New Mexico Minimum Wage: A 2024 Employer’s Guide

As in many parts of the United States, New Mexico has its own state minimum wage law, establishing the lowest hourly pay rate that employers can offer their workforce. These regulations are put in place to guarantee employees receive fair compensation for their work, contributing to a reasonable standard of living. So, what exactly is the Minimum Wage In New Mexico, and how has it evolved recently?

In this comprehensive guide tailored for employers, we will delve into everything you need to know about the minimum wage in New Mexico. Our aim is to clarify your obligations and the rights of your employees. Furthermore, we will provide valuable tips and best practices to assist you in meeting your legal requirements and cultivating a thriving and equitable workplace.

Understanding How Minimum Wage Operates in the U.S.

The United States employs a multi-layered minimum wage system, with different rates set at the federal, state, and even local levels. This system can be intricate, requiring employers to navigate various regulations to determine the correct minimum wage for their employees.

Federal Minimum Wage. The federal minimum wage, as mandated by the Fair Labor Standards Act (FLSA), sets a nationwide wage floor for most non-exempt workers. Currently, the federal minimum wage is $7.25 per hour.
State Minimum Wage. Numerous states have enacted their own minimum wage laws, and these state rates often exceed the federal level. This is intended to better reflect the varying costs of living and labor market conditions across different states.
Municipal Minimum Wage. Adding another layer, a growing number of cities and counties are establishing local minimum wage ordinances. These local rates often surpass both state and federal figures to address the specific economic realities of particular areas. Examples include cities like San Francisco ($17.70) and New York City ($16.50).

It’s also important to note that minimum wage rates can differ by industry. For instance, the minimum wage for tipped employees in sectors like hospitality is generally lower than the standard minimum wage. This is based on the assumption that a significant portion of these employees’ earnings comes from customer tips. However, many jurisdictions require employers to compensate for any shortfall if an employee’s tips plus hourly wage do not reach at least the minimum wage.

Current New Mexico Minimum Wage Rates

According to Chapter 50 of the New Mexico Statutes, the current minimum wage in New Mexico is $12.00 per hour. For tipped employees in New Mexico, the minimum wage is $3.00 per hour, with the stipulation that employer must ensure that tips bring the employee’s total earnings to at least $12.00 per hour. It is important to note that there are exemptions and specific circumstances where these rates may not be applicable, which we will discuss further in this article.

The New Mexico minimum wage has seen consistent increases in recent years, reflecting the state’s commitment to keeping pace with inflation and the rising cost of living. For example, in 2021, the minimum wage was $10.50 per hour, and it has been gradually raised to the current $12.00 per hour. These adjustments are aimed at ensuring fair compensation for workers, especially as the cost of living continues to increase. As of 2024, there are no further scheduled increases to the New Mexico minimum wage beyond the current rate.

Local Minimum Wage Ordinances in New Mexico Municipalities

New Mexico law grants municipalities the authority to set their own minimum wage rates, as long as these local rates are higher than the state-mandated minimum wage. Consequently, several cities and counties within New Mexico have utilized this provision to implement local minimum wage standards that are more aligned with the specific cost of living in their regions.

Currently, four municipalities in New Mexico have established minimum wage rates that exceed the statewide minimum: Albuquerque, Santa Fe, Santa Fe County, and Las Cruces.

Here’s a breakdown of the local minimum wage rates in these areas:

Albuquerque. While the general minimum wage in Albuquerque mirrors the state minimum wage at $12.00 per hour, the minimum tipped wage in Albuquerque is higher than both the federal and state rates, standing at $7.20 per hour.
Santa Fe & Santa Fe County. Both the city of Santa Fe and Santa Fe County have adopted identical minimum wage ordinances to maintain consistency across the county. The minimum wage in Santa Fe and Santa Fe County is $14.60 per hour. The tipped minimum wage is $4.38 per hour in Santa Fe County.
Las Cruces. The city of Las Cruces has set a minimum wage of $12.36 per hour for 2024. For tipped employees in Las Cruces, the minimum wage is $4.95 per hour, with the expectation that tips will bring total earnings to at least the standard minimum wage.

It is also worth mentioning that Bernalillo County has a local minimum wage of $10.30 per hour. However, in this instance, the higher state minimum wage of $12.00 prevails over the lower county wage.

Exemptions to the New Mexico Minimum Wage

While the New Mexico minimum wage law is designed to cover most employees, certain exemptions exist. Employers must be aware of these exceptions to ensure compliance.

Here’s a summary of the exemptions to the New Mexico minimum wage:

Tipped Employees. As mentioned earlier, tipped employees have a base wage of $3.00 per hour, with the requirement that their combined earnings from wages and tips must equal or exceed the standard minimum wage of $12.00 per hour.
Apprentices and Learners. In certain situations, apprentices and learners may be exempt from minimum wage requirements. This allows employers to pay a reduced wage under specific, supervised training conditions.
Employees with Disabilities. Employers can obtain special certificates that permit them to pay a subminimum wage to employees with disabilities. This wage is typically set at 50% of the standard New Mexico minimum wage to promote employment opportunities for individuals with disabilities.

Additional New Mexico Wage Laws for Employers

Beyond the minimum wage, New Mexico has several additional wage laws that employers need to be familiar with. These laws can significantly impact employee wage management and company compliance.

Let’s examine these additional New Mexico wage laws in detail to ensure your company policies and employee handbook are fully compliant.

Payroll Deductions Regulations

New Mexico law mandates that employers must pay employees all wages due in full. The only exceptions are for lawful payroll deductions or deductions authorized in writing by the employee, such as for health insurance premiums. More detailed information on payroll deductions can be found at the New Mexico Taxation & Revenue Department.

Furthermore, employers who withhold federal income tax from employee wages are also required to withhold New Mexico state income tax.

Payroll Schedule Requirements

In New Mexico, employers are obligated to pay employees their wages on regularly scheduled paydays. These paydays cannot be spaced more than 16 days apart.

Specifically, wages earned between the 1st and 15th of a calendar month must be paid by the 25th of the same month. Wages earned between the 16th and the last day of a month must be paid by the 10th of the following month.

For businesses that process payroll from a central location outside of New Mexico, the deadlines are slightly different. Wages earned between the 1st and 15th of a month must be paid by the last day of that month, and wages earned from the 16th to the end of the month must be paid by the 15th of the following month.

Executive, administrative, and professional employees who are exempt under the FLSA can be paid on a monthly or biweekly basis, unless a collective bargaining agreement specifies otherwise.

Pay Stub Requirements in New Mexico

New Mexico law requires employers to furnish employees with a detailed pay stub each payday, either in paper or electronic format. This pay stub must contain specific information to ensure transparency and compliance with state wage laws.

The required information on a New Mexico pay stub includes:

Gross Wages: The employee’s total earnings before any deductions.
Net Wages: The employee’s pay after all deductions have been taken.
Itemized Deductions: A clear breakdown of all deductions, including taxes, insurance, retirement contributions, and any other withholdings.
Hours Worked: The total number of hours worked during the pay period (especially important for non-exempt employees).
Pay Rate: The employee’s hourly rate or salary, including any applicable overtime rates.
Employer Information: The name and address of the employer.
Employee Information: The employee’s name and employee identification number.

Employers in New Mexico are also legally required to retain these payroll records for three years, making them available for inspection if necessary.

Rules for Final Paychecks

The regulations for final paychecks in New Mexico depend on whether the employee was terminated or resigned:

Involuntary Termination (Firing): If an employer terminates an employee’s contract (fires them), all earned wages (fixed or definite amounts) must be paid within five days of termination.
Voluntary Termination (Resignation): When an employee voluntarily resigns, all wages owed must be paid by the next regular payday.

Regarding unused employee benefits, if a company has a paid time off (PTO) policy where employees accrue vacation time, any unused, accrued PTO is considered earned wages. Employers are required to compensate the employee for this accrued PTO in their final paycheck.

Meal and Rest Break Laws

New Mexico labor laws do not mandate employers to provide meal or rest breaks for employees. However, in accordance with federal law, any breaks lasting less than 30 minutes must be paid.

Overtime Pay Regulations

According to New Mexico overtime law, non-exempt employees who are paid hourly are entitled to “time and a half” pay for every hour worked beyond 40 hours in a workweek. This is known as overtime pay. For example, an employee earning the New Mexico minimum wage of $12 per hour must be paid $18.00 per hour for each overtime hour worked (any hour exceeding 40 in a week).

Overtime pay requirements apply to most employees, but there are specific exemptions. These exemptions include employees who are exempt under the Fair Labor Standards Act (FLSA), as well as outside salespersons and employees paid on commission, piecework, or a flat-rate schedule.

Paid Sick Leave in New Mexico

New Mexico’s Paid Sick Leave Law requires most employers in New Mexico with one or more employees to provide at least 64 hours (or 8 full days) of paid sick leave per year. Employees can carry over accrued leave from year to year, but the total accrued leave is capped at 64 hours.

This legislative update, also known as Earned Sick Leave, is part of the Healthy Workplaces Act (HWA).

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Best Practices for New Mexico Wage Law Compliance

With a comprehensive understanding of New Mexico minimum wage and additional wage laws, the next step is to ensure your business fully meets its obligations. This includes adhering to specific rules for tipped employees, understanding applicable exemptions, and complying with all relevant federal and state wage and hour laws. Proper compliance is crucial to avoid potential penalties and maintain a fair and positive work environment for your employees.

What are the key steps to New Mexico wage law compliance?

Implementing these essential tips and best practices is vital for protecting your business and fostering a compliant and positive workplace.

Stay Informed and Current on Wage Laws

First and foremost, it’s essential to stay updated on changes to federal and state minimum wage laws. These regulations can evolve, so continuous monitoring is necessary. The New Mexico Department of Workforce Solutions and the U.S. Department of Labor websites are valuable resources for the latest information.

Maintain Accurate Records and Conduct Regular Audits

Maintaining accurate and up-to-date records of employee work hours and wages is crucial. Precise record-keeping ensures employees are paid correctly and on time. Regular internal and external audits can help identify and rectify errors, ensuring legal compliance and preventing potential fines.

Utilizing employee record management software can significantly simplify this process. These systems automate time tracking, payroll processing, and compliance checks, reducing errors and saving valuable administrative time. By leveraging such technology, you can maintain reliable records and focus on other essential business operations while staying compliant with the law.

Ensure Correct Employee Classification

Properly classifying employees as either exempt or non-exempt under the FLSA is critical. This classification determines eligibility for overtime pay. Carefully review the job duties and responsibilities of each employee to accurately determine their exempt or non-exempt status and ensure correct wage practices.

Implement Precise Payroll Practices

Maintaining accurate and current payroll records is fundamental. These records should include employee names, hours worked, wages paid, and all deductions. New Mexico law mandates retaining these records for at least three years.

Regularly review your payroll records to identify and correct any inconsistencies or errors. Using a payroll checklist can help ensure all necessary steps are completed during each payroll cycle. This includes verifying employee hours, confirming correct pay rates, and accurately calculating payroll taxes.

Track Overtime Hours Diligently

Accurately tracking overtime hours for non-exempt employees is essential for compliance. Implement a reliable system for employees to report overtime, such as timesheets or electronic timekeeping systems. Ensure overtime pay is calculated at the correct rate of time and a half to comply with New Mexico law.

Utilize Appropriate Payroll Software

Selecting the right payroll software is a key best practice. Effective software helps maintain compliance by automatically adjusting for changes in minimum wage rates and efficiently managing tax withholdings. It also streamlines tracking employee hours, calculating overtime and holiday pay, and generating accurate pay stubs at the end of each pay period. This minimizes the risk of errors, simplifies administrative tasks, and ensures employees are paid correctly and on time, helping your business fully comply with New Mexico wage laws.

How Factorial HR Can Assist with Compliance

Factorial can be a significant asset for New Mexico employers by simplifying HR management, automating payroll processes, ensuring compliance with state-specific labor laws, and offering an integrated platform for managing employee records.

Still considering the benefits?

Here’s how the specific features of our secure and comprehensive solution can help you achieve full New Mexico wage law compliance:

Payroll Software Solutions. Factorial offers robust payroll software that streamlines payroll management, automates pay stub generation, and ensures adherence to all New Mexico minimum wage regulations.
Holiday Pay and Pay Schedule Management. Factorial simplifies holiday pay administration and pay schedule management, ensuring timely and accurate payments to employees.
Real-Time Overtime Tracking. Factorial’s time tracking features enable real-time monitoring of overtime hours for non-exempt employees, allowing for prompt identification and resolution of potential overtime compliance issues.
Electronic Time Clock Functionality. Factorial’s electronic time clock ensures precise recording of employee work hours, including breaks, helping businesses meet all time-tracking legal requirements.
Efficient Employee Record Management Software. The software effectively manages and stores employee records, simplifying compliance with New Mexico’s record-keeping mandates.
Comprehensive Payroll Reporting Capabilities. Factorial generates detailed payroll reports, offering valuable insights into employee compensation, overtime trends, and overall payroll expenditures for better financial oversight and compliance management.

By utilizing these features, businesses can more easily navigate the complexities of New Mexico wage laws, from adhering to minimum wage standards to meeting obligations related to timekeeping, overtime, and record retention. This allows you to concentrate on business growth with the assurance that your HR and payroll operations are accurate, efficient, and fully compliant with state regulations.