An Act To Amend the Laws Governing Employer Recovery of Overcompensation Paid to an Employee
Maine Legislature, Session 130, LD 0610
Committee: Labor and Housing
Sponsors: DOORE
Amends: 26 MRSA §635

Legislative Document
No. 610
H.P. 446
House of Representatives, March 1, 2021
An Act To Amend the Laws Governing Employer Recovery of 
Overcompensation Paid to an Employee
Received by the Clerk of the House on February 25, 2021.  Referred to the Committee on 
Labor and Housing pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 
401.
ROBERT B. HUNT
Clerk
Presented by Representative DOORE of Augusta.
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.
A-1.  "Employer" means a person in this State that employs individuals and includes 
the State and political subdivisions of the State.  "Employer" includes a person acting 
in the interest of an employer directly or indirectly.
B.  "Overcompensation" means any compensation paid to an employee 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, paid leave, 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; limitations.  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 limitations 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 limitations established by subsection 2 and who violate violates this 
section shall return all money withheld in excess of that permitted under subsection 2 within 
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 exclude 
compensation in the form of paid leave.  It provides a definition of "employer."  It changes 
the maximum amount an employer may 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.