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In almost every U.S. state, employers are required by law to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in New Mexico, you must carry workers’ comp insurance if you have three or more employees. Like most states, New Mexico specifies a few employee types that are exempt from compulsory coverage.
Workers’ compensation is one of many small business insurance types all Mexico entrepreneurs should consider.
In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.
How does workers’ compensation insurance in New Mexico work?
The state of New Mexico requires you to carry workers’ compensation insurance as soon as you have three or more employees. Part-time workers, seasonal workers, owners, partners and executive officers all count toward this total. If your employees perform work that falls under the New Mexico Construction Industries Licensing Act, then you must provide coverage for all employees, even if you have less than three.
You can purchase coverage via the private market through either a licensed insurance broker or directly through an insurance company.
If your company is considered high-risk, you might struggle to find insurance through the private market. The National Council on Compensation Insurance provides coverage for insurers who can’t find a suitable private market solution. Visit their website here.
Some larger employers can also qualify to become self-insurers. To become a self-insurer, a company must periodically submit proof that it has the financial capability to handle injury claims from any and all of its employees.
Who needs workers’ compensation insurance in New Mexico?
Nearly every employee in New Mexico must be covered by workers’ compensation insurance, with some exceptions. Employees who are exempt from mandatory coverage include:
- Domestic workers
- Federal employees
- Independent contractors
- Real estate salespeople
- Sole proprietors
- Partners in partnerships
- Corporate officers
As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.
What are the penalties for not having workers’ comp in New Mexico?
Workers’ compensation compliance is handled by the New Mexico Workers’ Compensation Administration (WCA). If your business is found to be non-compliant, the WCA’s Enforcement Bureau can seek fines and can even use a temporary restraining order to shut down your business. If one of your employees is injured or dies and you have a lapse in coverage, you could be held liable for any related medical expenses, lost wages or death benefits. Employees must report injuries within 15 days to their employers but have up to a year to file a claim for benefits.
What does workers’ comp cover?
If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.
For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.
Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.
If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.
Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who might receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.
If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.