An Act To Amend and Clarify the Application of the Laws Regarding Severance Pay . Reference to the Committee on Labor suggested and ordered printed.
Maine Legislature, Session 124, LD 1441
Committee: Labor
Sponsors: JACKSON, BRYANT, CAMPBELL, CLARK, DRISCOLL, EVES, GIFFORD, KNIGHT, RUSSELL, THERIAULT, TUTTLE
Amends: 26 MRSA §625-B, 26 MRSA §632

Legislative Document 
No. 1441 
S.P.525 
In Senate, April 7, 2009 
An Act To Amend and Clarify the Application of the Laws 
Regarding Severance Pay 
. Reference to the Committee on Labor suggested and ordered printed. 
Presented by Senator JACKSON of Aroostook. 
Cosponsored by Representative BRYANT of Windham and 
9t~(J~ 
JOY 1. O'BRIEN 
Secretary ofthe Senate 
Senator: BRYANT of Oxford, Representatives: CAMPBELL of Newfield, CLARK of 
Millinocket, DRISCOLL of Westbrook, EVES of North Berwick, GIFFORD of Lincoln, 
KNIGHT of Livermore Falls, RUSSELL of Portland, THERIAULT of Madawaska, TUTTLE 
of Sanford. 
Printed on recycled pap.er 
Be it enacted by the People ofthe State of Maine as follows: 
Sec. 1. 26 MRSA §625-B, sub-§l, errA, as enacted by PL 1979, c. 663, §157, is 
amended to read: 
A. 
"Covered establishment" means any industrial or commercial facility or part 
theFeof 'llhich of a facility in the State that employs or has employed 100 or more 
persons at any time in the preceding 12 month 36-month period 100 OF mOFe DeFsons. 
Sec. 2. 26 MRSA §625-B, sub-§l, ~-1 is enacted to read: 
B-1. "Employee" means a person employed at a covered establishment at the time a 
decision to terminate or relocate is made, whether or not that person is actively 
working at the time. 
Sec. 3. 26 MRSA §625-B, sub-§l, '1[E, as enacted by PL 1979, c. 663, §157, is 
amended to read: 
E. "Physical calamity" means any sudden calamity such as fIre, flood or other natural 
disaster, or the fInal order of any federal, state or local governmental agency 
including adjudicated an involuntary bankruptcy petition filed under 11 United States 
Code, Section 303 (2007). A bankruptcy petition filed by the employer or its parent 
corporation is not a physical calamity. 
Sec. 4. 26 MRSA §625-B, sub-§l, GjfH, as enacted by PL 1979, c. 663, § 157, is 
repealed and the following enacted in its place: 
H. "Week's pay" means the greater of: 
(1) The employee's wage rate at the time of a decision to terminate or relocate a 
covered establishment times the number of hours in that employee's most 
recently scheduled workweek; or 
(2) An amount equal to the employee's gross earnings during the previous 12 
months divided by the number of weeks in which the employee worked. 
Sec. 5. 26 MRSA §625-B, sub-§2, as enacted by PL 1979, c. 663, §157, is 
amended to read: 
2. 
Severance pay. Afiy An employer who relocates or terminates a covered 
establishment shall be is liable to his employees an employee for severance pay at the rate 
of one week's pay for each year of employment by the employee in that establishment. 
The severance pay to an eligible employees shall be employee is in addition to any fmal 
wage payment to the employee and shall must be paid within one regular pay period after 
the employee's last full day of work, notwithstanding any other provisions of law. The 
provisions of sections 621-A and 626 apply to the payment of severance pay, as do the 
penalties in section 626-A. 
Sec. 6. 26 MRSA §625-B, sub-§3,~, as enacted by PL 1979, c. 663, §157, is 
amended to read: 
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D. That employee has been employed by the employer at a covered establishment for 
less than 3 years. In determining the number of years an employee has worked at a 
covered establishment, it is immaterial whether or not the employee has been 
employed by the same person. 
Sec. 7. 26 MRSA §625-B, sub-§8, as enacted by PL 2001, c. 625, §1, is amended 
to read: 
8. Rules. The Department of Labor shall adopt rules to implement this section. 
Rules adopted pursuant to this subsection are major substantive rules as defmed in Title 
5, chapter 375, subchapter II-A 2-A. Initial rules must be nfOvisionallv adonted and 
submitted to the Lelrislature not later than .Tannarv 15. 1003. 
Sec. 8. 261\1RSA §625-B, sub-§10 is enacted to read: 
10. Mass layoff. Whenever an employer lays off 100 or more employees at a 
covered establishment, it must be presumed that the layoff constitutes a termination of a 
part of that covered establishment within the meaning of subsection 1, paragraph G, and 
the affected employees are eligible for severance pay under this section. The employer 
has the burden of proof that the layoff is not permanent. The terms of a collective 
bargaining agreement, if negotiated after the effective date of this subsection, supercede 
the terms of this subsection. 
Sec. 9. 26 MRSA §632, sub-§l, as amended by PL 1983, c. 172, is further 
amended to read: 
1. Fund established. There is established a Maine Wage Assurance Fund to be used 
by the Bureau of Labor Standards within the Department of Labor for the purpose of 
assuring that all former employees of employers within the State receive payment for 
wages for a maximum of 2 weeks for the work they have performed. The Legislature 
intends that payment of earned wages from the fund be limited to those cases when the 
employer has terminated his that employer's business and there are no assets of the 
employer from which earned wages may be paid, or when the employer has filed under 
any provision of the Federal Bankruptcy Act. No officer or director in the case of a 
corporation, no partner in the case of a partnership and no owner in the case of a sole 
proprietorship may be considered an employee for purposes of this section. 
An employee who is due severance pay under section 625-B is eligible for payment from 
the Maine Wage Assurance Fund of the severance pay due to that employee from any 
employer who fails to timely pay the severance pay. 
SUMMARY 
This bill makes the following changes to the laws governing severance pay. 
1. It makes changes to definitions. 
2. It provides that certain provisions of the labor laws that apply to the payment of 
wages and penalties for the nonpayment of wages also apply to severance pay. 
3. 
It provides a presumption that whenever an employer lays off 100 or more 
employees at a covered establishment, that layoff constitutes a termination of a part of 
that covered establishment. 
4. It provides that severance pay may be paid from the Maine Wage Assurance Fund 
if an employer fails to timely pay severance pay. 
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