APPROVED CHAPTER
JULY 8, 2021 425
BY GOVERNOR PUBLIC LAW
STATE OF MAINE
_____
IN THE YEAR OF OUR LORD
TWO THOUSAND TWENTY-ONE
_____
H.P. 446 - L.D. 610
An Act To Amend the Laws Governing Employer Recovery of
Overcompensation Paid to an Employee
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.
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 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
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.
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Statutes affected:
Bill Text LD 610, HP 446: 26.635
Bill Text ACTPUB , Chapter 425: 26.635