Workers’ Compensation Insurance in New Mexico
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New Mexico workers’ compensation law

Every New Mexico employer with three or more employees is required to provide their employees with workers’ compensation insurance.

Who needs workers’ comp insurance in New Mexico?

New Mexico imposes strict workers’ compensation insurance rules on employers. All businesses with three or more employees must provide workers’ comp coverage.

What determines the number of employees for the “three employees or more” benchmark? The state considers every individual who performs the business entity’s work to be an employee. If you’re a business owner and work in the business, then you are considered an employee for meeting the “three or more” test.

Business owners must also count part-time workers in the coverage requirement. Once you have three part-time employees, they must receive workers’ comp coverage.

Which workers are excluded from workers’ comp requirements?

New Mexico strives to maintain near-universal workers’ comp coverage. This means that all employees working in the state must be covered by workers’ comp insurance, except for:

  • Those working for employers licensed under the New Mexico Construction Industries Licensing Act, regardless of the number of employees
  • Household workers
  • Real estate salespeople
  • Laborers on farms and ranches

Farm and ranch workers who spend most of their time growing or harvesting produce, meat, or dairy products are exempt. However, those who do other types of work such as packing, processing, or transporting agricultural products must be covered when employers have three or more workers.

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Can you purchase workers’ comp insurance for exempt employees?

Yes, the state of New Mexico encourages employers to voluntarily purchase insurance even though they aren’t required to. This will protect their companies from lawsuits.

To secure voluntary coverage, employers in an exempt category must first file an Election to be Subject form [PDF] with the New Mexico Workers’ Compensation Administration (WCA).

Are nonprofits exempt from New Mexico workers’ comp requirements?

Nonprofit organizations aren’t exempt. The coverage requirements are identical to all other employees, and employers should adhere to the same safety practices as any other employer.

Do New Mexico business owners need to be included in workers’ compensation coverage?

It depends on what type of business owner you are. Here’s how New Mexico business owner requirements work:

Sole proprietors, partners, and independent contractors are excluded from the state’s workers’ comp mandate. However, they can elect to include themselves in their firm’s insurance policy should they find it beneficial.

Corporate officers are also exempt. This applies to executives serving as chairman of the board, president, vice president, secretary, treasurer, or other executive officer and only to those owning 10% or more of the corporation’s stock. To activate an exemption, corporate officers must file an Executive Employee Exemption form [PDF] with the New Mexico Workers’ Compensation Administration.

Members of a limited liability company (LLC) also qualify for a workers’ comp exemption, as long as they own 10% or more of the LLC.

Even though owners and executives can qualify for an exemption, they must be counted as employees to determine whether their firm must provide workers’ comp to its other employees. For example, in a firm with one owner and two other employers, the owner must provide workers’ comp to the two employees.

How does workers’ comp work in New Mexico?

New Mexico business owners can compare quotes and purchase a policy from private insurance companies. Insureon offers this service with its online insurance marketplace.

If your firm’s high-risk status makes it impossible to purchase workers’ comp insurance through the voluntary market mentioned above, you can purchase coverage from the New Mexico assigned risk pool. Many new small businesses buy this coverage until they have a track record to apply for insurance in the commercial market. However, assigned risk workers’ comp is more expensive than voluntary-market insurance.

The National Council on Compensation Insurance (NCCI) manages New Mexico’s assigned risk insurance pool, serving as the state’s workers’ comp provider of last resort.

New Mexico employers who qualify can self-insure their workers’ compensation claims. This means they’ll pay for their own workers’ comp claims rather than submit them to an insurance company.

To qualify for self-insurance, you must file an application with the New Mexico Workers’ Compensation Administration and receive written approval from the WCA director.

Alternatively, firms in the same or similar industries can band together in a group self-insurance arrangement. This normally occurs under the auspices of an industry association. As with individual-firm self-insurance arrangements, the WCA director must approve the formation of any group self-insurance programs.

What is the average cost of workers’ compensation insurance in New Mexico?

Estimated employer costs for workers' compensation in New Mexico are $1.40 per $100 covered in payroll.

What are the penalties for not having workers’ comp in New Mexico?

The consequences of failing to comply with New Mexico’s workers’ compensation rules include:

  • The WCA’s Employer Compliance Bureau will contact you and request voluntary compliance.
  • If you remain noncompliant, you will be summoned to a Director’s Hearing. In this meeting, a designated hearing officer will hear evidence showing your business is required to provide workers’ comp insurance.
  • WCA staff will take that evidence to a district court judge to potentially issue a restraining order against your business. This will allow New Mexico law enforcement to shut down your business.

Workers’ compensation death benefits in New Mexico 

In New Mexico, a deceased employee’s survivors can receive death or survivor benefits if the worker has died as a result of a job-related injury. Death must occur within two years of the injury date.

The maximum death benefit, in addition to funeral expenses, is the amount the worker would have received in disability income benefits for 700 weeks.

Only spouses, dependent children, or other family members who were dependent on the worker may receive death benefits.

Workers’ comp settlements in New Mexico

A workers’ compensation settlement is an agreement between the injured employee, employer, and insurer that resolves a workers’ compensation claim. This benefits both the employee and the employer.

In New Mexico, many workers’ comp claims end in settlements. This means the parties to the claim – the injured employee, the company, and the insurer – must agree on a lump-sum payment in return for the employee (or the employee’s survivors) agreeing to forgo future payments.

Employees who wish to enter into an agreement to take a lump-sum payment in lieu of future benefits, including their right to future medical treatment, must file a Petition for Lump Sum Payment [PDF]. However, the state only grants this petition in a few specific situations.

The New Mexico Workers’ Compensation Administration must approve all settlements.

New Mexico workers’ compensation law for statute of limitations

In New Mexico, employees must file a workers’ comp claim within one year after the employer's insurance provider has started (or failed) to pay them.

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If you are ready to explore workers’ comp coverage options for your New Mexico business, start a free online application today to compare quotes from top-rated insurance carriers.

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