Maine further limits deductions affter overpaying employees

Maine has enacted legislation (Legislative Document 610) that will further limit deductions after an employer mistakenly overpays an employee. The law takes effect October 18, 2021.

Legislative Document 610:

Under the law, an employer that has overcompensated an employee through employer error may not withhold more than 5 percent of the net amount of any subsequent pay without the employee's written permission. Prior to Legislative Document 610, the limit was set at 10 percent. As is the case under existing law, if the employee voluntarily terminates employment, the employer may deduct the full amount of overcompensation from any wages due.

The new law also clarifies that an employer may not recover more than the amount of overcompensation paid to that employee in the three years preceding the date of discovery of the overcompensation.

Compliance Recommendations:

Maine employers should review payroll procedures to ensure compliance with Legislative Document 610. Please contact your dedicated service professional with any questions.