The Maine Supreme Court heard oral arguments Tuesday morning in the case against the Maine Department of Labor (MDOL) over rules adopted for the state’s newly-instituted Paid Family and Medical Leave (PFML) program.
The Maine State Chamber of Commerce, which represents the interests of businesses in the state, and Bath Iron Works, a subsidiary of the defense contractor General Dynamics, have sued the MDOL for allegedly adopting rules that contradict the program’s establishing legislation.
Separately, BIW argues that the new program represents a violation of Maine businesses’ constitutional rights.
Much of Tuesday’s oral arguments focused on the question of whether or not the rules adopted by the MDOL are consistent with the legislative intent for the program.
[RELATED: Bath Iron Works, Maine Chamber Sue State Over Paid Leave Rules]
The ongoing legal battle stems from the program developed by Senate President Mattie Daughtry (D-Cumberland) and, depending on the outcome, could have significant implications for businesses and workers statewide, who began paying the payroll tax to support the program on January 1.
Although Daughtry’s bill did not pass as originally introduced, Gov. Janet Mills (D) later signed a budget into law that included, among other things, legislation establishing the program with a starting appropriation of $25 million for the MDOL to administer it.
Employers and employees began contributing a new one-percent payroll tax to the state at the start of the year, sixteen months ahead of when benefits are scheduled to become available.
Beginning in the spring of 2026, 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. 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.
Click Here for More Information on the Paid Family and Medical Leave Program
Under this law, businesses that 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 MDOL, however, such exemptions were 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 were required to contribute hundreds of thousands of dollars to a program from which they will never derive benefits, as they will be subscribed to an approved alternative.
[RELATED: Maine’s New Paid Leave Rules — Here’s What Businesses and Workers Should Expect]
The lawsuit argues that the MDOL’s rules 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.
Sara Murphy, attorney for the Chamber and BIW, argued that the case rests on a “straightforward question of statutory interpretation.”
Because the MDOL “prohibited the possibility of having the exemption” in the first quarter of 2025, businesses that intended to apply for a private plan exemption were required to pay at least three months’ worth of premiums to the state for a program in which neither they nor their employees would participate.
Nancy Macirowski, attorney for the MDOL, pushed back on this interpretation, arguing that the law itself does not explicitly require that premiums be refunded or that exemptions be made retroactive for businesses that later substitute a private plan.
Macirowski further suggested that those with a private plan substitution are not exempt from the PFML Program and its tenants, only from premium contributions, citing the law’s non-retaliation clause as an example.
The Maine Supreme Court will now take the case under consideration and issue a written decision in the near future.
