Workers’ compensation is required for nearly all New Mexico businesses, but understanding the rules can take some time. To help employer’s get all the information they need to stay compliant, this guide covers the basics of who needs to be covered, any exemptions that exist and how to purchase workers’ compensation insurance
What makes workers’ compensation so important?
To put it simply, having workers’ compensation insurance can benefit both employers and employees. On one hand, workers comp insurance covers medical expenses, rehabilitation, and lost wages for any covered employee who is injured or becomes ill while on the job. However, workers’ compensation coverage protects business owners as well because, in most cases, it protects them from potentially costly lawsuits as well as penalties for noncompliance (which can sometimes even result in business closure).
Now that we have a better idea of how a workers’ compensation policy can help both workers and businesses, let us talk about which businesses are required to have coverage.
What employers in New Mexico are required to have workers’ compensation insurance?
New Mexico law says that has any employer with three (3) or more employees is required to carry workers’ compensation insurance. The three employees do not need to all work in New Mexico for this requirement to kick in, and workers are not required to live in New Mexico for benefits to be available. For example, if you have four employees and two work in New Mexico and two work in another state, you are required to purchase workers’ comp insurance for all four employees.
In New Mexico, an employee includes owners if they actively work in the business, part-time employees, as well as seasonal and temporary workers. New Mexico law also requires that agricultural employers as well as those involved in the construction industry all have workers’ compensation coverage.
Are there exceptions?
New Mexico does have some exemptions from coverage. These exemptions include:
- Independent contractors
- Real estate salespeople
- Executive employees
- Sole proprietors
- Federal employees covered by the Federal Employees Compensation Act
- Domestic workers
- Willfully negligent employees
- Casual workers
It’s important to note that workers’ comp regulations cannot be enforced on tribal lands, though each tribe has the option to enforce the requirement if they desire. Any business located on a Native American reservation or pueblo must follow the guidelines of that tribe, and any private business located on tribal land may have to resolve workers’ compensation issues in either a tribal court or through the State of New Mexico Workers’ Compensation Administration or WCA.
With coverage a must-have for most employers, let’s dive into the specific benefits it offers for on-the-job illnesses or injuries.
Common protections that workers’ compensation in New Mexico provides
In a nutshell, New Mexico workers’ compensation insurance covers all reasonable and necessary medical care related to a work-related injury or illness without out-of-pocket costs. New Mexico workers comp also offers indemnity benefits including:
- Temporary partial disability (TPD)
- Temporary total disability (TTD)
- Permanent partial disability (PPD)
- Whole body impairment
- Permanent total Disability (PTD)
New Mexico workers comp also offers death or survivor benefits including funeral expenses.
For employers who are unsure how to obtain a policy, let’s explore how most companies typically go about buying insurance coverage.
How can a New Mexico employer purchase workers’ comp insurance?
In New Mexico, businesses can purchase workers’ comp coverage from any insurance agency that is licensed to sell commercial lines of insurance. There are three types of coverage available:
- Conventional coverage – for the voluntary, commercial market, this coverage is provided by an insurance company licensed by the New Mexico Office of the Superintendent of Insurance (OSI).
- Assigned risk pool – for businesses in a high-risk industry or those with poor safety records, they can obtain workers’ comp coverage from the state high-risk pool, which also provides coverage for new businesses until they can obtain commercial coverage.
- Self-insurance – for larger businesses and government entities that have the funds available to provide their own insurance coverage. Those interested in self-insurance must apply to the WCA for approval.
In addition to the premium for coverage, New Mexico employers must also pay a fee of $4.30 per employee per quarter, with employees responsible for paying $2 of the total fee. This fee is paid to the Taxation and Revenue Department quarterly.
What are the penalties in New Mexico for not having workers’ comp insurance?
When businesses are unable to present proof of adequate workers’ compensation coverage, the business will be referred to WCA’s Enforcement Bureau, who will contact a business directly to request voluntary compliance. If insurance is not purchased, the business can be shut down until insurance is obtained and coverage verified.
More resources for New Mexico employers
For more information on workers’ compensation requirements in New Mexico, contact the New Mexico Workers’ Compensation Administration at 505-841-6000. Below are some additional resources that may be useful for New Mexico employers.
Workers’ compensation is a must-have for New Mexico employers
Generally speaking, having a workers’ compensation plan in place benefits both employers and employees. A workers’ comp plan provides employers with protection from costly lawsuits, while helping employees recover from work-related illness and injury. If you have questions about obtaining a workmans’ compensation policy for your business, our team can help.
Please note all material in this article is for educational purposes only and does not constitute tax, benefits or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.