GOP Lawmakers Introduce Bill to Allow Some Employers to Get a Refund for Contributions to Paid Leave Program

A new bill introduced this week looks to amend the laws governing Maine’s new Paid Family and Medical Leave (PFML) Program to allow employers who had a “substantially equivalent” private plan in place by January 1 of this year.

Currently, Maine employees and employers are required to make non-refundable contributions to the new paid leave program, even if the employer intends to substitute a private plan.

This program, enacted last year as part of a spending bill, has imposed a one percent payroll tax on most working Mainers and their employers to fund paid leave for all employees statewide, with benefits not scheduled to begin until May of 2026.

Under this program, businesses who intend to provide a private alternative to the state’s program have the option of doing so. Applications must be submitted to and approved by the state, at which point contributions from both the employees and employer would no longer be required.

Due to the rules established by the Maine Department of Labor (MDOL), however, such exemptions are not able to take effect until several months after the start of premium collection, and the money paid by employers and employees in the meantime in order to maintain compliance with state law would not be refundable.

Consequently, many businesses and employees will be required to contribute hundreds of thousands of dollars to a program from which they will never benefit.

Rep. Michael Soboleski (R-Phillips) sponsored LD 1169 which would allow some employers with a qualifying private plan to recoup their portion of these payments.

Employers with an MDOL-approved private plan in place on or before January 1, 2025 would be eligible to request a refund for the premiums paid that have already been paid into the program.

The Department would then need to issue a full refund to employers within 90 days of receiving their qualifying application. The MDOL would also be required to make public information about the availability of these refunds.

Cosponsoring this bill are Sen. Joseph Martin (R-Oxford), Rep. Barbara A. Bagshaw (R-Windham), Rep. Gary A. Drinkwater (R-Milford), Rep. Randall Adam Greenwood (R-Wales), Rep. Chad R. Perkins (R-Dover-Foxcroft), Rep. Tracy L. Quint (R-Hodgdon), Assistant Minority Leader Katrina J. Smith (R-Palermo), Rep. James Lee White (R-Guilford), and Sen. David Haggan (R-Penobscot).

Click Here for More Information on LD 1169

Earlier this year, Bath Iron Works and the Maine State Chamber of Commerce sued the MDOL over their rules implementing the paid leave program, alleging that they were contradictory to the underlying laws establishing the program.

Separately, BIW argues that the new program represents a violation of Maine businesses’ constitutional rights.

The lawsuit argues that the MDOL’s rules requiring employers who intend to apply for a private plan substitution to make non-refundable contributions to the program are contrary to the legislation approved by lawmakers and, therefore, are “arbitrary and capricious.”

In BIW’s separate argument, the company contends that the MDOL’s rules are also in violation of both the United States and Maine constitutions.

According to BIW, the collection of non-refundable contributions for a program from which they and their employees will never benefit violates the U.S. Constitution’s Fifth Amendment ‘Takings Clause.’

They also argue that it is in violation of the Maine Constitution’s Article I prohibition against taking “private property for public uses” absent “just compensation,” except for under circumstances when “the public exigencies require it.”

[RELATED: Bath Iron Works, Maine Chamber Sue State Over Paid Leave Rules]

In late February, the state officially approved the first twelve private plan substitutions for the paid leave program.

An updated list of private plans eligible for substitution will be maintained on the MDOL’s website at: www.maine.gov/paidleave/docs/2025/employerresources/ListofApprovedandCertifiedInsuredPlans.pdf.

Earlier this year, the MDOL released guides for employers who are looking to opt-out of the state run program in favor of a private alternative.

One guide focuses on the substitution of fully-insured plans, while the other explains how employers may substitute a self-insured plan.

Fully-insured plans are described by the MDOL as giving employees the “rights, protections, and benefits substantially equivalent to those provided under the State Plan.”

Self-insured plans, on the other hand, are where an employer commits to providing these same things to employees independently or through a third-party administrator.

The guides also explain that only certain fully-insured plans will be certified as substitutes for the state-run program.

[RELATED: State Approves First 12 Private Plan Substitutions for Maine’s New Mandatory Paid Leave Program]

Before applying to substitute a fully-insured plan, the guides indicate that employers first must actually purchase the qualifying coverage.

To submit an application, employers must use the Maine Paid Leave Contributions Portal and click the “Request Substitution of a Private Plan” hyperlink.

The website will then prompt employers to input their businesses’ identifying information and select whether they are seeking to substitute a fully-insured or self-insured plan.

For employers going the fully-insured route, they will be prompted to input plan details and upload proof of purchase

Employers opting to substitute a self-insured plan will be asked to provide the relevant details and documentation.

Regardless which type of plan an employer is seeking to substitute, a $250 application fee must be paid to the state before pressing submit.

The guides do not provide an estimated time frame in which employers can expect the state to decide whether or not to except their applications.

If the state denies an employer’s application, the decision may be appealed within fifteen days.

Both guides emphasize, however, that employers must continue to pay into the state paid leave program while their applications are pending.

LD 1169 was first introduced Thursday, so a public hearing has not yet been scheduled, but it is expected that one will be set at some point in the coming weeks.