New Mexico Overtime Laws

September 17th 2024

Overtime laws are an essential component of the state’s labor regulations. Under the New Mexico Labor Law, employees are entitled to receive overtime compensation for hours worked beyond the standard 40-hour workweek. 

This article will provide information to successfully navigate New Mexico’s overtime regulations, whether you’re an employer aiming for compliance or an employee defending your rights.

This article covers:

New Mexico Overtime Rates

Overtime law in New Mexico is designed to prevent employees from being exploited by their employers. Employees who work over 40 hours per week are entitled to overtime pay at time-and-a-half (1.5) for every additional hour worked. 

Since the regular minimum wage in New Mexico is $12 per hour, this means New Mexico’s overtime minimum rate is $18 per hour. 

Overtime Entitlement in New Mexico

According to New Mexico overtime laws, overtime pay is required for any non-exempt employees.

Employees who earn below $844 a week (or $43,888 annually) and work in a non-exempt industry are entitled to overtime pay.

However, your overall eligibility for overtime pay will be based on what your job duties are as well as what type of business you are in.

Read more about Overtime Exceptions and Exemptions in New Mexico.

Compensatory Time in New Mexico

Public employers in New Mexico have the option to provide compensatory time off, also known as “comp time”, instead of monetary payment for overtime worked. Comp time must be given equivalent to one and a half times the employee’s regular rate of pay. This alternative method allows public employers to fulfill their overtime obligations while offering employees the flexibility to take time off in the future as compensation.

Comp time must be offered in a collective bargaining agreement, employment agreement, or memorandum of understanding. These arrangements must be negotiated either with individual employees, their representatives, or through a collective bargaining agent. This ensures that compensatory time off is provided following the agreed-upon terms and conditions.

In general, employees can accumulate a maximum of 240 hours of compensatory time, which effectively translates to 160 hours of actual overtime work. If an employee has accrued compensatory time and requests to use it, the employer must allow them to use the time within a reasonable period, provided that it does not excessively disrupt the agency’s operations.

Overtime for Tipped Employees in New Mexico

For tipped employees in New Mexico, the overtime rate is calculated at 1.5 times their regular wage for every hour worked beyond 40 hours in a week. However, it’s important to note that tipped employees in New Mexico are subject to a lower minimum wage than non-tipped employees. While the regular state minimum wage may apply to most workers, tipped employees have a lower minimum wage set at $3.00 per hour, with a tip credit of $9.00. 

To further understand the compensation structure for tipped employees, the concept of a “tip credit” comes into play. The tip credit allows an employer to pay tipped employees a reduced minimum wage of $3.00 per hour, under the condition that the employee’s total wage, including tips, reaches or exceeds the regular tipped employee’s minimum wage.

If the total wage, including tips, falls short of the regular tipped minimum wage, the employer is obligated to make up the difference. It is also important to note that when calculating overtime pay for tipped employees in New Mexico, the tip credit cannot be factored in.

Simply put, employers cannot include the tip credit in the overtime pay calculation but must use the entire tipped employee minimum wage of $12.00 to determine the overtime pay rate for tipped employees.

Overtime for Salaried Employees in New Mexico 

In New Mexico, only certain salaried employees have the right to receive overtime pay. A salaried employee is an individual who receives a predetermined salary, regardless of the actual hours worked. This means that even if they work more than the hours their salary compensates for, they are still entitled to additional compensation for their extra hours.

To determine a salaried employee’s overtime rate, an employer must first determine their employee’s hourly rate by dividing the salary by the number of hours that salary compensates for.

Then, take the hourly pay rate to calculate the overtime rate for salaried employees using the following formula:

Hourly pay rate x Overtime Hours x Overtime Rate (1.5)

It is important to note that if an employee’s salary covers less than 40 (hours) in a workweek, their regular rate will be added for every subsequent hour working up to 40. Only after 40 hours will time-and-a-half be counted.

If an employee’s salary covers 40 (hours) in a workweek, then time-and-a-half will be paid for any hours over 40.

Calculating Overtime with Commission in New Mexico

In New Mexico, employees who may receive commissions are still entitled to overtime pay although the rate may differ.

If an employee receives weekly commissions, the commission will be combined with the employee’s weekly wage to get the total earnings for the week. The amount is then divided by the total number of hours worked in the week to determine the regular hourly rate for that week. For any hours worked beyond 40 per week, the employee must be paid additional compensation at a rate of half of the regular hourly rate.

For example, let’s say an employee works 45 hours a week at a rate of $12/hour (New Mexico minimum wage) and receives $50 in commissions for that week. 

(Total hours x Hourly Rate) + Commission

= (45 x 12) + 50

= $590 (total earnings for the week)

Then, divide that by the total hours worked in the week.

= 590 / 45

=$13.11 (new regular hourly rate)

To determine the overtime rate for the commissioned employees, we need to take that new regular hourly rate and halve it.

$13.11 / 2

= $6.56

Since the employee worked an extra 4 hours in the week, that makes his overtime compensation $32.8 ($6.56 x 5 hours).

The amount will vary according to the hours worked, hourly rate, and commission earned.

Overtime Exceptions and Exemptions in New Mexico

As per federal overtime exemption regulations, certain categories of employees, known as white-collar workers, are excluded from protection under the law. These categories include administrative workers, executives, professionals, and outside salespeople.

These employees are exempted from receiving overtime pay at 1.5 times their regular rate for working beyond 40 hours per week, provided that they earn a minimum of $844 per week. In addition to these categories, other professions are exempted from overtime laws, which include:

  • Individuals working for the United States, the state, and a political subdivision of the state.
  • Individuals who work voluntarily for educational, charitable, religious, or nonprofit organizations.
  • G.I. Bill trainees while under training.
  • Seasonal employees of employers who have a valid certificate issued by the Labor Relations Division of the Workforce Solutions Department.
  • Employees working in agriculture.
  • Employees engaged in handling, drying, packaging, processing, freezing, or canning of any agricultural and horticultural commodity in its unmanufactured state.
  • Employees of charitable, religious, and nonprofit organizations who reside on the premises.

Statute of Limitations For Unpaid Overtime Claims in New Mexico

In New Mexico, the statute of limitations refers to the specific time limits within which an employee can seek to recover unpaid overtime wages. Generally, an employee has a two-year window from the date of the violation to file a complaint and pursue overtime back wages. This means that if an employee initiates legal action today, they can only seek compensation for violations that occurred within the two previous years.

Despite that, the statute of limitations can sometimes be extended to three years. This extension applies when an employer has knowingly or wilfully violated overtime regulations. 

Legal Cases Relating to Overtime Compensation in New Mexico

Below, we present law cases relating to fair overtime compensation for employees in New Mexico: 

1. Employer Deducts Travel Costs from Delivery Driver’s Pay Resulting in Lawsuit

In the case of Quiroz v. DCT Enterprises Of New Mexico, LLC., Sanjuana Quiroz filed a lawsuit against DCT Enterprises (DCT) for alleged violations of the Fair Labor Standards Act (FLSA). Quiroz claimed that DCT owned and operated several Papa John’s franchises in New Mexico. 

Quiroz worked as a delivery driver for DCT, during which time she claimed that DCT paid her less than the minimum wage per hour. There were various expenses related to her delivery job. Quiroz claimed that she had to cover expenses such as automobile costs, gasoline, insurance, cell phone expenses, and vehicle maintenance and parts. These costs were deducted from her wages, which resulted in a lower hourly rate. Additionally, Quiroz also contended that she worked more than 40 hours per week on certain occasions without receiving proper overtime pay. 

Overall, Quiroz filed a motion for default judgment, seeking compensation for back wages, liquidated damages, and attorney’s fees and costs. The court found that DCT had not responded to Quiroz’s complaint or motion, and default was entered. However, there was doubt about whether Quiroz properly served DCT with the legal documents. Quiroz’s process server deliver the documents to a manager named Jeremy Roths, but it was unclear if Roths had the authority to accept on behalf of DCT.

As a result, the court denied Quiroz’s motion for default judgment and ordered Quiroz to provide proof as to why the case should not be dismissed for failure to timely serve DCT.

Key lessons from this case:

  • Delivery driver employees should clarify their rights to additional compensation for costs such as gasoline or vehicle maintenance to prevent employers from deducting such costs from their wages.
  • Employees who file complaints seeking back wages must ensure that legal documents are properly delivered to the appropriate individual within the company they sue.
  • A motion for default judgment cannot be granted if an employee fails to comply with the proper procedures for filing overtime lawsuits.

2. Employees Seek Overtime Back Wages in Collective Action Lawsuit

In the case of Bone v. XTO Energy, Inc., Cory Bone and Luis Carrillo filed a lawsuit against XTO Energy (XTO) for not providing overtime compensation for hours worked more than 40 per week. Bone and Carrillo were safety consultants for XTO, an oil and gas-producing company. They sought to bring a collective action under the FLSA and a class action lawsuit, including other similarly situated safety consultants.

XTO filed a motion to dismiss the class/collective claims, arguing that they were overbroad and lacked jurisdiction. XTO claimed that there was a lack of personal jurisdiction against claims made by any non-New Mexico employees. The court decided to limit the FLSA Collective action to only those safety consultants who worked for XTO in the state of New Mexico.

Bone and Carrillo argued that XTO’s connections to New Mexico justified the court’s jurisdiction, but the court found that argument to be insufficient. Due to this confusion in jurisdiction, the court ruled that Bone and Carillo had two choices. They either had to accept the removal of any non-New Mexico employees from the lawsuit, or they had to transfer the case to Delaware, where XTO is incorporated and may, therefore, be subjected to general jurisdiction.

The court postponed ruling on other issues until the jurisdiction matters were resolved.

Key lessons from this case:
  • Personal jurisdiction is an essential factor in overtime law cases, and employees must establish its presence for their claims to proceed.
  • Collective actions under FLSA allow employees with similar claims against an employer to join together in a single lawsuit.
  • The court can choose to defer a case if it does not fall under their jurisdiction, despite the legitimacy of any overtime allegations made.

3. Misclassified Employee Claims Overtime Entitlement Under the NMMWA

In the case of Kerr v. K. Allred Oilfield Services, LLC., Kerr filed a lawsuit against K. Allred Oilfield Services (KAOS), for unpaid overtime wages and damages. Kerr filed a collective action under the Fair Labor Standards Act (FLSA) and a class action under the New Mexico Minimum Wage Act (NMMWA).

Kerr worked as an operator for KAOS and alleged that he was misclassified as an independent contractor and not paid overtime despite working more than 40 hours per week. Instead of receiving a salary or hourly pay, he was paid a day rate for all hours worked. KAOS claimed that this day rate constituted a flat rate schedule, which was excluded under the NMMWA.

KAOS sought to dismiss the NMMWA claims. They argued that the day rate compensation received by Kerr fell under the NMMWA’s exclusions for overtime pay. The court applied the standard for evaluating a motion to dismiss and determined that Kerr’s allegations were sufficient to state a plausible claim. Although there was no definitive case law that existed on the definition of “flat rate schedule” under the NMMWA, the court considered previous similar cases.

Consequently, the court denied KAOS’ motion to dismiss the NMMWA claims, as the allegations provided enough factual content to infer liability under the NMMWA. However, the court noted that the matter of “flat rate schedule” is difficult to interpret. The court ruled that this matter was to remain open in the district due to the absence of conclusive case law on the subject.

Key lessons from this case:
  • Employers cannot avoid overtime obligations by paying a flat rate or day rate that does not account for the actual number of hours worked.
  • A day rate is not automatically considered a flat rate schedule under the NMMWA, and further interpretation is required to determine their compatibility.
  • The burden is on the employee to provide factual content that allows the court to infer liability on the part of the defendant.

Learn more about New Mexico Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.