As with many other regions in the U.S., New Mexico has established a state minimum wage law that dictates the lowest hourly rate employers can offer their employees. These regulations have been designed to ensure that workers receive fair pay for their efforts, helping them achieve a decent standard of living. But what is the New Mexico minimum wage and how has it changed recently?
In today’s comprehensive guide for employers, we will cover everything you need to know about the New Mexico minimum wage to help you understand your responsibilities and the rights of your employees. We will also share some tips and best practices to help you comply with your obligations and foster a positive workplace environment.
- How Minimum Wage Works in the U.S.
- New Mexico Minimum Wage: Current Rates
- New Mexico Minimum Wage: Exemptions & Special Cases
- Additional New Mexico Wage Laws
- Best Practices for New Mexico Wage Laws Compliance
- How Factorial Can Help
- Manage payroll on time and error-free✅
How Minimum Wage Works in the U.S.
The United States operates a tiered minimum wage system, with varying rates set at the federal, state, and municipal levels. This creates a complex system for determining the minimum wage for workers across the United States.
- Federal minimum wage. The federal minimum wage, established by the Fair Labor Standards Act (FLSA), serves as the baseline wage for non-exempt employees nationwide. The current federal minimum wage stands at $7.25 per hour.
- State minimum wage. Many states have enacted their own minimum wage laws. These state minimum wages often exceed the federal rate, aiming to align with the local cost of living and labor market conditions.
- Municipal minimum wage. A growing number of cities and counties have also implemented their own local minimum wage limits, often higher than both state and federal minimum wage rates. These municipal-level minimum wages reflect the unique economic circumstances of specific localities.
Finally, in addition to regional differences, the minimum wage can also vary based on industry. For example, the minimum wage for tipped employees in the service industry is typically lower than the minimum wage for non-tipped employees. This is because many states expect tipped employees to receive a significant portion of their income from tips. However, in some states, employers are required to make up the difference if the employee’s hourly wage plus tips does not equal at least the minimum wage.
New Mexico Minimum Wage: Current Rates
Under Chapter 50 of the New Mexico Statutes, the New Mexico minimum wage is currently set at $12.00 per hour. The tipped minimum wage in New Mexico is $3.00 per hour, but the employer must ensure that tips bring the total to at least $12.00 per hour. There are exemptions and special cases where these rates do not apply, as we will see later in the post.
The minimum wage in New Mexico has seen gradual increases in recent years, reflecting the state’s efforts to keep pace with inflation and living costs. For example, the minimum wage was $10.50 per hour in 2021 and has increased steadily to reach the current rate. These changes aim to provide workers with fair compensation, especially as the cost of living continues to rise.
Municipal New Mexico Minimum Wage Ordinances
New Mexico allows municipalities to set their own local wage rates, provided that these local rates are higher than the state-mandated minimum wage. As a result, certain jurisdictions within the state have taken advantage of this flexibility to establish local minimum wage standards that better reflect the cost of living in their areas.
In fact, there are currently 4 New Mexico municipalities with higher rates than the state-wide New Mexico minimum wage: Albuquerque, Santa Fe, Santa Fe County, and Las Cruces.
Here’s everything you need to know:
- Albuquerque. The minimum wage in Albuquerque is the same as the New Mexico minimum wage ($12.00 per hour). However, the minimum tipped wage is higher than both federal and state rates ($7.50/hour vs. $3.00/hour).
- Santa Fe. Santa Fe has one of the highest minimum wage rates in the state. As of 2024, the Santa Fe minimum wage is $14.60 per hour. The minimum tipped wage is $3.00 per hour, in line with the New Mexico minimum wage for tipped workers.
- Santa Fe County. Like the city of Santa Fe, Santa Fe County has adopted a similar minimum wage ordinance, ensuring consistency across the county. The minimum wage in Santa Fe is also $14.60 per hour, aligning with the city’s ordinance. However, the minimum tipped wage is slightly higher ($4.38 per hour)
- Las Cruces. The city of Las Cruces has established a minimum wage of $12.36 per hour for 2024. For tipped workers, the minimum wage is set at $4.95 per hour, with the expectation that tips will bring the total earnings to at least the standard minimum wage.
Also worth noting is that Bernalillo County has established a local minimum wage rate of $10.30 per hour. However, in this instance, the higher, state minimum wage prevails over the county wage.
New Mexico Minimum Wage: Exemptions & Special Cases
While the New Mexico minimum wage applies to most workers, there are certain exemptions under NM minimum wage law that you need to be aware of.
Here’s an overview of these New Mexico minimum wage exemptions:
- Tipped employees. These workers receive a base wage of $3.00 per hour, with the requirement that their combined earnings from tips and wages meet or exceed the standard minimum wage of $12.00 per hour.
- Apprentices and learners. Certain apprentices and learners are exempt from minimum wage requirements, allowing employers to pay these employees a lower rate under specific conditions.
- Employees with disabilities. Employers can obtain special certificates that permit them to pay a subminimum wage to employees with disabilities, typically set at 50% of the standard New Mexico minimum wage.
Additional New Mexico Wage Laws
Aside from the New Mexico minimum wage, the state has a number of additional wage laws that employers need to understand as these can have an impact on how you manage an employee’s wages.
Let’s explore these additional New Mexico wage laws in a bit more detail so you can make sure your employee handbook meets all requirements.
Payroll Deductions
New Mexico employers must pay employees all owed wages in full with the exception of lawful payroll deductions or any other deductions that have been authorized by the employee in writing (such as health insurance, for example). You can find more information about this via the New Mexico Taxation & Revenue Department.
In addition, any employer who withholds a portion of an employee’s wages for payment of federal income tax must withhold New Mexico state income tax as well.
Payroll Schedules
New Mexico employers must pay employees their wages on regular paydays. These paydays can not be more than 16 days apart.
More specifically, wages earned between the 1st and 15th day of a calendar month must be paid by the 25th of that month. Any wages earned between the 16th and the last day of a calendar month must be paid by the 10th day of the following calendar month.
If your payroll is processed via a central location outside of New Mexico, then wages earned between the 1st and 15th day of a calendar month must be paid by the last day of that same month. Any wages earned between the 16th and the last day of a calendar month must be paid by the 15th day of the following calendar month.
Finally, you can pay executive, administrative and professional employees (FLSA-exempt employees) on a monthly or biweekly basis unless said wages are subject to the provisions of a collective bargaining agreement.
Pay Stubs
New Mexico state law requires employers to provide employees with a detailed pay stub, either in paper form or electronically, with each paycheck. The pay stub must include specific information to ensure transparency and compliance with New Mexico wage laws.
Here’s what you need to include:
- Gross wages. The total amount earned before any deductions.
- Net wages. The amount paid after all deductions.
- Itemized deductions. A breakdown of all deductions, including taxes, insurance, retirement contributions, and any other withholdings.
- Hours worked. The total hours an employee works during the pay period (particularly important for non-exempt employees).
- Pay rate. The employee’s hourly rate or salary, including any overtime rates, if applicable.
- Employer’s information. The name and address of the employer.
- Employee’s information. The worker’s name and employee identification number.
Additionally, New Mexico law requires you to retain these records for a period of three years, so that they are available for inspection if needed.
Final Paycheck
The rules for final paychecks in New Mexico vary depending on whether an employee has been fired or quit:
- Enforced termination. If you terminate an employee’s contract (fire them), you must pay them all owed wages (fixed or definite amounts) within 5 days of discharge.
- Voluntary termination. If an employee voluntarily terminates their employment (they quit), you must pay them all owed wages by the next succeeding payday.
Finally, in terms of unused employee benefits, if you have a paid time off (PTO) policy in which employees accrue vacation time, then any unused accrued PTO is considered earned wages and you must compensate the employee accordingly in their final paycheck.
Meals & Rest Breaks
New Mexico labor laws do not require employers to provide any meal or rest breaks for employees. However, any breaks that are less than 30 minutes long must be paid, in line with federal requirements.
Overtime
According to New Mexico overtime law, non-exempt employees who are paid by the hour should be paid “time and a half” for each hour they work over 40 hours per week. This is known as overtime pay. For example, if an employee received the New Mexico minimum wage rate of $12 per hour, you must pay them $18.00 per hour for every hour of overtime (every hour they work over 40 hours in a week).
This applies to all employees except those specifically exempt by law. These include exempt employees under the Fair Labor Standards Act (FLSA) and salespersons and employees who are commissioned, paid by piecework, or paid on a flat-rate schedule.
Paid Sick Leave
Finally, New Mexico’s Paid Sick Leave Law requires most New Mexico employers with 1 or more employees to provide a minimum of 64 hours (or 8 full days) of paid sick leave per year. Leave can carry over from one period to another, but total leave is capped at 64 hours.
The legislative update, also known as Earned Sick Leave, was created as a part of the Healthy Workplaces Act (HWA).
Best Practices for New Mexico Wage Laws Compliance
And there you have it! We’ve now covered everything you need to know about the New Mexico minimum wage and the state’s additional wage laws. All you need to do now is make sure your business meets all its obligations, including complying with the specific rules for tipped employees, any applicable exemptions, and any additional federal wage and hours laws. That way, you can avoid potentially hefty penalties and maintain a fair working environment for all your employees.
So, what’s the key to New Mexico wage law compliance?
Simple. Just implement the following essential tips and best practices to protect your business and build a positive and compliant work environment.
Stay Informed and Up to Date
Firstly, keep up to date with federal and state minimum wage laws, as these can change. The New Mexico Department of Workforce Solutions and the U.S. Department of Labor websites are good resources for this.
Maintain Accurate Records and Conduct Regular Audits
Secondly, it’s important to maintain accurate and up-to-date records of all employee work hours and wages. Keeping precise records helps ensure employees are paid correctly and on time. Regular internal and external audits can help you spot and fix mistakes, making sure everything is legal and helping you avoid hefty fines.
Using employee record management software can make this easier. These systems automate time tracking, payroll processing and compliance checks, which cuts down on errors and saves time. By using this technology, you can maintain accurate and reliable records and focus on other important parts of your business while staying compliant with the law.
Classify Employees Correctly
Thirdly, make sure you properly classify your employees as either exempt or non-exempt from the FLSA. This classification determines whether you must offer overtime pay. Carefully review the duties and responsibilities of each employee to determine their exempt or non-exempt status.
Implement Accurate Payroll Practices
It’s important to maintain accurate and up-to-date payroll records that include employee names, hours worked, wages paid and any deductions that you have made. New Mexico law requires you to keep these records for at least three years.
You should also regularly review your payroll records to identify any inconsistencies or errors. And don’t forget to create a payroll checklist to make sure that you complete all necessary steps during each payroll cycle, including verifying employee hours, ensuring correct pay rates, and calculating payroll taxes accurately.
Track Overtime Hours
In addition, make sure you accurately track overtime hours worked by non-exempt employees. Implement a system for employees to report overtime hours, such as using timesheets or electronic timekeeping systems. Make sure you calculate overtime pay at the right rate (time and a half).
Use the Right Payroll Software
Finally, choosing the right payroll software is essential. The right software helps you stay compliant by automatically adjusting for changes in minimum wage rates and managing tax withholdings. It also helps you track employee work hours, calculate overtime and holiday pay, and produce accurate pay stubs at the end of each pay period. This reduces the risk of errors, streamlines administrative tasks, and ensures that employees are paid correctly and on time, helping your business comply with all New Mexico wage laws.
How Factorial Can Help
Factorial can be a valuable tool for employers in New Mexico as it simplifies HR management by automating payroll processes, ensuring compliance with state-specific labor laws, and providing an all-in-one platform for managing employee records.
Still not convinced?
Here’s how the specific features of our secure and comprehensive solution can help you achieve New Mexico wage laws compliance:
- Payroll Software. Firstly, the platform offers payroll software solutions, streamlining the process of managing payroll and issuing pay stubs and ensuring compliance with all New Mexico minimum wage laws.
- Holiday Pay and Pay Schedule Management. Secondly, Factorial helps manage holiday pay and keeps track of pay periods, ensuring employees are paid correctly and on time.
- Real-Time Overtime Tracking. Thirdly, Factorial’s time tracking feature enables real-time monitoring of overtime hours worked by non-exempt employees. This allows you to identify and address any overtime issues promptly, ensuring compliance with New Mexico overtime pay regulations.
- Electronic Time Clock. In addition, Factorial’s electronic time clock feature ensures that your employees accurately record their hours worked, including breaks. That way, you can rest assured that you meet all time-tracking legal requirements.
- Employee Record Management Software. Moreover, the software effectively stores and manages employee records, making it easier to maintain compliance with New Mexico recordkeeping requirements.
- Comprehensive Payroll Reporting. Finally, Factorial generates detailed payroll reports, providing valuable insights into employee compensation, overtime trends, and overall payroll expenses.
By leveraging these features, businesses can more easily navigate the complexities of New Mexico wage laws, from complying with the requirements of the New Mexico minimum wage to meeting timekeeping, overtime, and recordkeeping obligations. That way, you can focus on growing your business with the confidence that your HR and payroll processes are accurate, efficient, and fully compliant with state regulations.
