Human Resource Blog

Maine Law on PTO or Vacation Pay

If an employee resigns on good terms from a company in Maine with 28 hours of accrued PTO time, must the employer pay the worker for that time?

Yes. Maine has one of the toughest vacation (or PTO) payment requirements of any state. Under Maine case law, “An employee leaving employment must be paid in full within a reasonable time after demand at the office of the employer where payrolls are kept and wages are paid . . . .  Whenever the terms of employment include provisions for paid vacations, vacation pay on cessation of employment has the same status as wages earned.”

According to the Maine Department of Labor, an employee who resigns must receive their final paycheck on the normal payday. That check must also include payment for any accrued vacation time or PTO. The employee must receive the check within 2 weeks. The employee must go in person, on or after the regularly scheduled payday, to pick up the check.

However, be aware that the employee may not be paid for all of his or her PTO time. This is because PTO often includes sick pay and holiday pay. Under the Maine law, the employer is liable only for the amount of PTO that is considered “vacation pay.” And, the employer can decide how much time this is, as long as they apply the same rules to all employees.

The Maine Department of Labor (DOL) enforces this law, so any employee who does not receive their check on the regularly scheduled payday can contact the state DOL, Wage and Hour Division. The Wage and Hour Division will collect the employee’s wages and vacation pay.

Workers in Maine are fortunate in this regard. Only a handful of states require that employers pay employees for their accrued vacation time. These states include California, Illinois, Iowa, Louisiana, Maine, Massachusetts, North Carolina, Oregon, Rhode Island and Tennessee.

Employers in Maine would be wise to follow this law scrupulously. Even an honest mistake can result in hefty penalties plus court costs for employers. In Maine MedicalCenter vs. Bisbing, an emergency room doctor, Spence Bisbing, sued Maine Medical Center (MMC) for his accrued vacation pay. The employer argued that Dr. Bisbing had used all his vacation time. The court ruled in Dr. Bisbing’s favor, and ordered MMC to pay $27,500 in vacation pay, plus damages equal to three times that amount, totaling $82,500. The court also awarded Dr. Bisbing attorney’s fees in the case.

Maine Medical Center appealed the case, arguing that they made an honest mistake and should not have to pay damages. The state appeals court upheld the lower court’s findings.

So even an employer who makes an honest mistake can end up paying damages three times the amount owed for vacation pay, plus attorney fees, under Maine law.