An Act To Amend the Laws Governing Employer Recovery of Overcompensation Paid to an Employee
Maine Legislature, Session 129, LD 0507
Committee: Labor and Housing
Sponsors: DOORE, DESCHAMBAULT, BRYANT, DUNPHY, MARTIN, MOONEN, NADEAU, RYKERSON, VEROW, POULIOT
Amends: 26 MRSA §635

Legislative Document
No. 507
H.P. 364
House of Representatives, January 31, 2019
An Act To Amend the Laws Governing Employer Recovery of 
Overcompensation Paid to an Employee
Reference to the Committee on Labor and Housing suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative DOORE of Augusta.
Cosponsored by Senator DESCHAMBAULT of York and
Representatives: BRYANT of Windham, DUNPHY of Old Town, MARTIN of Sinclair, 
MOONEN of Portland, NADEAU of Winslow, RYKERSON of Kittery, VEROW of Brewer, 
Senator: POULIOT of Kennebec.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  26 MRSA §635, as enacted by PL 1989, c. 804, is amended to read:
§635.  Overcompensation by employer
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Net amount" means the amount of money due an employee as compensation 
after any deductions or withholdings other than an employer's withholding for the 
purpose of recovering any overcompensation.
B.  "Overcompensation" means any compensation paid to an employee, including 
paid leave, that is greater than that to which the employee is entitled under the 
compensation system established by the employer, but does not include fringe 
benefits, awards, bonuses, settlements or insurance proceeds in respect to or in lieu of 
compensation, expense reimbursements, commissions or draws or advances against 
compensation.
C.  "Paid leave" has the same meaning as in section 636, subsection 1, paragraph C.
2.  Recovery of overcompensation; limits.  An employer who has overcompensated 
an employee through employer error may not withhold more than 10% 5% of the net 
amount of any subsequent pay without the employee's written permission, except that, if 
the employee voluntarily terminates employment, the employer may deduct the full 
amount of overcompensation from any wages due.  An employer who has 
overcompensated an employee through employer error may not recover more than the 
amount of overcompensation paid to that employee in the 3 years preceding the date of 
discovery of the overcompensation.
3.  Violation.  If an employer with over 25 employees violates this section, that 
employer forfeits any claim to the overcompensation.
If an employer with 25 or fewer employees knows of the limitation established by 
subsection 2 and violates this section, that employer forfeits any claim to the 
overcompensation.  Employers An employer of 25 or fewer employees who do does not 
know of the limitation established by subsection 2 and who violate violates this section 
shall return all money withheld in excess of that permitted under subsection 2 within 3 
days of written or oral demand by the employee, or forfeit forfeits any claim to the 
overcompensation. 
4.  Application.  This section is applied as follows.
A.  An employer has the burden of proof, except that, if the overcompensation 
amounts to less than 15% of the correct net amount of the employee's compensation, 
the employer must prove by clear and convincing evidence that the employee 
knowingly accepted the overcompensation.
B.  If an employee knowingly accepts the overcompensation, this section does not 
apply.
C.  This section, except for the forfeiture provisions in subsection 3, does not limit or 
affect an employer's general civil remedies against an employee or an employee's 
general civil remedies against an employer.
SUMMARY
This bill amends the definition of "overcompensation" by an employer to include 
compensation in the form of paid leave. It changes the maximum amount an employer 
can withhold from an employee's pay to recover overcompensation from 10% to 5%. It 
prohibits an employer from recovering more than the amount of overcompensation paid 
to an employee in the 3 years preceding the discovery of the overcompensation. The bill 
also specifies that the section of law regarding overcompensation by employers that 
includes these provisions does not limit or affect an employee's general civil remedies 
against an employer.