Maine’s employee separation process can vary significantly from other states—which can make separating from or firing employees complicated.
This employee separation checklist and guide helps explain your employer obligations in final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
Maine Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Maine
Maine law has specific guidelines for paying employees who terminate their employment. If an employee is terminated or resigns, they must receive their final wages by the next scheduled payday. This includes any amount due under their employment terms.
For employers with 11 or more employees, all unused paid vacation time must also be paid out as part of the final wages, according to the employer’s vacation policy. However, Maine’s Earned Paid Leave law does not mandate the payout of accrued-but-unused leave, unless the employer’s policy specifies it. The Maine Department of Labor has issued guidance on these conflicting rules.
Final paychecks, if issued by check, should either be available for pickup at the business location or mailed in time to reach the employee by the established payday. Failure to comply with these payment requirements can result in penalties, including payment of the owed wages, interest, and potentially twice the unpaid amount. Employers may also be responsible for covering attorney’s fees and employee costs.
2. Firing Employees in Maine
Because Maine is an at-will employment state, employers and employees may terminate their working relationship for any reason at any time—as long as it’s not illegal. Unlike many states, Maine does not require employers to provide any written notice or documentation upon separation. This makes firing employees a reasonably straightforward process.
3. Severance Agreements in Maine
If your organization includes a severance agreement upon separation, explicitly list the specific federal and state law claims the employee is releasing. Maine allows employees to release claims under Maine Human Rights Act, Maine’s equal pay law (Me. Rev. Stat. tit. 26 § 628), Maine’s leave laws, and Maine’s minimum wage and overtime laws.
Non-disparagement clauses in severance agreements cannot prevent employees from discussing or disclosing instances of discrimination, such as sexual harassment or assault, that occurred in the workplace. Limit any release of claims to those that arose before the effective date of the agreement.
Maine’s WARN Act mandates that employers provide advance notice and severance pay in the event of a facility closure, mass layoff (affecting 50 or more employees), or relocation of a facility employing 100 or more workers. A “covered establishment” refers to any facility employing 100 or more people within the last 12 months. A 90-day notice is required for closures and relocations. Mass layoffs require at least seven days’ notice.
If a closure or layoff occurs, eligible employees must receive severance pay equal to one week’s pay for each year of service, with prorated amounts for partial years. Notice must be given to the Director of the Bureau of Labor Standards, the affected employees, and relevant local officials. In some cases, employers may avoid penalties for failing to provide notice due to unforeseen circumstances, such as a final government order or physical calamity, although severance pay is still required.
Finally, employers should also be mindful of federal laws, including recent guidance from the NLRB in its 2023 McLaren decision. This decision limits the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in Maine
If you have an employee with an Income Withholding for Support Order (“IWO”), you must report the employee’s termination as soon as possible to the child support agency, court, or attorney that issued the IWO. Employers may register for online reporting with the Federal Office of Child Support Enforcement here to expedite the process.
Alternatively, you may report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Maine
If separating from your last Maine employee has ended your business dealings in the state, you may formally withdraw your business registration. The type of form needed depends on your organization’s legal structure. For-Profit Corporations must file this Application for Withdrawal, while Non-Profit Corporations must file an Application for Surrender. Limited Liability Companies (LLCs) must file a Certificate of Cancellation of Foreign Qualification.
Stay Compliant with Maine Employee Separation Requirements
Staying current Maine’s employee termination laws and Employee Separation Agreement requirements helps employers ensure regulatory compliance, honor employee rights, and mitigate risks.
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