Labor committee reverses course on critical workplace bill

LD 607 is amended to a resolve that focuses on education and outreach

At a work session on Wednesday, March 2, the Joint Standing Committee on Labor and Housing reversed course on one of the most critical bills of the second session for the business community, LD 607, An Act to Restore Overtime Protections to Maine Workers, sponsored by Rep. Rachel Talbot Ross (D-Portland).

At the work session, Rep. Talbot Ross offered a completely re-drafted version of the bill – the focus of which was to direct the Maine Department of Labor to develop a comprehensive educational campaign to ensure that Maine’s regulated community fully understands the laws regarding the payment of overtime to Maine workers.  This resolve replaces her bill proposed in 2021 and is a marked improvement over the original language.

As drafted, LD 607 would have been disastrous on numerous levels for Maine businesses. In addition to making our state an outlier when it comes to the overtime salary threshold, it would have drastically increased costs of doing business here, as well as created disruption and productivity issues in the workplace. 

As originally approved by a majority of the Labor committee back in January 2022, that version of the bill proposed tinkering with the existing multiplier tied to changes in the minimum wage. Since 2009, Maine’s monetary dividing line separating hourly / non-exempt and salaried / exempt workers has been tied to changes in Maine’s minimum wage. At that time, Title 26 was amended to create a threshold that is 3,000 times the state’s minimum wage. While the federal threshold is currently set at the newly established threshold of $35,568, Maine’s threshold has climbed, again this year, to its current level of $38,250 – again tied to the most recent increase in the minimum wage as indexed by changes to the Universal Consumer Price Index (UCPI) effective on January 1, 2022. Therefore, Maine’s “threshold” is already above the federal level and will continue to climb each year, even if nothing is done through public policy in our state.

Under the previously approved version of LD 607, the multiplier would increase in 2023 from 3,000 times the minimum wage to 3,500 times; in 2024, it would increase to 4,000 times; and in 2025, it would again increase to 4,500 times. Just based on the current minimum wage of $12.75 an hour, these increases translate into $44,626 in 2023, $51,000 in 2024, and $57,375 by 2025. However, the minimum wage will increase each year, as adjusted for by the UCPI, at the same rate the multiplier increases. This year’s adjustment was a six-percent increase, or 60 cents. It will again increase in 2023. Therefore, actual cost estimates are low and can only go higher than the above numbers.

By unanimously adopting the new version of the bill, all these problems and costs are avoided. Specifically, the resolve calls for the Maine DOL to do the following:

• At the request of employers and employer groups, the Bureau of Labor Standards will provide targeted training to employers on the requirements of Maine’s statutes regarding overtime, including a review of Maine's minimum wage, the determination of its salary threshold, and the three-pronged duties test to determine whether an employee is exempt from the overtime provisions of the law;
  
• In collaboration with organizations representing Maine’s business community and its non-profit sector, the Bureau of Labor Standards will create and distribute to employers compliance toolkits covering the requirements of Maine’s statutes regarding overtime;
  
• Also, in collaboration with organizations representing Maine’s business community and non-profit sector, the Bureau will offer employers the opportunity to review with its staff their classification of employees with respect to eligibility or exemption from overtime pay in order to ensure compliance;
  
• The department will launch a social media campaign focusing on overtime requirements and connecting employers and workers with resources to determine the proper salary threshold and whether an employee is exempt from overtime provisions of the law.
  

In addition, the resolve calls for an annual report from the department to the Labor committee on the effectiveness of their outreach and communication efforts, along with data on the complaints and violations of overtime laws and the status of the department’s enforcement efforts regarding regulation of overtime during the previous year.

The Maine State Chamber, along with the more than 50 statewide business association members and individual businesses, view this outcome as a positive victory. As noted earlier, Maine’s salary threshold is one of only five states right now above the federal threshold. In addition, Maine has a built-in escalator, meaning its number will increase each year tied to the UCPI. Lastly, it appears the Biden administration will likely once again re-visit this issue at the federal level in the upcoming year. All these things were noted by Rep. Talbot Ross upon introducing her amended language. The committee then proceeded to give its unanimous bipartisan approval of LD 607 as amended. 

This outcome on LD 607 is extremely positive one for Maine businesses of all sizes. As originally approved two months ago, the bill represented a significant cost increase in the cost of doing business here, as well as making Maine an outlier to nearly every other state in the country. With this action, that threat is removed.

The Maine State Chamber would like to thank Rep. Talbot Ross and Labor committee members from both parties for approving the bill as amended. We would also thank the more than 50 statewide business associations and their members for joining our collective voices in opposition to the original proposal. Your grassroots actions made a difference!

For additional information or questions, please contact Peter Gore, executive vice president, by calling (207) 623-4568, ext. 107, or by emailing [email protected].