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HR changes your business [org.] should know about…

by Sarah Skillin Woodard

On January 1, 2020, several important changes will take effect that impact all Maine employers, regardless of size. Some are based on recent federal rulemaking; others due to enacted Maine laws.

  • Maine’s minimum wage will increase $1 an hour more, to $12 an hour, effective January 1, 2020. This is the final dollar increase to the minimum wage associated authorized by the 2016 citizen’s initiated and approved referendum. In addition, effective 2021 and each year thereafter, Maine’s minimum wage will continue to increase associated with any change in the Consumer Price Index (CPI). The minimum wage won’t decrease in any case.
  • An increase in Maine’s wage threshold will also take effect on January 1, tied to the minimum wage increase. The wage threshold is used to determine which employees are salaried or hourly. Hourly employees are subject to overtime pay. In Maine, the salary portion test used to make the determination between an hourly and salaried employee is in state statute and is set at 3000 times the minimum wage. Therefore, Maine’s salary threshold will increase from its current level of $33,000 to $36,000. It is important to note that this increase is above the US Department of Labor rules establishing a new, higher salary threshold nationally. Again, this differential will continue to increase yearly going forward associated with any additional increase in the minimum wage tied to CPI indexing.
  • The US Department of Labor has recently adopted new rules establishing a new federal salary threshold. Again, effective January 1, 2020, the new rule raises the pay threshold for exempt workers to $35,568 per year ($684 per week), from its current level of $23,660 per year ($466 per week). Like the state test, employees must be paid a salary of at least the minimum salary threshold amount and meet certain duties tests to be exempt from overtime under the Fair labor Standards Act (FSLA). If either the salary threshold or the duties test is not met, the employee must be paid overtime at 1.5 times the regular hourly rate for any hours worked in excess of 40 hours in a work week. This is the first increase in the federal overtime standard since 2004. It is important to note that, unlike the state statue, the federal standard impacts certain other employees in the workplace.

Specifically, the federal standard:

  • Increases the total annual compensation level for a “highly-compensated employee” from $100,000 to $107,432 per year;
  • Allows companies to use non-discretionary bonuses, incentive payments and commissions (all paid at least annually) to satisfy up to 10 percent of the standard salary level;
  • Revises special salary levels for workers in the US territories and in the movie business; and,
  • Does not contain an automatic escalator like Maine’s statute – because the Maine statute is more generous than the federal rule, all Maine employers will need to comply with the Maine law in this regard.

Source: Maine State Chamber of Commerce December 17, 2019

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