Paid Family and Medical Leave — An Explainer

Updated July 11, 2023
The Maine legislature voted to incorporate paid family and medical leave legislation into the budget, which Governor Mills signed and enacted. Maine is now the 13th state plus DC to offer comprehensive paid family and medical leave! Information about the new program can be found below.

What is Paid Family and Medical Leave?

At some point in their life, almost every Mainer will need to take extended time away from work for a major life event, like welcoming a new baby, recovering from an illness, or caring for an ailing family member. Paid Family and Medical Leave (PFML) is a benefit that allows workers to attend to their health and family without risking financial stability, employment, or health insurance.

A legislative commission to evaluate the feasibility of creating a paid leave program recommended Maine join 12 other states and Washington, DC in adopting a statewide plan. Lawmakers passed legislation that was recently enacted as part of the state budget, creating a new state-wide program that will be fully implemented in 2026. Employers and employees will make small contributions into a state insurance fund each pay period, which then covers the cost of their replacement wages while they’re out on leave.

Why is it important?

Working families need flexibility and financial security

77 percent of American workers lack access to comprehensive paid leave benefits through their employer.
Family-unfriendly policies are costly. Lack of access to child care and paid leave costs U.S. workers about $32 billion in lost wages each year.
Family-unfriendly policies depress wealth and health. Thirty percent of women without paid leave drop out of the workforce within a year after welcoming a new child, contributing to a “motherhood penalty” which permanently drags mothers’ earnings 20 to 65 percent below men’s. Those who return to work before they’ve had time to heal and bond experience worse health outcomes for themselves and their babies.
Family-unfriendly policies hurt older workers, too. Adults over 50 who leave the workforce to care for an ailing parent lose an average of $303,880 in wages and retirement savings.
Cancer patients lose financial and medical security when they need it most. One third of cancer patients who missed work did not receive any pay for at least part of the time they were out due to their illness. 1 in 10 lost or quit their jobs.

Paid leave is good for business — especially small business

Good for the bottom line. Eighty-seven percent of businesses surveyed after California implemented its paid leave policy reported no increased costs, and 9 percent reported cost savings resulting from lower worker turnover.
Improves worker participation. States with paid leave policies found a 20 percent reduction in the number of women leaving their jobs in the first year after welcoming a child, and up to 50 percent reduction after five years.
Improves worker retention. Workers with paid leave are more likely to return to their previous employers after taking leave to give birth or manage an illness.
Improves employee morale. Ninety-nine percent of employers surveyed in California reported the state paid leave program had a positive or neutral effect on morale. Employers surveyed in New Jersey reported reduced employee stress as well as improved morale.
Helps small businesses compete. With modest bottom lines, small businesses often have trouble matching benefits offered by larger employers, resulting in a hiring disadvantage. People who work for firms with less than 100 employees are half as likely to have paid leave benefits as those who work for firms with more than 500. National and state-wide plans level the playing field.

Women, people of color, and rural and low-wage workers bear the brunt of lack of paid leave

Women perform a greater share of unpaid caregiving and are more likely than men to reduce work hours or leave the workforce to provide care. At the same time, women are also less likely to have paid leave through their employer and more likely to suffer negative consequences of caregiving, including stagnant pay, lack of career advancement, and termination.
Workers of color face substantial barriers in accessing any kind of leave. Compared to white workers, Hispanic workers are 66 percent more likely, Black workers 83 percent more likely and Native American, Pacific Islander and multiracial workers 100 percent more likely to be unable to take leave when needed. Inability to afford unpaid leave is the most common reason for not taking leave, followed by fear of losing a job.
Rural workers are less likely to have access to paid leave, must travel three to five times farther to seek hospital-based care, and have far less access to child care, direct care, and health care options. When care is available, rural workers need more time away from work to get it. Rural communities also have a higher share of older residents, resulting in rural workers caring for a larger group of older adults.
Workers with low wage are least likely to have access to paid leave and to be able to afford to take unpaid leave if they have access to it. Ninety-three percent of workers with low wages have zero access to paid leave. One in seven have lost a job to recover from illness or care for a family member.

How are Mainers impacted?

Right now, only 28 percent of Maine workers have access to comprehensive paid family and medical leave through their employers, and only about half of all Maine workers are eligible for unpaid family and medical leave through state and federal laws. When the state’s new paid leave program is fully implemented in 2026, all Maine workers will have access.
Maine’s new state-wide paid family and medical leave plan will provide financial security to more than 600,000 workers and their families. That’s about 90 percent of workers in Maine. The remainder includes people covered by more generous private plans and self-employed workers who opt out.
166,000 family caregivers provide an estimated 155 million hours of unpaid care each year in Maine, worth almost $3 billion dollars.
Approximately 85 percent of Maine caregivers are women. Those who are caring for aging parents are often also caring for their children and working full time.
60 percent of Maine’s population lives in rural areas where access to care is far more challenging and takes more time away from work to receive. The Wabanaki Nations in Maine are 106 miles, on average, from the nearest NICU. Rural Mainers who live in areas with concentrated poverty must travel an average of 40 miles for pediatric care, cancer treatment, and cardiac care, and 109 miles to the nearest NICU.

How would a Maine paid leave plan work?

The paid leave program (advanced as a bill and later amended and enacted as part of the state budget), establishes a statewide program accessible to all workers, allowing up to 12 weeks of paid leave per year for qualified reasons.
Employers and workers will each contribute a small, equal amount (totaling less than 1% of weekly wages) to a state fund each pay period. Payroll contributions begin in 2025 and benefits will be available in May of 2026.
People taking leave will receive a weekly benefit from the state fund equal to a portion of their earnings, capped at the state’s average weekly wage. To receive the benefit, workers must have contributed an amount to the fund that is at least six times Maine’s average weekly wage in the previous 12 months. In today’s numbers, that means a worker will need to have earned at least $6,217 in the past year to qualify, and the maximum benefit an employee can receive is $1,036 per week.
Small business employers are exempt from contributing to the fund, though their employees will be fully covered. Small businesses will not be required to hold temporary/seasonal jobs open for an on-leave employee if it presents a demonstrable hardship for the business.
Self-employed workers and Tribal governments can choose to opt into the fund. Self-employed people only pay the employee share of the contribution.
Workers’ jobs are protected when they take leave if they have worked at least 120 days at their current job. Workers must also give 30 days notice before taking leave in many circumstances.

Did you know…?

The United States is the only high-income country that does not provide paid family leave.
Three states in New England already have comprehensive statewide paid leave programs: Massachusetts, Rhode Island and Connecticut. This year Michigan, Illinois, and New Mexico could join the 13 other states and DC in creating new comprehensive programs.
Women’s incomes drop 30 percent after the birth of their first child and never catch up. Meanwhile, men make roughly 20 percent more once they have children.
74 percent of working women would have no savings left if they took eight weeks of unpaid maternity leave.
One in 10 US parents of school-aged children also care for an older adult.
In 2021, 38 million family caregivers in the US provided an estimated 36 billion hours of unpaid care to older or disabled adult family members, worth $600 billion.
The number of Americans needing long-term care services will more than double from 12 million people in 2010 to 27 million people by 2050. At the same time, the number of potential caregivers for people ages 80 and older will decline by more than half in that same timeframe.