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Payroll management in Maine

Maine has a diverse economy supported by industries such as tourism, fishing, healthcare, and manufacturing. With specific payroll regulations, including a higher minimum wage than the federal requirement and state-mandated paid leave policies, employers in Maine must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in Maine

Employers in Maine must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

  • Minimum wage: Maine’s minimum wage is $14.15 per hour, which is higher than the federal minimum wage.
  • Overtime rules:
    • Maine follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
    • Some exemptions apply to specific industries and job classifications.

State income tax

  • Maine has a progressive state income tax system with rates ranging from 5.8% to 7.15% depending on income levels.
  • Employers must withhold state income tax and remit it to the Maine Revenue Services.

Unemployment insurance (UI) tax

  • Employers must contribute to Maine’s Unemployment Insurance (UI) program, managed by the Maine Department of Labor.
  • The wage base for UI tax in Maine is $12,000.
  • UI tax rates vary based on an employer’s experience rating and range from 0.49% to 5.40%.

Workers’ compensation

  • Maine law requires most employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

  • Employers must register for a Maine Withholding Tax Account Number with the Maine Revenue Services.
  • State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
  • UI tax reports must be submitted quarterly to the Maine Department of Labor.
  • Payroll tax payments can be made electronically through the Maine Revenue Services online portal.

Quick facts: Important considerations for employers

  • State minimum wage compliance: Maine’s minimum wage is higher than the federal rate, and employers must comply with state laws.
  • Final paycheck rules:
    • If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
    • If an employee resigns, the final paycheck must be provided by the next scheduled payday.
  • New hire reporting: Employers must report new hires to the Maine Department of Health and Human Services within seven days.
  • Paid leave: Maine requires employers with more than 10 employees to provide one hour of paid leave for every 40 hours worked, up to 40 hours annually.
  • Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
  • Right-to-work state: Maine is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in Maine with Remote

Managing payroll in Maine requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.