On November 8, Maine was one of four states which passed ballot initiatives approving a minimum wage increase. In addition to raising the 2017 state minimum wage for non-tipped workers from $7.50 per hour to $9.00, the Maine referendum schedules additional increases of $1.00 per year until the minimum hourly rate reaches $12.00, at which point it will increase according to inflation. The referendum also put in place the gradual elimination of the tipped minimum wage by way of increasing it each year until 2024 when it meets the non-tipped rate.
Question 4 gained approximately 55% of the vote, passing with the highest margin of approval of all of Maine’s 2016 initiatives. However, despite its popularity with voters, the referendum may end up being altered soon after its passage. On November 28, Governor Paul R. LePage issued a public letter to the Legislature asking them to “lessen the impact” of Question 4 as well as another approved referendum which increases income tax for education funding.
LePage specifically objected to Question 4’s automatic yearly increases “with no regard to how the state or national economy is doing,” as well as to the elimination of a lower minimum wage for tipped workers. According to LePage, “most Mainers did not understand the specifics of the referendum question they approved,” which he believes are likely to “create significant hardship” for small businesses, workers, and consumers.
Today, as the 128th Legislature convened for the governor to swear in its new members, LePage took the opportunity to tell lawmakers directly that he intends to submit legislation calling for a slower implementation of the scheduled minimum wage increases, as well as for the rejection of provisions to eliminate the tipped minimum wage. Many Maine legislators have stated that while they are unwilling to disregard the will of the people as expressed through their approval of the referendum, they are willing to consider changes if they prove to be for the greater economic good.
LePage’s promise is unlikely to impact the January 1, 2017 effective date for the first round of minimum wage increases, but we’ll keep an eye on legislation through the 128th Session to see how this unfolds. In the meantime, Maine employers should prepare for the impact of the minimum wage increase, as well as its effect on overtime rates. Maine Department of Labor communications and policy director Jill Rabinowitz recently reminded Maine employers that the minimum wage increase will also affect the salary threshold for exempt employees.
Maine’s minimum wage statute specifies that to be exempt from overtime pay, a salaried employee must be paid an annual rate which “exceeds 3000 times the State’s minimum hourly wage or the annualized rate established by the United States Department of Labor under the federal Fair Labor Standards Act, whichever is higher.” With the upcoming state minimum wage increase and the recent enjoinment against the USDOL’s attempt to raise the federal salary threshold, 3,000 times Maine’s new minimum hourly wage ($519.24 per week or $27,000 per year) is now higher than the federal and must be treated as the new state salary threshold.