New Mexico Payroll: Laws, Regulations, and Rules

With drastic changes in local, state, and federal payroll and HR laws over the past few years, navigating your business's payroll can be a daunting task – even for an experienced New Mexico employer. Steep penalties can make the process even more intimidating.

To help New Mexico business owners ensure their compliance with state and federal guidelines, this article will explore payroll, labor, and HR laws that every employer should know when managing their payroll.

Contents:

• State and Federal Payroll Laws
• HR Laws that Impact Payroll Management
• Navigate Payroll Laws and Regulations

State and Federal Payroll Laws

As one can expect, there are both state and federal payroll laws that every New Mexico employer must make sure they adhere to. In this section, we will examine these regulations one by one.

Minimum Wage

In terms of payroll law, minimum wage establishes a legally mandated price floor on hourly wages – set on the local, state, and federal levels. Under these laws, nonexempt employees may not be paid below these set standards.

On the state level, New Mexico's minimum wage is set at a rate of $11.50 per hour, established in 2008. This rate will increase to $12.00 per hour on January 1, 2023.

Although the federal rate is lower at $7.25 per hour, employers in New Mexico must adhere to state and local regulations – meaning business owners must pay their employees, at minimum, $11.50/hour.

In addition to state minimum wage law, several of New Mexico's cities and municipalities have established their own wage floors. If a local municipality's minimum wage is higher than the state or federal limit, then employers must adhere to that regulation. 

For 2022, the following local governments have an established minimum wage:

• Albuquerque: $11.50/hour ($6.90/hour for tipped employees)
• La Cruces: $11.50/hour
• Santa Fe: $12.95/hour
• Sante Fe County: $12.95/hour ($3.88/hour for tipped employees)

As with most payroll laws, there are a few exceptions. The following employees are exempt from minimum wage requirements in the state of New Mexico:

• Minors under the age of 18.
• Individuals employed in an executive, administrative, or professional capacity, including forepersons, superintendents, and supervisors.
• Employees or salespersons compensated by commission, piecework, or flat rate schedules.
• Registered apprentices and learners.
• Seasonal employees of educational, charitable, or religious organizations who receive room and board as a condition of their employment.
• Agricultural workers who are paid on a piece-rate basis, whose employer did not use more than 500 person-days of agricultural labor during a calendar quarter in the preceding year, or who are directly related to the employer.

Overtime Regulations

On both the state and federal level, New Mexico employers are required to pay overtime wages for any time worked over 40 hours in a week. Per state and federal law, overtime pay must be at least one and a half times the employee’s standard hourly rate.

For example, an hourly worker paid $15 dollars per hour would earn an overtime rate of $22.50 per hour. Overtime pay only applies to nonexempt employees.

New Mexico also establishes additional overtime laws for certain industries and laborers. 

Firemen, law enforcement officers, and farm/ranch workers, for example, may only work a maximum of 16 hours in any 24-hour period – with the exception of emergencies.

There are four main exemption categories for New Mexico overtime law, which are not protected by state or federal regulations. These roles are:

• Executive positions whose primary responsibility is the management of two or more employees.
• Administrative positions primarily related to operations, policies, and administrative training.
• Professional positions whose primary duties require advanced education and knowledge, like teachers, skilled computer professionals, etc.
• Outside Sales positions whose main responsibilities are to make sales and take orders outside the employer's primary workplace.

Payment Methods

In New Mexico, there are four approved methods by which employers may pay their employees. 

The four approved methods for payment in New Mexico are:

• Cash
• Check
• Direct deposit (if agreed upon by employer and employee)
• Payroll vouchers

An employer may only pay their workers with payroll vouchers if they can be converted to cash at full value.

Pay Stub Laws

Currently, there is no federal law that requires employers to provide pay stubs. Many states, however, do have their own pay stub laws, including New Mexico.

In New Mexico, employers must provide written or printed statements to each employee that detail their individual pay information. These documents should include both the employee’s and employer's names, as well as gross pay, number of hours worked, total wages and benefits, and a list of deductions.

Per state law, these records must be kept by the employer for a year.

Minimum Pay Frequency

Currently, there is no federal law that specifies a minimum pay frequency. As a result, under federal law, any pay frequency is legal. However, most states establish their own minimum pay frequency, which employers must adhere to.

In New Mexico, employers must set paydays no more than 16 days apart – typically the 16th of the month and the end of the month. Many employers establish more frequent pay schedules as well, such as weekly and bi-weekly.

Executives, professionals, outside salespersons and other roles defined by the Fair Labor Standards Act (FLSA) are exempt from New Mexico’s minimum pay frequency laws. As a result, exempt roles may be paid as little as once per month.

Paycheck Deduction Rules

A paycheck deduction refers to any sum removed from an employee’s paycheck – typically for benefits, taxes, damages, or losses.

In New Mexico, employers may deduct from their employee’s paychecks for damages and losses of company property, uniforms, required tools, and any other items necessary for employment. They may also make deductions for cash shortages.

Employers may also create deductions that employees have consented to in writing, such as benefits or retirement.

In all cases, deductions must be itemized and listed on each employee’s pay stub.

Final Paycheck Laws

Final paycheck laws establish a required timeframe in which employers must pay former employees for their services. Under federal law, final pay is generally expected by the next typical payday – though states may have different requirements.

In New Mexico, if an employee is fired or laid off, they must receive their full wages within five days of their dismissal – assuming wages are fixed. If their employment is based on a task, piecework, or commission basis, then employees must receive payment within 10 days. 

Document and Record Storage

When it comes to storing documents and records, New Mexico employers must adhere to both the Fair Labor Standards Act (FSLA) and NM Statute 50-4-9 (2018).

Per the two, the following information is required to be recorded and stored:

• Employee's full name and Social Security Number
• Address, including Zip Code
• Birth date, sex
• Occupation/role
• Time and day of the week when an employee's work week begins
• Total hours worked each day, each workweek
• Pay frequency (e.g., "$9 per hour", "$440 a week", "piecework")
• Regular hourly pay rate
• Total daily or weekly straight-time earnings
• Total overtime earnings for the workweek
• All additions to or deductions from the employee's wages
• Total wages paid each pay period, date of payment, and the pay period covered by the payment

The state of New Mexico only requires employers to store records for up to one year. The FLSA, however, requires all payroll records to be stored for at least three years and all records for determining wages to be stored for two years.

HR Laws that Affect Payroll

New Hire Reporting

Since 1998, employers have been required by federal and state law to report all new and rehired employees. In New Mexico, the reports are filed with the New Mexico New Hire Directory.

For business owners in New Mexico, employers are required to report newly hired and rehired employees within 20 days of their hire date. Generally, any employee who files a W-4 should be reported – including those who work full-time, part-time, and seasonally. 

Per the New Mexico New Hire Directory, rehired employees are "employees who return to work after sixty (60) days, or more, of being laid off, furloughed, separated, or granted a leave without pay or terminated from employment." Similarly, roles like substitute teachers and seasonal workers, which remain on payroll during a gap in pay or break in service, are considered 'recalled employees.’

New hires can be reported either digitally, by mail, or by fax.

Requirements for New Mexico New Hire Reporting

When reporting new hires to the New Mexico New Hire Directory, employers must submit the following information:

• Company Name
• Company Address
• Company federal tax ID number
• Employee's Name
• Employee’s Social Security Number
• Employee's Address
• First Day of paid Work

Paid Time Off (PTO)

In the United States, Paid Time Off is not required on a federal level, though it is a common benefit. While some states have laws regarding PTO, others do not.

Fortunately for New Mexico businesses, employers do not need to provide paid or unpaid vacation benefits to their employees. Additionally, New Mexico employers do not need to provide holiday leave or holiday pay rates – unless the work qualifies for overtime pay.

With that said, if an employee is terminated and has accrued paid time off, they must be compensated for their earned wages in their final paycheck.

Note: while the majority of vacation policies are written, unwritten agreements can still be enforced in a court of law.

Leave Laws and Regulations

The state of New Mexico does not have any state-specific Family and Medical Leave laws. However, there are still regulations for paid sick leave, voting, and more. 

In this section, we will examine the types of leave that employees are entitled to in New Mexico.

Paid Sick Leave

In New Mexico, nearly every employer must adhere to the Healthy Workplaces Act (HWA). As a result, nearly every employee is eligible for sick leave, including part-time, seasonal, and temporary employees. Generally, only contracted employees are exempt.

Per the HWA, New Mexico employers must provide a minimum of 64 hours (8 work days) of paid sick leave per year to their employees. 

Employees must accrue at least one hour of paid sick leave for every 30 hours they work. Alternatively, employees can receive their 64 hours of paid leave all at once on the first day of the year. While accrued leave can roll over from period to period, it can also be capped at 64 hours – per employer discretion.

Unlike PTO, paid sick leave has specific guidelines. An employee may use paid sick leave for:

• Mental or physical illness;
• Medical diagnosis
• Care or treatment for injury, health condition, or mental/physical illness
• Preventative medical care
• Meetings at the employee’s children’s school or source of childcare 
• Absence due to domestic abuse, sexual assault, or stalking (within specific guidelines)

Kin Care

Building upon the guidelines established in the Healthy Workplaces Act, New Mexico’s Kin Care Law establishes rights for employees that are acting as caregivers for direct family members.

Under this law, employers must allow their employees to use their sick leave to care for family members.

Jury Leave

Establishing rights for those participating in their civic duty, New Mexico law dictates that an employee must receive unpaid time off to report to jury selection or jury duty. Employers are allowed to require proof of the employee’s jury summons, however.

This law also protects employees from undue harm for attending jury duty. Under no circumstances may an employer punish or dismiss an employee for being selected for jury duty. 

Employees may use their PTO while on jury duty at their own discretion, but cannot be coerced by an employer to do so.

Voting Leave

According to the New Mexico Voting Leave law, employers must provide up to 2 hours of leave time to vote in their local, state, and federal elections – with the exception of employees whose shift begins two or more hours before polls open, or ends three hours after closing.

Employers may specify which time the employee may take their leave, but cannot penalize employees under any conditions.

Child Labor

New Mexico’s Child Labor Laws set a series of guidelines for employing minors, including the number of hours, the location, and the times they may work.

All minors below the age of 16 are required to obtain a work permit in order to be eligible for employment. For instructions on obtaining work permits, visit the New Mexico Department of Workforce Solutions.

In terms of location, minors of all ages are prohibited from working in certain dangerous workplaces, including underground mines, quarries, and places that utilize explosives.

Minors that are 14 to 15 years of age have a series of restrictions when it comes to how long they may work and when. According to the state’s Child Labor Laws, children 14 to 15 years old may not work:

• Prior to 7:00am or after 7:00pm during the calendar school year;
• Prior to 7:00am or after 9:00pm outside the calendar school year;
• More than three hours on days where school is in session;
• More than eight hours on days where school is not in session;
• More than 18 hours total during weeks where school is in session;
• More than 40 hours total during weeks where school is not in session.

In line with Federal Child Labor Laws, New Mexico does not have any limits on the number of hours a 16 or 17 year old can work in a day.

Lunch and Other Break Time Requirements

In New Mexico, employers are not required to provide employees with meal or rest breaks, regardless of shift length. 

However, any break that is less than 30 minutes long must be considered paid time – meaning employees must be compensated.

Additionally, employers must provide flexible break times for nursing mothers to pump breast milk during work hours. Employees do not need to pay for these break times, as they are in addition to already established rest periods.

Navigate Payroll Laws and Regulations 

Even with an extensive guide, New Mexico payroll laws can feel like an endless stream of regulations.

We look to ease the burden of payroll management with our premium software solution and concierge service. Serving businesses located in Albuquerque, our team of local, state, and federal policy experts are prepared to help manage every part of your payroll process – including ensuring compliance on all levels.

Along with your personal Payroll Guide, our flagship human capital management software will streamline your payroll processes – including time card processing, general ledgers, PTO management, and more.

To learn more about our Payroll Solutions and related tax services, click here.

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.