An Act To Enforce Wage Laws by Preventing Misclassification of Employees
Maine Legislature, Session 126, LD 0418
Committee: Labor, Commerce, Research and Economic Development
Sponsors: RUSSELL, GILBERT, GOODE
Amends: 26 MRSA §620, 26 MRSA §621-A, 26 MRSA §622, 26 MRSA §623, 26 MRSA §626, 26 MRSA §626-A, 26 MRSA §626-C

Legislative Document 
No. 418 
H.P. 290 
House of Representatives, February 14, 2013 
An Act To Enforce Wage Laws by Preventing Misclassification of 
Employees 
Reference to the Committee on Labor, Commerce, Research and Economic Development 
suggested and ordered printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative RUSSELL of Portland. 
Cosponsored by Representatives: GILBERT of Jay, GOODE of Bangor. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  26 MRSA §620 is enacted to read: 
§620.  Definitions 
As used in this subchapter, unless the context otherwise indicates, the following 
terms have the following meanings. 
1.  Employee.  "Employee" means an individual who is employed in this State by an 
employer, including an individual who is in receipt of or is entitled to any compensation 
for labor performed for an employer. "Employee" also includes a commission salesperson 
who takes orders from or performs services on behalf of a principal and who is paid on 
the basis of commissions, but does not include individuals who purchase for their own 
account for resale.  "Employee" does not include an independent contractor. 
2.  Employer.  "Employer" means an individual, firm, corporation, agent, manager, 
representative, contractor, subcontractor or principal or a person acting directly or 
indirectly in the interest of an employer to permit an employee to work. 
3.  Independent contractor.   "Independent contractor" means an individual who: 
A.  Provides services free from direction and control over the means and manner of 
providing the services, subject only to the right of the person or entity for whom 
services are provided to specify the desired result, and furnishes the tools and 
equipment necessary to provide the services; 
B.  Operates a business that is considered inseparable from the individual for 
purposes of taxes, profits and liabilities: 
(1)  In which the individual: 
(a)  Owns all of the assets and profits of the business; and 
(b)  Has sole, unlimited personal liability for all of the debts and liabilities of 
the business, unless the business is organized as a corporate entity to which 
sole, unlimited personal liability does not apply; and 
(2)  For which: 
(a)  The individual does not pay taxes separately but reports business income 
and losses on the individual's personal tax return; and 
(b)  If the business is organized as a corporate entity and the individual 
otherwise qualifies as an independent contractor under this subsection, the 
individual files a separate federal informational tax return as required by law; 
and 
C.  Exercises complete control over the management and operations of the business 
under paragraph B and exercises the right and opportunity on a continuing basis to 
perform the services of the business for multiple entities at the individual’s sole 
choice and discretion. 
Sec. 2.  26 MRSA §621-A, sub-§5, as amended by PL 2005, c. 103, §1, is further 
amended to read: 
5.  Change in rate of pay.  Notwithstanding the provision of section 623 exempting 
salaried employees as defined in section 663, subsection 3, paragraph K, payment of 
wages or salary must be made at the rate previously established by the employer, except 
that the employer may decrease the rate of pay, effective the next working day pay 
period, if the employer gives notice to all affected employees one pay period prior to the 
change.  When an employer has temporarily increased an employee's wage rate to comply 
with the prevailing wage requirements of chapter 15; the federal Davis-Bacon Act, 40 
United States Code, Section 276a et seq.; or other applicable federal or state law, an 
employer need not provide advance notice prior to returning the employee to the 
employee's regular wage rate, as long as the employer is in compliance with all posting 
and notice provisions of the applicable law.  Changes of rates of pay made under a 
collective bargaining agreement are exempt from this requirement.  All notices must be 
either given to each employee in writing or posted at a place where employee notices are 
routinely posted. 
Sec. 3.  26 MRSA §621-A, sub-§7 is enacted to read: 
7.  Notification. An employer shall notify its employees in writing at the time of 
hiring of the wages and regular paydays that are designated by the employer. 
Sec. 4.  26 MRSA §622, as repealed and replaced by PL 1999, c. 465, §3, is 
repealed and the following enacted in its place: 
§622.  Notification; records 
1.  Notification.  An employer shall make available to its employees, upon written 
request, a written statement enumerating employment agreements and policies with 
regard to vacation pay, sick leave, reimbursement for expenses, retirement benefits, 
severance pay or other matters with respect to wages. Notice of the availability of the 
agreements and policies must be given to each employee in writing or by a notice posted 
at a place where employee notices are routinely posted. 
2.  Records.  An employer shall: 
A.  Within 10 working days of a request by an employee, furnish to the employee a 
written, itemized statement or access to a written, itemized statement listing the 
wages and deductions made from the employee's wages for each pay period in which 
the deductions were made together with an explanation of how the wages and 
deductions were computed; 
B.  On each regular payday, send to each employee by mail or provide at the 
employee’s normal place of employment during normal employment hours a 
statement showing the hours the employee worked, the wages earned by the 
employee and deductions made for the employee; 
C.  Establish, maintain and preserve for 3 calendar years the payroll records showing 
the hours worked, wages earned and deductions made for each employee and any 
employment agreement entered into between the employer and employee. Failure to 
maintain these records raises a rebuttable presumption that the employer did not pay 
the required minimum wage rate; and 
D.  Make available records required to be kept by this section to any representative of 
the Department of Labor at any reasonable hour.  This section and sections 621-A 
and 623 do not excuse any employer subject to section 702 from keeping the records 
required by that section.  A representative of the department may, consistent with due 
process of law, enter any place of employment to inspect the records concerning 
wages and payrolls, question the employer and employees and investigate such facts, 
conditions or matters as are considered appropriate in determining whether any 
person has violated the provisions of this subchapter.  The name of any employee 
identified in a complaint to the department must be kept confidential as long as 
possible.  When the department determines that an employee's name must be 
disclosed in order to investigate the complaint further, it may do so only with the 
employee’s consent.  The Commissioner of Labor shall adopt any rules necessary to 
carry out the provisions of this subchapter.  Rules adopted pursuant to this paragraph 
are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
Sec. 5.  26 MRSA §623, as amended by PL 2005, c. 18, §2, is further amended to 
read: 
§623.  Exemptions 
This section and sections section 621-A and 622 do not apply to family members and 
salaried employees as defined in section 663, subsection 3, paragraphs J and K.  Sections 
Section 621-A and 622 do does not apply to an employee of a cooperative corporation or 
association if the employee is a stockholder of the corporation or association, unless the 
employee requests the association or corporation to pay that employee in accordance with 
section 621-A.  Except as provided in section 621-A, subsections 3, 4 and 5, a 
corporation, contractor, person or partnership may not by a special contract with an 
employee or by any other means exempt itself from this section and sections 621-A and 
622. 
Sec. 6.  26 MRSA §626, 2nd ¶, as enacted by PL 1991, c. 162, is repealed. 
Sec. 7.  26 MRSA §626-A, as amended by PL 1999, c. 465, §5, is further amended 
to read: 
§626-A.  Penalties 
Whoever violates any of the provisions of sections 621-A to 623 or section 626, 
626-C, 628, 629 or 629-B is subject to a forfeiture fine of not less than $100 nor more 
than $500 for each violation. 
Any employer is liable to the employee or employees for the amount of unpaid wages 
and health benefits. Upon a judgment being rendered in favor of any employee or 
employees, in any action brought to recover unpaid wages or health benefits under this 
subchapter, such judgment includes, in addition to the unpaid wages or health benefits 
adjudged to be due, a reasonable rate of interest, costs of suit including a reasonable 
attorney's fee, and an additional amount equal to twice the amount of unpaid wages as 
liquidated damages. 
The 10 largest shareholders, as determined by the fair value of their beneficial 
interest as of the beginning of the period during which the unpaid services referred to in 
this subchapter are performed, of a corporation that does not have shares listed on a 
national securities exchange or regularly quoted on an over-the-counter market by one or 
more members of a national or affiliated securities association registered under Section 
15A of the federal Securities Exchange Act of 1934 are, jointly and severally, personally 
liable for all debts, wages or salaries due and owing to any of the corporation's employees 
for services performed by them for that corporation.  Civil action may be brought against 
a shareholder liable for wages due under this subchapter instead of and in addition to the 
employer.  For the purposes of this paragraph, "corporation" does not include an 
investment company registered as such under the federal Investment Company Act of 
1940, 15 United States Code, Sections 80a-1 to 80a-64. 
Remedies for unpaid wages do not become available to the employee except as 
follows.  If the wages are clearly due without a bona fide dispute, remedies are available 
to the employee 8 days after the due date for payment.  If there is a bona fide dispute at 
the time payment is due, remedies become available to the employee 8 days after demand 
when the wages are, in fact, due and remain unpaid. 
The action for unpaid wages or health benefits may be brought by either the affected 
employee or employees or by the Department of Labor. The Department of Labor is 
further authorized to supervise the payment of the judgment, collect the judgment on 
behalf of the employee or employees and collect fines incurred through violation of this 
subchapter.  The Department of Labor shall retain any penalties, except those penalties 
due employees, in a nonlapsing account to be used for enforcement of this subchapter.  
When the Department of Labor brings an action for unpaid wages or health benefits, this 
action and an action to collect a civil forfeiture fine may both be joined in the same 
proceeding. 
For purposes of calculating penalties pursuant to this section, each violation of this 
subchapter that occurs during a separate week, including discriminatory or retaliatory 
practices, is considered a separate violation. 
Sec. 8.  26 MRSA §626-C is enacted to read: 
§626-C.  Preventing retaliation against employees 
1.  Prohibition.  An employer or individual may not discharge or in any other 
manner discriminate or retaliate against an employee or other individual for exercising a 
right under this subchapter or any rule implementing its provisions, or against an 
individual for providing assistance to an employee or information regarding the exercise 
of that right, or for testifying or planning to testify in any investigation or proceeding 
regarding the exercise of that right. 
2.  Presumption of retaliation.  An employer or individual that takes an adverse 
action against an individual within 90 days of that individual's engaging in the activities 
specified in subsection 1 raises a presumption that the action was retaliation. This 
presumption may be rebutted by clear and convincing evidence that the action was taken 
for other permissible reasons. 
3.  Complaint.  An employee or other individual may file a complaint with the 
Department of Labor against an employer or individual alleging retaliation as described 
in subsection 2 within 30 days after the alleged retaliation occurs.  Upon receipt of the 
complaint, the department shall cause an investigation to be made to the extent 
considered appropriate.  If the department determines from the investigation that the 
provisions of this section have been violated, the department shall bring an action in the 
appropriate District Court against that employer or individual.  The District Court may, 
for cause shown, restrain violations of this section and order all appropriate relief, 
including rehiring or reinstatement of the employee to the former position with back pay.  
A civil action to enforce this section may also be maintained in any court of competent 
jurisdiction by the State or by any party injured by a violation of this section.  The court 
shall require an employer or individual that retaliates against an employee or other 
individual in violation of this subchapter to pay the employee or other individual an 
amount set by the department or a court sufficient to compensate the employee or other 
individual and deter future violations but not less than $150 for each day that the 
violation continued or until judgment is final. 
SUMMARY 
This bill defines "employee," "employer" and "independent contractor" for the 
purposes of the wages and medium of payment provisions of the labor laws in order to 
prevent misclassification of employees and their exclusion from wage law protection.  It 
strengthens notification and reporting requirements.  The bill includes shareholders' 
liability to protect employees who are hired by corporations that use bankruptcy law to 
evade payment.  It makes each violation of the wage and medium of payment provisions 
that occurs during a separate week, including discriminatory or retaliatory practices, a 
separate violation.  The bill also prohibits employer retaliation against employees or 
others who bring complaints under the law.