Rep. Josh Morris (R-Turner) has formally submitted a bill that, if passed, would repeal the state’s new payroll tax—set to take effect on January 1—that is designed to fund the recently established Paid Family and Medical Leave program.
Titled “An Act To Stop Government Overreach and Repeal Payroll Taxes,” the proposed legislation was filed as an emergency so that all relevant payroll taxes collected for the program would be returned to Mainers immediately.
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
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.
[RELATED: Maine’s New Paid Leave Rules — Here’s What Businesses and Workers Should Expect]
Although 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.
The per-employee premium that must be paid by businesses to fund this program is statutorily capped at 1 percent of their wages. Employers are permitted to ask their workers to contribute up to 50 percent of this cost.
Businesses responsible for more than 15 employees must cover the other 50 percent of the premium themselves, while smaller businesses are only required to turn over the 50 percent paid by their employees.
Also encoded in the law is guidance for the program’s applicability to self-employed individuals, explaining that they may opt into the program and, if they choose to do so, would be responsible for paying the same 50 percent premium contributed by small businesses.
It is also specified in the law that upon returning to work, an employee must be reinstated to the same, or a suitably equivalent, position.
Click Here to Read the 2023 Budget Legislation
“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.
