Maine Lawmakers Propose Eliminating the Cost-of-Living Adjustment for the Minimum Wage

Maine lawmakers have proposed doing away with the cost-of-living adjustment for the state’s minimum wage this legislative session.

Under the proposed Republican-led legislation, the state minimum wage would be set at $14.65 per hour and all references to cost-of-living increases would be removed.

LD 206 was sponsored by Sen. Jeff Timberlake (R-Androscoggin) and cosponsored by Rep. Joshua Morris (R-Turner), Sen. Jim Libby (R-Cumberland), Sen. Trey Stewart (R-Aroostook), Rep. Billy Bob Faulkingham (R-Winter Harbor), and Rep. Sheila A. Lyman (R-Livermore Falls).

Under current State Law, the hourly minimum wage must be increased in accordance with the cost of living as of August the previous year, rounded to the nearest five cents.

The most recent cost-of-living increase went into effect on January 1 of this year, bringing it up to the $14.65 per hour that would be codified under the proposed legislation.

In addition to this, the new tip wage was been set at $7.33 per hour, up from $7.08, such that it remains at fifty percent of the minimum wage. The amount of tips earned per month in order to qualify as an eligible service worker was also increased from $179 per month to $185 per month.

[RELATED: Maine’s Latest Minimum Wage Increase Takes Effect on Wednesday, January 1]

The tip wage — sometimes referred to as a tip credit — essentially allows employers to pay certain workers less per hour so long as the tips they earn are sufficient enough for them to earn a sum that is at least equal to the minimum wage.

In 2016, Maine voters approved a referendum incrementally increasing the minimum wage, beginning with a jump from $7.50 to $9 and increasing by an additional dollar annually until 2020, at which point it was indexed to inflation.

Although this measure also eliminated the statewide tip credit, it was quickly reinstated by lawmakers and former Gov. Paul LePage (R) in 2017.

[RELATED: Minimum Wage Hike, Tip Credit Elimination Will Not Appear on the Ballot in Portland]

Earlier this year, the Portland City Council considered a proposal that would have eliminated the City’s tip credit, a measure that was shot down by 61 percent of residents at the polls just two years prior.

Councilors voted 5-2 in August against placing this measure on the ballot, instead sending the proposal to the Housing and Economic Development Committee.

As of now, there is no clear timeline for when the proposed tip credit elimination could again come before the Portland City Council as a whole for further consideration.

[RELATED: Judge Blocks New DOL Rule for “White-Collar” Overtime — “Something Has Gone Seriously Awry”]

In November, a federal judge in Texas blocked the United States Department of Labor (DOL) from increasing the maximum salary threshold for so-called “white-collar” overtime under the Fair Labor Standards Act (FLSA), preventing the rule from going into effect nationwide.

As a result of this, the new minimum salary threshold in Maine will be $845.21 per week — or $43,951 annually — instead of the expected $58,656, according to the Maine Department of Labor (MDOL).

Under the FLSA, employers are generally required to pay employees overtime, or time-and-a-half, if they work more than forty hours in a week.

Some “white-collar” employees — including those who fall under the categories of executive, administrative, and professional — are exempt from this requirement, however, if they are also paid on a salaried basis and earn above a certain threshold.

In Maine, the salary threshold for overtime pay is set at 3,000 times the state’s minimum wage or the DOL standard, whichever is higher. Consequently, Maine’s threshold going into 2025 is higher than the amount now enforceable by the DOL.

LD 206 will now go before the Maine State Legislature’s Labor Committee for a public hearing and further consideration.