The Maine Chamber of Commerce and Bath Iron Works are suing the Mills administration over the new paid family leave law’s implementation.
The lawsuit highlights a 1% payroll tax that started this month. This tax is shared between employers and employees. However, companies with private leave programs can’t opt out until after April 1.
They filed the lawsuit in Kennebec County Superior Court in Augusta. The Department of Labor and Labor Commissioner Laura Fortman are named as defendants.
This delay is tough for companies like BIW. They’ll be paying into the state program for months, even though they already provide similar benefits to their workers. They could eventually qualify for an exemption from the tax.
The lawsuit points out that the rules don’t specify how long the Department of Labor can take to review exemption applications. There’s no deadline for them to act, which could lead to long waits for employers.
Also, if an employer is granted an exemption later, they won’t get refunds for the money they paid into the program. For BIW, that could mean a loss of $620,000 if their exemption request is approved quickly.
Originally, employers would have had to pay into the program for 16 months without the option to opt out. After complaints, the state changed it to allow opt-outs starting in the first quarter of 2025.
The fund from the payroll tax will cover up to 90% of wages for up to 12 weeks for workers who are sick or need to care for family members. Small businesses with fewer than 15 employees are exempt from paying into the program, but their workers will still pay a 0.5% payroll tax and can access benefits.
This story will be updated as more information comes in.
