Maine’s Earned Paid Leave Law

Many states have already enacted legislation, or are in the process of putting legislation into place, regarding earned paid leave for employees. Whether or not your state requires you to offer earned leave, it’s a great benefit to provide and can help in retaining your top employees.

Maine’s Earned Paid Leave law originally went into effect in January 2021 and requires all small businesses in Maine with more than 10 employees to provide up to 40 hours of paid leave annually to all employees. But as of September 24, 2025, this law is changing under a recent amendment signed by Governor Janet Mills.

Below we’ll break down the current rules, the new update under LD 55, and what it means for Maine businesses.

The Basics of Maine's Earned Paid Leave Law

• Effective January 1, 2021, employers with more than 10 employees must offer earned paid leave to all employees.
• Employees may earn 1 hour for every 40 hours worked, up to a maximum of 40 hours per year.
• This earned time may be used for sick, vacation, personal, or emergency time.
• This is a minimum requirement. Employers may (and many do) offer a more substantial time off package. If you already have a plan that meets or exceeds the minimums, you’re in compliance.
• Having a written policy in place is essential.

Eligibility Requirements

There are specific requirements that businesses must fall into for them to be required to comply with this law.

• All employers with more than 10 employees are required to offer Earned Paid Leave. This is bodies, not full-time equivalent (FTE) or any other count of employees.
• Common ownership rules apply. Consequently, if you own two businesses with a total of more than 10 employees, you are required to offer earned paid leave to all employees of both businesses.
• Seasonal businesses (open less than 120 days a year) who are specifically designated by the DOL are exempt. This is an uncommon designation, so be sure before you think you’re exempt. 
• All classes of employees are included – full-time, part-time, seasonal, per diem, temporary, etc.

Tracking Paid Earned Leave

Creating a clear policy for tracking time off is critical. If you are offering the minimum 40 hours, you have two main approaches:

• Frontload: Give employees 40 hours at the beginning of the year.
• Accrual: Employees earn 0.025 hours for each hour worked (including overtime). This can be set up easily in payroll software like isolved.

Additional tracking rules:

• Employers must decide whether employees can use time before it’s accrued or only after accrual.
• Paper Trails tracks earned paid leave for our clients at no charge.

New Update: LD 55 Increases the Accrual Cap

Here’s the big change: On July 1, 2025, Governor Janet Mills signed into law LD 55, which amends Maine’s Earned Paid Leave statute. This update takes effect on September 24, 2025.

What’s Changing?

Previously, accrual was capped at 40 hours. If you carried over hours, you were limited in how much more you could earn.

• Old Rule: Carrying over 30 hours meant you could only accrue 10 more in the new year.
• New Rule: Employees may carry over up to 40 unused hours and still accrue another 40 in the new year.

This means employees could have up to 80 hours of earned paid leave available in a given year, depending on usage.

Example Scenarios

• If an employee carries over 30 hours from 2025 into 2026, they can still accrue another 40 hours in 2026, giving them access to 70 hours.
• If that same employee only uses 10 hours in 2026, they could carry 40 into 2027 and accrue another 40, totaling 80 hours available in 2027.
• Any carried-over hours beyond one year are forfeited.

What Employers Should Do

Employers should:

• Review current leave and carryover policies.
• Decide whether your earned paid leave program will remain separate or be integrated into a larger PTO/vacation policy.
• Update your employee handbook and time-off policies to reflect the new law before September 24, 2025.

Using Earned Paid Leave Time

The Earned Paid Leave law also establishes rules on how earned time can be used. The rules are as follows:

• Employees may use Earned Time for any reason, including unexpected illness, vacation, personal time, emergency, bereavement, etc.
• Earned time must be paid at the same rate as normal pay.
• Tipped employees are paid at minimum wage.
• Employers may require employees to work 120 days before using any time.
• Employees may be required to give up to 4 weeks' notice for non-emergent leave.
• Employees should notify their employer as soon as practical for emergent leave.
• Employers may deny non-emergent leave based on business need.

Additional Details of Maine’s Earned Paid Leave Law

Some additional notes and tips for your Earned Time policy include:

• Set a 1-year period and be consistent (calendar year, employee anniversary or other period based upon business need—think seasonal)
• Employers can allow time to carry over if accruing time, but employees can still only earn/use 40 hours in the subsequent year. See above for more information.
• Payout of earned time upon employee termination is determined by your policy. **Update** As of April 7th, 2022, Maine law requires the payout of unused, accrued vacation time (only vacation time) for employers with more than 10 employees. Read more here.**
• If you front-load the 40 hours, you may deduct unearned hours from the employee's last paycheck (but you must have tracked earned time correctly).
• Employers may require employees to use earned time in 1-hour increments.
• Employees who leave and return within one year are entitled to any earned time they were not paid out upon departure.
• Employees who leave and return within one year are not subject to the wait if they previously worked 120 days.
• Employers shall not deny an employee the right to use paid leave, but there are exceptions.

HR rule #1: Consistency, consistency, consistency!!! Your policy should state eligibility requirements (almost everyone), how time accrues, how time may be used, how to request time off, what happens when an employee leaves (payout or no), who tracks this policy, and who to contact in the event questions arise.

Don’t Forget to Post the New Labor Law Poster!

The state has released a new labor law poster that must be published in a conspicuous location for all to see.

Download the new poster for FREE here. 

FAQ's about Maine Earned Paid Leave

Do all Maine businesses have to follow Maine Earned Paid Leave?

No. Only businesses with more than 10 employees are required to comply. This count includes all employees—full-time, part-time, seasonal, and temporary. If you own multiple businesses under common ownership, all employees are counted together.

How much time can employees earn?

Employees accrue 1 hour for every 40 hours worked, up to a minimum of 40 hours per year. However, under the 2025 amendment (LD 55), employees can now carry over up to 40 unused hours into the following year and still accrue another 40 hours. This means an employee could have up to 80 hours available depending on usage.

Does unused time get paid out when an employee leaves?

Not necessarily. The Earned Paid Leave statute itself doesn’t require payout upon termination. But under Maine’s vacation payout law, employers with more than 10 employees must pay out unused, accrued vacation time if their policy provides it. Your written policy should clearly state what happens with unused Earned Paid Leave at separation.

Can employers restrict how Earned Paid Leave is used?

No. Employees can use their time for any reason—illness, vacation, emergencies, or personal matters. However, employers can:

• Require employees to wait 120 days before using leave,
• Ask for up to 4 weeks’ notice for non-emergency leave, and
• Deny non-emergency leave if it causes a business hardship.

Final Thoughts

Maine’s Earned Paid Leave law continues to evolve, and the 2025 amendment (LD 55) significantly changes how much time employees can carry over and use. For small business owners, this means updating policies, payroll systems, and employee communications before September 24, 2025.

As with all compliance issues, the key is clarity and consistency. By building a strong policy and communicating it clearly, you’ll stay compliant with the law while also providing employees with a valuable benefit.