Does New Mexico require workers’ compensation insurance?
Yes, once a business has three or more workers. Under NMSA 52-1-6, New Mexico's Workers' Compensation Act applies to employers of three or more workers, and to every employer doing work that needs a Construction Industries Licensing Act license, regardless of head count. Part-time, seasonal, and paid family workers count toward the three, and so do corporate and LLC executive employees, even those who have opted out of coverage.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before New Mexico requires workers' comp?
NMSA 52-1-6(A) applies the Act to employers of three or more workers, and to all employers doing work that must be licensed under the Construction Industries Licensing Act, regardless of head count. The Workers' Compensation Administration (WCA) counts part-time, seasonal, and paid family workers. Private domestic servants are outside the Act; its farm and ranch laborer exclusion was struck down by the New Mexico Supreme Court in 2016, so farms with three or more workers need coverage.
Source: New Mexico WCA, Frequently Asked Questions, checked .
Which owners, officers, and family members are exempt in New Mexico?
Under NMSA 52-1-7, an executive employee (a board chair, president, vice president, secretary, treasurer, or other executive officer owning at least 10% of a corporation or LLC) and a sole proprietor may elect out of coverage by filing with the WCA director. The election takes the person off the policy, not out of the count: an excluded executive still counts toward the three. There is no family exemption; relatives paid wages are employees.
Owners count when the business is a corporation, LLC, professional association, or limited partnership, or does work licensed by the Construction Industries Division (CID), per the WCA's FAQ. An LLC or corporation with fewer than three workers should confirm its status with the Employer Compliance Bureau at (505) 841-6851.
Source: New Mexico WCA, Frequently Asked Questions, checked .
What happens to a New Mexico employer with no workers' comp?
The WCA refers an uninsured employer to its Employer Compliance Bureau for enforcement. The director can fine $25 to $1,000 for each occurrence (NMSA 52-1-61) and ask a district court to stop the business until it files proof of coverage (NMSA 52-1-62). If a worker is hurt, the Uninsured Employers' Fund can pay the claim and recover it from the employer with interest, costs, and attorney fees, plus a penalty of 15% to 50% of the award (NMSA 52-1-9.1).
The WCA's Employer Guidebook adds that the CID can revoke or suspend a contractor's license for lapsed coverage, and an injured worker can sue an uninsured employer for negligence.
Source: New Mexico WCA, Frequently Asked Questions, checked .
Who enforces workers' comp in New Mexico?
The New Mexico Workers' Compensation Administration enforces the requirement. Its Employer Compliance Bureau checks that businesses carry coverage, its Enforcement Bureau investigates violations, and its Uninsured Employers' Fund pays injured workers of uninsured employers and collects from the employer. Carriers file proof of each policy with the WCA (NMSA 52-1-4).
Covered employers also pay a quarterly assessment of $4.80 per covered employee ($2.55 employer, $2.25 worker) to the Taxation and Revenue Department on form WC-1, per the WCA's FAQ.
Source: New Mexico WCA, Employer Compliance Bureau, checked .
Where do New Mexico employers buy coverage?
New Mexico is not a monopolistic state. An employer buys from any insurer authorized in New Mexico (NMSA 52-1-4) or qualifies to self-insure. New Mexico Mutual, which the legislature created under the Employers Mutual Company Act (NMSA 52-9), competes alongside private carriers; the Act says it is not a state agency and is regulated like any private insurer.
An employer no voluntary carrier will write goes to the assigned risk pool, which the Office of Superintendent of Insurance supervises. That office also regulates rates and, with the Workers' Compensation Appeal Board, hears employer disputes over audits, experience mods, and classifications.
Source: New Mexico Mutual, History, checked .
Who sets the class codes and rates in New Mexico?
New Mexico is an NCCI state. NCCI files advisory loss costs for New Mexico and publishes a State Advisory Report on each filing; class codes and experience mods follow NCCI's rules, and each carrier files its own rates on top.
Source: NCCI, State Advisory Resources: New Mexico, checked .
Is there an exemption or waiver form in New Mexico?
Yes, but it is an opt-out election, not a waiver certificate. A qualifying corporate or LLC executive files the notarized Executive Employee Affirmative Election with the WCA and the carrier; a construction sole proprietor files the CID Sole Proprietor Affirmative Election; a business outside the Act that wants in files the Election to be Subject. A revocation takes effect 30 days after filing (NMSA 52-1-7).
An election covers only the person who signs it. The business still needs a policy for everyone else once it reaches three workers, counting the excluded executive, or its first worker in construction. An executive who opts out also cannot collect from the Uninsured Employers' Fund if hurt (NMSA 52-1-9.1).
Source: New Mexico WCA, Forms, checked .
Sorting out New Mexico workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the New Mexico requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
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The hub, and the New Mexico pages that go deeper
New Mexico workers’ comp FAQ
Do I need workers' comp in New Mexico with two employees?+
Not unless the business does CID-licensed construction work or the count reaches three. Part-time, seasonal, and paid family workers count, and so does a corporate or LLC executive who owns 10% or more, even after opting out. Two employees plus an owner-officer is three.
Does a one-person construction business in New Mexico need workers' comp?+
Construction is covered from the first worker. A construction corporation or LLC must cover every worker who has not filed an Executive Employee Affirmative Election, and a sole proprietor with no employees can file the CID Sole Proprietor Affirmative Election instead of buying a policy. Confirm eligibility with the WCA's Employer Compliance Bureau before relying on either.
Is New Mexico Mutual the state fund?+
Not a state agency. The legislature created it under the Employers Mutual Company Act as a nonprofit public corporation organized as a mutual insurer, and it competes with private carriers. An employer can buy from it or any other authorized carrier.
Do 1099 contractors count toward New Mexico's three-employee rule?+
A true independent contractor is not your employee, but the WCA says a 1099 or a signed contract does not settle the question. A worker who is really an employee counts toward the three and belongs on your policy. Verify a contractor carries its own coverage before hiring it.