In this Issue:
- Paid Leaving Coming for (Most) Maine Nonprofits
- Electronic Voting Bill
- New Tax on Transportation Benefits
- E-Bulletin Information
Paid Leave Coming for (Most) Maine Nonprofits
The Maine Legislature is poised to enact a historic bill that would require paid leave for employees of any business or nonprofit with 11 or more employees. The bill, L.D. 369, was amended in the Labor and Housing Committee at the urging of Governor Mills. The original bill would have established paid sick leave and would have applied to employers with 6 or more employees, while the amended bill establishes a broader category of paid leave and ups the threshold to 11 employees.
Here are some key details:
- The paid leave requirement kicks in if an employer has 11 or more employees for more than 120 days in a calendar year. Nonprofits receive no special exemptions and are treated just like businesses.
- An employee accrues one hour of paid leave for every 40 hours worked, up to 40 hours per year.
- Accrual begins at the start of employment, but the employer can choose to delay use of the leave until an employee has been employed for at least 120 days during a one-year period.
- Except for sudden illnesses or emergencies, the employee must give her employer reasonable notice before taking paid leave.
- Municipalities may not enact separate paid leave ordinances.
- In the coming year, expect the Maine Department of Labor to issue rules fleshing out more details.
- The act takes effect January 1, 2021.
The paid leave statute will accelerate a general trend of employers converting from separate vacation and sick leave policies to a unified paid leave policy. Employers and employees alike report more satisfaction with unified policies. They tend to be administratively simpler, while employees do not feel pressure to lie about taking “sick” days for other purposes.
The vast majority of Maine nonprofits already provide more than 40 hours of paid vacation and/or sick leave, so the bill will not cause radical changes in the sector. However, nonprofit employers with 11 or more employees will want to review their employment handbooks to ensure compliance with the law. Furthermore, even employers with 10 or fewer employees should consider switching to a unified paid leave policy, in order to remain competitive and consistent with larger organizations.
Electronic Voting Bill
A bill is working its way through the Maine Legislature that would authorize electronic voting by members of Maine nonprofit corporations. L.D. 894 was recently voted Ought to Pass by the Judiciary Committee, a propitious signal of its eventual passage. The bill allows votes by members to be conducted electronically (e.g. by email), as opposed to the current in-person or snail mail procedures.
Electronic voting by directors (as opposed to members) is not addressed by the legislation. The existing provisions of the Maine Nonprofit Corporation Act do not explicitly authorize or prohibit electronic voting by directors. In my practice, I often include language in Bylaws to authorize electronic voting by directors, with certain safeguards included to make sure decisions are well documented and decided by a supermajority.
To be clear, electronic voting by members or directors should not become the norm for nonprofit organizations dealing with complex issues. Rather, email voting should be used only for noncontroversial matters. For any issue where an exchange of ideas would inform the decision, votes should be taken at a meeting (including a meeting that is partially or fully held by conference call or video chat).
On a related note, a recent decision of the Maine Supreme Court affirmed earlier case law that a nonprofit corporation’s bylaws constitute a binding contract among its directors and members. Scott v. Fall Line Condominium Ass’n, 2019 ME 50. Thus, it’s important for an organization to review its bylaws every few years to ensure that it complies with each of the provisions, especially those pertaining to voting and other forms of decision making.
New Tax on Transportation Benefits
The nonprofit world continues to brace for the taxation of parking and other transportation benefits included in the 2017 tax bill. May 15 is the deadline for many tax-exempt organizations to file their IRS Form 990 for 2018, although a six-month extension is easily obtained. This filing is where the rubber will hit the road for many organizations, as they find themselves owing money for the first time due to this new tax.
In December, the IRS issued Notice 2018-99, providing interim guidance on the taxation of transportation benefits. The tax-exempt sector is clamoring for the law to be repealed, and there is bipartisan support. But given Congress’ general dysfunctional, I’m not holding my breath.
I send the Maine Nonprofit Law E-Bulletin 3 or 4 times per year to provide updates and analysis on legal and policy matters respecting Maine nonprofit organizations. I do my best to keep the messages brief, timely, and useful to nonprofit staff, board members, volunteers, advisors, and donors. At the same time, no one may rely on these E-Bulletins as legal advice, and I encourage you to consult a qualified attorney for advice on any particular situation.
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