- The Maine Wire - https://www.themainewire.com -

How will Maine’s struggling small businesses survive the next unfunded mandate?

The National Federation of Independent Businesses (NFIB) issued a press release Monday raising concerns about the implementation of Maine’s new paid leave law, passed in the First Session of the 129th Legislature and signed into law by Gov. Janet Mills in late May 2019.

The law is set to take effect on Jan. 1, 2021. With businesses already struggling to remain afloat amidst the pandemic and a turbulent summer tourist season, the NFIB worries the new law will be the final nail in the coffin for many of Maine’s small businesses.

Under the new law, employees of businesses with 11 or more employees can earn one hour of paid leave for every 40 hours they work, up to a maximum of 40 hours of paid leave annually. Employees begin accruing earned paid leave time at the start of their employment, but their employer is not required to permit the use of leave before the employee has worked 120 days over a one-year period.

Maine’s law allows earned leave time to be be used for reasons outside of illness, provided the employee gives their employer reasonable notice of their planned absence. Seasonal workers are not eligible to receive paid leave under the new law.

“The unprecedented crisis created by COVID-19 has made paid leave of crucial importance to Maine workers, many of whom have been forced to balance their family’s health and their economic security,” Maine Department of Labor (MDOL) Commissioner Laura Fortman said in a release. “Maine is a national leader with this law, which will go far to help Maine workers today and will help support our workforce into the future.”

The NFIB is not as optimistic about the new law and believes the rules established by the MDOL do not give employers as much flexibility as the original law intended.

As noted in their release, NFIB says the law does not allow employers to file a general business hardship waiver and, if challenged, may be forced to justify individual hardships if the business denies a leave request made by an employee.

As originally passed, LD 369 states an employee “shall give reasonable notice to the employee’s supervisor of the employee’s intent to use earned leave. Use of leave must be scheduled to prevent undue hardship on the employer as reasonably determined by the employer.” Under this language, it appears the onus falls on an employee to ensure their use of paid leave does not cause undue hardship to the business, as defined by the business.

The rules recently released by the MDOL, however, do not adequately reflect this language and appear to define undue hardship, which was not defined in the original law.

“Undue hardship means a significant impact on the operation of the business or significant expenses, considering the financial resources of the employer, the size of the workforce, and the nature of the industry,” the new rules read. This language creates ambiguity about what would qualify as undue hardship given the size and industry of the employer. Large employers can absorb small fluctuations to their workforce, however it’s much more difficult for a small business with 15 employees to do the same, particularly given the challenges posed by the pandemic.

“Significant and ongoing disruptions facing small businesses already have them struggling to stay afloat financially, so piling on more costs and reducing their flexibility could be the final tipping point,” said David Clough, Maine NFIB state director. “We believe the law gives small employers more authority for determining hardship than the rules appear to recognize,” Clough said.

The difference between the language of the law and the rules developed by MDOL could become costly for small businesses. Businesses could be forced to testify to the extent of their hardship if a complaint is filed against the business for denying a leave request, even though the law states a business can reasonably determine what would cause an undue hardship. Violations of the law for each improperly denied leave request can result in a fine of no more than $1,000.

Clough also notes the new paid leave law is being implemented at the beginning of 2021 when Maine’s minimum wage law is scheduled to increase again due to its indexing to inflation.

“We are appreciative that Governor Janet Mills and legislators have excluded very small employers with up to 10 employees, but there is still great concern about those with 11 or more who are covered by the new law,” he said. “In January business owners will face not only higher labor costs for paid leave but the $12 minimum wage is slated to rise. If you combine those added costs to pandemic-related losses, PPE costs, and extended business restrictions, it could wipe out many jobs and small businesses even if no single factor is solely to blame because it all adds up.”