Cape Elizabeth to Cover Town Employees’ Contribution Costs for New State Paid Leave Program Through End of Fiscal Year

The Cape Elizabeth Town Council voted unanimously Monday in favor of covering both the employer and employee contributions to the state’s new paid leave program for Town employees through the end of the fiscal year.

Town Manager Patrick Fox explained in a December 10 memo to the Town Council that covering these costs through June 30, 2025, would allow more time to educate employees on the new law and its impacts.

Click Here to Read the Full Memo to the Town Council

Under the new program — signed into law over the summer as part of the budget legislation — Maine workers will be eligible to take up to twelve weeks of paid leave to care for a sick family member, as well as to bond with a newborn baby or newly adopted child beginning in the spring of 2026.

Also eligible for leave are those who are experiencing a serious health condition and are rendered unable to work for an extended period, and anyone serving as a caregiver for someone who meets the other conditions.

Employers and employees will begin contributing a new one percent payroll tax to the state on January 1, 2025, sixteen months ahead of when benefits are scheduled to first become available.

Click Here for More Information on the Paid Family and Medical Leave Program

“The Town Council’s decision to cover the 1 percent contribution for the remainder of Fiscal Year 2025 allows time to educate employees on this new law and better understand the long-term effects or changes required to the town’s existing leave plans and policies,” a Town press release explained.

It was estimated that this will cost the Town about $13,500 per quarter next year. These costs can be absorbed by the current budget, however, “due to staff vacancies in multiple departments this year.”

The cost for all Town employee and employer contributions for FY 2026 will be around $70,000. Local officials will have the ability to discuss and decide upon potential cost sharing considerations going forward during the upcoming budget process.

Under the program’s law, public employers who have employees covered under collective bargaining agreements do not own premiums to the state until the current contract period expires.

In the case of Cape Elizabeth, this includes the Police and Public Works bargaining units, who have contracts that expire on July 1, 2025.

Click Here to Read the Full Press Release

This new program has frequently drawn criticism from some, and just months after its approval, lawmakers will be considering a proposal to roll it back.

Rep. Josh Morris (R-Turner) formally submitted a bill last week that, if approved, would repeal this program and return to Mainers all payroll taxes collected for it.

“I believe that this new tax should be repealed because it’s time to lower Mainers’ cost of living as much as possible as quickly as possible,” Rep. Morris said in a statement Monday.

“Mainers are still dealing with the effects of high inflation, high gas, grocery, healthcare, and energy costs caused by Democrats’ out of touch big government policies, Republicans must fight harder than we ever have against these costly bad ideas and on behalf of Maine’s workforce,” said Morris.

[RELATED: Republican Lawmaker Seeks to Repeal Impending Payroll Tax for New Paid Leave Program]

Although many of the major structural elements of this program were already outlined by the Legislature, most of the specifics were left up to Maine Department of Labor (MDOL) and a commission formed to administer the program.

Advancing the bill in this manner allowed lawmakers to get the measure approved without debating specific details, but it also created a significant amount of uncertainty for Maine businesses that will now be required to comply with various mandates, changes to tax collections, and paid leave allowances.

The rules set by the MDOL fill in the gaps, going into greater detail regarding the nuts and bolts of the requirements that the program will begin to impose on Maine businesses in a matter of weeks.

While the final version of the rules published earlier this month brought some clarity to how the program will work in practice, a fair amount of ambiguity still remains over how the regulatory language will be interpreted.

In an interview with the Maine Wire over the summer, Maine State Chamber of Commerce CEO Patrick Woodcock suggested that the timeline for the program’s implementation is far too rapid given the scale of the policies being instituted.

“I do think that the timeline of the entire program had a fundamental misunderstanding of the scale of this initiative,” Woodcock said. “It is the biggest program for the State of Maine government to set up in a generation.”

Woodcock also underscored the nature of how this program will fundamentally impact employers throughout the state, expressing concern that many businesses may not yet fully grasp the scope of the changes that will be wrought by the program.

“I think a lot of businesses are trying to navigate in 2024 the combination of inflation, labor scarcity, and now this additional payroll tax, and what in 2026 will be the management of a workforce that is now eligible for twelve weeks of leave,” said Woodcock.

For More Information from the Maine Wire on the Final Rules for This Program: Maine’s New Paid Leave Rules — Here’s What Businesses and Workers Should Expect