Proposed rules for Maine’s Paid Family and Medical Leave program have been revised to ease the burden on businesses, including those that intend to opt-out of the state’s program by offering their own private benefit plans.

The changes were released Wednesday by the Maine Department of Labor in response to public feedback, including criticism from the business community.

Destie Hohman Sprague, executive director at Maine Women’s Lobby, speaks about paid family and medical leave during a news conference in Feb. 2023 at the Maine State House in Augusta. Joe Phelan/Kennebec Journal

The Maine Legislature approved a bill last year that establishes a 12-week paid family leave benefit. The adoption of technical rules is a key step in setting up the program in time to begin offering the benefit to Maine workers in 2026.

Patrick Woodcock, president and CEO of the Maine State Chamber of Commerce, said in an interview Wednesday that the business organization appreciates the Labor Department’s willingness to make changes.

“The revisions address two major concerns we had with the rule,” Woodcock said.

The law imposes a 1% payroll tax, to be split evenly between workers and their employers, to cover the costs of a state-run paid family leave benefit for workers who qualify. It would pay up to 90% of regular wages for up to 12 weeks for workers who are ill or need to take care of newborns or other family members, among other reasons.

The Maine chamber had criticized the original version of the rules because they didn’t allow businesses to opt out of paying the taxes until after the program goes into effect, even if they already offer an equivalent private plan. The state plans to begin collecting the taxes in January 2025 so it can build up enough funding to be able to pay out the benefits starting in May 2026.

The chamber’s objection was that some businesses that would be eligible to opt out by providing an equivalent benefit would be paying taxes for more than a year for a program they wouldn’t be using.

Under the previous version of the proposed rules, businesses would not have been allowed to opt out of the program until May 2026, fifteen months after they would start paying the tax.

But the new version allows businesses that prove they offer an equivalent or better paid family leave plan to opt out of the state system starting in April 2025, thus avoiding 12 months of tax liability.

‘We are really appreciative of the date change,” Woodcock said. “It will have a material impact of reducing the cost for employers and employees alike.”

Woodcock said that based on what has happened in other states, an estimated 15% to 25% of businesses will choose to offer an equivalent private plan.

Woodcock said the Labor Department also addressed another concern by revising language to make it easier to invoke a “hardship clause” for small and highly-seasonal businesses that would face an “undue hardship” if an employee went out on paid leave.

“It (the revised rule) does allow businesses to have an ability to work out a leave that works for the employee and employer alike,” Woodcock said.

Thirteen states, including Connecticut and Massachusetts, have paid family leave laws. The federal government passed an unpaid family and medical leave benefit in the 1990s. It required most companies to hold open the jobs of people who had to take family leave for up to three months.

Nora Flaherty-Stanford, spokeswoman for the Maine People’s Alliance, a progressive advocacy group that lobbied for the law, said the group approves of some of the rule changes, but wants others adjusted.

For instance, she said it’s good that the rules now clarify how workers can use paid leave when they are caring for a person who is not a direct family member, but is an important person in their lives. But the Maine People’s Alliance is going to seek to reverse a rule change that allows employers to claim a private benefit is equivalent to the state’s if it offers 10 weeks of benefits, rather than 12 weeks, she said.

Overall, the law will help many people when it goes into effect, she said.

“This is going to make a massive difference for people,” Flaherty-Stanford said. “People are no longer going to worry about having to choose between paying rent and taking care of their dying parent.”

Rep. Kristen Cloutier, D-Lewiston, left, and Sen. Mattie Daughtry, D-Brunswick, at a news conference about paid family leave legislation in Augusta in May 2023. Joe Phelan/Kennebec Journal

Public comment on the revised rules will be accepted until Sept. 30, and there will be a public hearing at 9 a.m. Sept. 17 in the Frances Perkins Room at the Maine Department of Labor.

State Sen. Mattie Daughtry, D-Brunswick, and state Rep. Kristen Cloutier, D-Lewiston, sponsors of the paid family leave law, said in a joint statement that the Labor Department is doing a thorough job establishing strong rules.

“Maine’s Paid Family and Medical Leave Program is going to be one of the most significant and transformative policies our state has seen in decades, with all Mainers having access to a new benefit,” they said. “It is critical that we have strong rules when we launch this program, and we’re so grateful for the second opportunity for employees and employers alike to provide feedback.”