All unused vacation time accrued pursuant to an employer’s vacation policy in Maine after January 1, 2023, must be paid to the employee on termination. There are exceptions for employers with 10 or fewer employees and public employers [H.B. 160, L. 2022].
Under current Maine law, whenever the terms of employment or an employer’s established practice includes provisions for paid vacations, vacation pay on termination of employment has the same status as wages earned.
Effective January 1, 2023, private employers with 11 employees or more will be required to pay out all accrued, unused vacation on termination of employment. This covers situations where an employee leaves the job, as well as when a business shuts down.
When employees are covered by a collective bargaining agreement (CBA) that includes provisions addressing payment of vacation pay on termination, the CBA will govern the payment.
The requirement does not apply to public employers, defined as the state, a county, a municipality, the University of Maine system, the Maine Community College system, a school administrative unit, and any other political body or its political or administrative subdivision.
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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for the APA.