment bags, including bags provided by a hotel to guests to contain wet or dirty clothing or bags provided to protect large garments like suits, jackets or dresses;
  • Newspaper bags;
  • Bags sold in packages containing multiple bags intended to contain garbage, pet waste or yard waste;
  • Bags used to contain live animals, such as fish or insects sold in pet stores;
  • Bags used for vehicle tires;
  • Bags used to transport chemical pesticides, drain cleaning chemicals or other caustic chemicals sold at a retail establishment;
  • Bags used by a hunger relief organization such as a food pantry or soup kitchen to distribute food directly to the consumer at no charge;
  • Bags that customers bring to the retail establishment for their own use or for carrying away from the retail establishment goods that are not placed in a bag provided by the retail establishment. 

Further, instead of giving customers their items in single-use plastic bags, the store may use recycled paper bags as an alternative as long as they charge five cents per bag. However, the fee does not apply to restaurants, hunger relief organizations and stores at which less than two percent of retail sales are attributed to the sale of food and that have less than 10,000 square feet of retail area. 

If a store violates the new law, they may be penalized between $100 and $10,000 for each day the violation occurs. This does not send a welcoming signal to individuals who own or might want to open a business in Maine. 

This new law will act as a tax on consumers because they will be responsible for paying the five cents for each recycled paper bag they use. While the business will retain those funds, they are not allowed to rebate or reimburse their customers for this fee. In other words, this is a mandate on businesses to gouge consumers into being more “woke” and “green”. 

However, a 2018 Danish Environmental Protection Agency study found that a paper bag would need to be reused 43 times before its environmental impact is less than or equal to a single-use plastic bag. Therefore, this new legislation will do little to help the environment, provides a plethora of exemptions and will cost consumers more at the checkout counter. 

In summation, businesses need to be aware of these changes in order to fully comply with the legislature’s demands. While paying people more and becoming more conscious of the environment are generally good ideas, they must be done through good judgment and free will. Businesses will become “green” when their customers demand it. 

The new year, along with the legislature’s mandates, will bring increased operating costs for businesses and increased prices of goods and services for consumers.

About Adam Crepeau

Adam Crepeau is a former policy analyst at Maine Policy Institute.

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