Guide to employee benefits and HR rules in New Mexico

Is your organization compliant with New Mexico's employment and HR laws?

If your company is New Mexico-based or you employ New Mexico workers, you must learn everything you can about HR compliance in the state. This guide will provide a basic overview of New Mexico's employment and benefits regulations for small and midsized businesses.

Topics covered in this guide include:

• What are the employment rules in New Mexico?
• What are an employees' rights in New Mexico?
• Required and non-required employee benefits in New Mexico
• Health insurance in New Mexico
• Wage laws in New Mexico

What are the employment rules in New Mexico?

The federal government sets minimum benefits and HR requirements for all U.S. employers. But many states have their own employment laws in addition to federal requirements—and New Mexico is no exception.

Before opening or growing your organization in New Mexico, familiarizing yourself with state employment laws is key.

In New Mexico, employers must follow several state-specific laws in addition to federal employment laws, such as:

• At-will employment
  • New Mexico is an “at-will” employment state. Employers and employees can end employment at any time, with or without cause, unless there is a written contract restricting termination or the termination is retaliatory.
• The New Mexico Human Rights Act of 1969
  • It’s unlawful to discriminate against someone based on their race, color, religion, national origin, ancestry, sex, age, disability, serious health condition, sexual orientation, gender identity, disability, condition related to pregnancy, or spousal affiliation.
  • This law applies to all employers with four or more employees. However, the spousal affiliation requirements only apply to organizations with 50 or more workers.
• New Mexico Criminal Offender Employment Act (“Ban the Box” law)
  • Employers with more than four employees can’t ask applicants about any arrests or convictions on their initial application for employment. However, they can discuss criminal history after reviewing the application with the candidate.
  • Employers can also post publicly or inform applicants that a criminal record may make them ineligible for a particular job.
• Right-to-work laws
  • New Mexico isn’t a right-to-work state. Therefore, employers may require union membership before employment.
• New Mexico Child Labor Act
  • Children must be at least 14 years old to work in most positions. These employees can only work outside school hours for specific amounts of time, and employers must get a work permit from their school.
  • Under the federal Fair Labor Standards Act (FLSA), children aged 16 and older aren’t subject to any time or hour requirements.
• New Mexico Fair Pay for Women Act
  • The Fair Pay for Women Act prohibits employers from discriminating against workers based on sex for jobs that use equal skill, effort, and responsibility in similar working conditions.
  • Exceptions are allowed in cases of seniority, merit, and when organizations base earnings on quality or amount of production.
• Workplace drug testing laws
  • Under the Lynn and Erin Compassionate Use Act and the Cannabis Regulation Act, employers generally can’t retaliate against an applicant or current employee who uses marijuana recreationally or medically outside of work hours.
  • Employers can prohibit employees from using drugs or alcohol at the workplace and take action against those under the influence onsite. They can also create their own drug testing policies, including punishment or termination for positive drug tests.
• Human Immunodeficiency Virus (HIV) Testing Laws
  • Employers can’t require applicants or employees to take or disclose the results of an HIV test unless a negative test result is a bona fide requirement of the particular job type.
• Workplace smoking laws
  • It’s illegal for employers to discriminate against applicants and employees who use tobacco products outside of business hours. This applies to all aspects of employment, including hiring, compensation, promotion eligibility, and termination considerations.
  • Due to the Dee Johnson Clean Indoor Air Act, no smoking, including electronic cigarettes and vaporizers, is allowed inside a workplace. The law allows employers to establish outdoor smoking areas, but they must have “No smoking” and “Smoking permitted” signs at the appropriate locations.
• Workplace accommodations and breaks for nursing mothers
  • Employers must provide a clean and private location, close to the employee’s workspace, for employees to express milk. Bathrooms and toilet stalls don’t fulfill this requirement.
  • These employees must also receive appropriate break times to complete their tasks. However, the break can be unpaid.
• Employer Immunity for Employee References
  • Under New Mexico Stature § 50-12-1, employers providing a reference about a current or past employee are immune from statements on their job performance unless they intentionally gave false, misleading, or malicious information or violated the employee’s civil rights.
• Reporting laws
  • Private employers must give the New Mexico New Hire Directory a report with the names, addresses, Social Security numbers, and start dates of all new hires and employees returning to work after a furlough or layoff.
  • Business owners must submit the report within 20 days of a new hire’s start date or an employee’s return to work. Employers who fail to report this information may receive a $20 fine for each violation and up to $500 if they intentionally failed to report or deliberately submitted a false report.
• Social Media and the Workplace Law
  • Private and public employers may not gain access to a job applicant’s or current employee’s personal social media accounts. This includes asking applicants or workers for their usernames or passwords, compelling an individual to add their employer to their social media contact lists, or requiring them to change their privacy settings.
  • Employers may monitor an employee’s company-issued hardware, including their email, as long as the employee handbook states there’s no expectation of privacy for work-related systems.

Now that we’ve reviewed New Mexico-specific laws, we’ll review the state’s employee rights.

What are employees’ rights in New Mexico?

Employees in New Mexico have many rights under state and federal law. Organizations of all sizes must know the state’s employees' rights if they have or plan to hire New Mexico workers.

Some state rights include:

• Fair wages
  • New Mexico employers must pay employees the minimum wage for their location (either the state, city, or county minimum wage) and the standard overtime rate.
• Meal and rest periods
  • There’s no law requiring employers to provide meal or rest breaks. But, if an employer chooses to offer them, they must pay employees for any breaks that are less than 30 minutes long. Breaks lasting 30 minutes or more can be unpaid.
• Gender-Free Restrooms Act
  • Any employer with a business that provides services or goods to the public must have a single-user restroom available to all individuals regardless of gender identity or sex. The restroom should also have gender-neutral signage.
• Occupational Safety and Health Administration (OSHA) reporting
  • OSHA is a federal agency that outlines safety and health standards for all employees while they’re at work. Employers can’t retaliate against employees who report them for OSHA violations.
  • The New Mexico Occupational Health and Safety Bureau (OHSB) manages safety and health standards for the state.
• New Mexico COBRA or “Mini-COBRA”
  • Employees and their eligible dependents can continue their employer-sponsored health coverage for up to six months if they lose coverage in specific situations. The law includes companies with 2-19 employees that would typically not be eligible for federal COBRA coverage.
  • Employers must provide written notice when employees are eligible for COBRA or Mini-COBRA.
• New Mexico Caregiver Leave Act

If eligible employees have available paid sick leave, they have the right to use that time to care for family members who are ill or injured. This Act is separate from the Family and Medical Leave Act (FMLA).

Required and non-required employee benefits in New Mexico

All companies must follow federal regulations regarding certain employee benefits. But, some benefits required in one state may not be needed in others. Let’s look at New Mexico's required and non-required employee benefits in the chart below.

Health insurance coverage in New Mexico

If you’re a New Mexico employer with fewer than 50 full-time equivalent employees (FTEs), you aren’t required to provide health insurance benefits. But if you employ 50 or more FTEs, you must offer affordable health insurance with minimum essential coverage (MEC) to comply with the Affordable Care Act (ACA).

Even if you don’t have to offer health insurance, it’s an effective way to attract and retain employees. But, traditional group health insurance can come with high premiums, annual rate hikes, and strict participation requirements that many businesses may be unable to manage.

Let’s break down the numbers. Small group health plan premiums in some New Mexico counties can cost as much as $550 per employee per month. In contrast, the average monthly premium in 2023 for a 40-year-old across all metal tiers is $431. This makes covering individual health plan premiums more affordable for small to midsize businesses in New Mexico.

If you find that individual health insurance premiums are more affordable in your county, you can implement a health reimbursement arrangement (HRA) or a health stipend to cover the cost of individual health plan premiums instead of offering a group plan.

Health reimbursement arrangement (HRA)

An HRA is a flexible health benefit owned and funded by the employer. It allows you to reimburse your employees, tax-free, for their individual health insurance premiums and eligible out-of-pocket expenses.

With an HRA, your employees choose the individual health insurance plan that suits their needs and budget. They can shop for a plan using a private exchange or through New Mexico’s health insurance marketplace, BeWellnm.

HRAs offer many benefits for employers. They’re more personalized than group health plans, have no annual rate hikes or participation requirements, and can help you control your budget by allowing you to choose your preferred monthly allowance amount.

Some HRAs, like the qualified small employer HRA (QSHERA), are only for employers with fewer than 50 FTEs. But others, like the individual coverage HRA (ICHRA), are for companies of all sizes and can satisfy the federal regulations for applicable large employers (ALEs). This flexibility makes an HRA suitable for all types and sizes of organizations.

Learn more about each HRA

Health and wellness stipends

With a health stipend, you can give your employees a set amount of money they can use on medical items, services, and insurance premiums. A health stipend isn't a formal group health plan, so you can choose which expenses are eligible for reimbursement, and they don’t have many IRS compliance rules.

You can offer as much stipend allowance as your budget allows, and employees can purchase the medical care and items that work for them and their families. This makes stipends a more personalized option than group health insurance and flexible enough to accommodate all your employees’ needs. But, a stipend doesn’t satisfy the ACA’s employer mandate for ALEs.

Stipends are a taxable health benefit, but they’re also customizable. For example, companies looking for a benefit that covers expenses insurance doesn’t, like mental health counseling and gym memberships, can do so with a wellness stipend.

Offering a health and wellness stipend together gives your employees more support for their overall well-being and happiness. If you want even more coverage, you can compliantly offer a stipend alongside an HRA to create a robust and comprehensive health benefit package.

Wage laws in New Mexico

Wages in New Mexico are subject to various state laws. We've compiled the most important requirements to know below.

Minimum wage laws

As of 2023, the federal minimum wage is $7.25 per hour. But, New Mexico has minimum wage requirements that exceed the federal minimum wage, depending on the location within the state.

The Director of the Labor and Industrial Division of the Labor Department can employ (with special certificates) individuals with disabilities at a subminimum wage rate of no less than 50 percent of the standard minimum wage.

Tipped wages

The minimum wage for tipped employees in New Mexico varies by location within the state.

Tipped employees in the City of Santa Fe must receive the city’s minimum wage of $14.03 per hour. Employers have to make up the difference if the employee doesn’t meet the city’s minimum wage on tips alone.

Hours worked

According to New Mexico wage and hour laws, employees must pay their employees based on their total hours worked. Generally, hours worked include a variety of instances, such as work performed during an employee’s regular shift, outside their regular shift, or away from the employer’s workplace.

New Mexico uses the regulations outlined in the FLSA regarding time spent waiting, being on-call, sleeping, traveling, and attending a meeting, lecture, or training. There’s no law requiring employers to pay employees for showing up for their shifts if they don’t work. Organizations also only need to pay wages for hours worked if they dismiss their workers before the end of their shifts.

Overtime pay

Like other states, employees must receive overtime pay of 1.5 times their regular rate for every hour they work over 40 in any seven-day period. Most hourly employees are eligible for overtime wages. Employees with jobs classified as executive, administrative, professional, or outside sales positions are exempt from receiving overtime pay.

Pay statements

An employee’s pay statements must include the following information:

• The company name
• The employee’s gross wages
• The number of hours worked in the pay period
• The total net wages and benefits earned in the pay period
• An itemized list of any pay deductions

Pay deductions

Other than state, federal, and social security taxes, employers can’t make pay deductions without a court order or written authorization from the employee. Employers must pay employees in full every pay period outside of these deductions.

The following are individuals whose earned income is exempt from withholding taxes:

• Native American members of a New Mexico-recognized tribe, nation, or pueblo
• Active-duty military service members

Pay frequency

Generally, New Mexico employers should pay their employees on regular paydays no more than 16 days apart. Employees should receive all earned wages from the first 15 days of a month by the 25th of the same month. Employers should pay all earned wages from the 16th through the final day of a month by the 10th day of the following month.

If an employer processes their payroll outside of New Mexico, employees must receive their earned wages from the first 15 days of a month by the last day of the same month.

While these are the standard pay frequency requirements, employers can pay their employees more often.

Employees who work on a commission basis, have jobs classified as executive, administrative, or professional positions, or are outside salespersons may receive their wages monthly as long as they receive payment on or before the 10th day of each month.

Payment methods

Under New Mexico law, an employer may pay wages by:

• Cash
• Payable checks
• Direct deposit

An employer may pay wages using direct deposit if:

• The employee agrees
• The deposit is to the employee’s account at a U.S. bank, savings and loan association credit union, or other financial institution
• The employee receives their total wages, outside of standard tax deductions or those expressly agreed up in a written contract before employment

Recordkeeping requirements

The following is list of a New Mexico employer’s obligations regarding recordkeeping:

• Payroll and timekeeping: Employers must retain a record of each employee’s total wages and hours worked for at least one year.
  • Business owners must also keep the employee’s name and last known address for at least ten years in the event they file for unclaimed wages.
• Unemployment: Employers must retain the employee’s name, address, social security number, dates of employment, total wages, pay periods, job status (i.e., full-time, part-time, etc.), shift schedule, and the reason for separation for at least four years
• Health and safety: Employers must retain records of any employee’s exposure to toxic materials and any workplace injuries that resulted in an absence from work of more than seven days.
  • Employers must also keep accurate records documenting all hazardous waste for 30 years.
• Child Labor: Employers must retain all work permits for any minors they employ.

Final pay

The following are final pay requirements in New Mexico based on situation:

• For terminated employees: Final pay for fixed wages is due immediately within five days of termination. Employees must receive unfixed final wages, such as unpaid commissions, within ten days of termination.
• For resigned employees: Final pay for all unpaid wages is due on the next regular payday.
  • This includes employees who have left employment due to a labor dispute or strike.

Employers aren’t required to provide severance pay. If an employer chooses to provide severance benefits, it must follow the terms within their company policy or the individual's employment contract.

Frequently asked questions