The New Mexico Department of Workforce Solutions has released guidance to clarify an employer's paid sick leave requirements under the Healthy Workplaces Act.
The Details
New Mexico enacted legislation (House Bill 20), the Healthy Workplaces Act ("the Act"), which requires employers to provide paid sick and safe leave to employees effective July 1, 2022. The state has released guidance that clarifies the following under the Act:
Covered Workers
The guidance helps clarify worker coverage under the Act.
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Covered Workers
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Employees who perform services in New Mexico, even if the employer is based in another state, such as telecommuters and remote workers are covered. This includes those who perform services in the geographic bounds of New Mexico and whose employers are:
· Incorporated, registered, based, physically in, or do business in New Mexico; or
· Remote and based or incorporated out of state but provide significant services in New Mexico or conduct significant business activities in the state.
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Partially Covered Employees
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Telecommuters and remote workers who perform some services in New Mexico and other services outside of New Mexico are most likely partially covered by the Act for the services performed in New Mexico, if the employer is also:
· A New Mexico employer; or
· An out-of-state employer with minimum contacts in New Mexico.
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Employees Likely Not Covered
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Remote workers in the geographic bounds of New Mexico, whose employers are based out of state and who do not provide significant services in New Mexico or conduct significant business activities in the state.
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Employees Not Covered
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· Independent contractors;
· Employees of the United States, New Mexico, or its cities, counties and agencies;
· Remote workers physically outside of the geographic bounds of New Mexico, regardless of whether their employers are based in New Mexico or are out-of-state employers with minimum contacts; or
· Employees that perform services in New Mexico on tribal land.
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See the reference guide for further details.
Accrual
The guidance clarifies the following for accruing paid sick leave under the Act:
· Employers can never cap an employee's paid sick leave accrual;
· Nonexempt employees accrue sick leave at the same rate as regular hours for hours worked that exceed 40 hours per seven-day workweek; and
· Employees must accrue paid sick leave for hours actually worked (paid sick leave is not accrued during any type of leave).
See the reference guide for more information.
Frontloading
The guidance clarifies the following for frontloading paid sick leave use under the Act:
· If frontloading, an employer must grant employees at least 64 hours of earned sick leave for the upcoming year at the start of each year. Employers may not frontload fewer than 64 hours, including for part-time employees. In cases where an employee begins work mid-year, employers can frontload a pro rata portion of the 64 hours for use in the remainder of that year.
· Employers who frontload must still monitor employee hours worked. If an employee works more than 1,920 hours in a year, that employee must receive the appropriate number of accrued sick leave hours, which would be more than the 64 hours they were frontloaded.
· Employers may frontload paid sick leave for one category of employees and use accruals for other employees.
· An employer may not recoup any unused frontloaded leave through payroll deductions, even if an employee signs a written agreement authorizing the employer to do so or is separated before accruing the frontloaded leave.
Use
The reference guide clarifies the following for paid sick leave use under the Act:
· Per diem employees may use earned sick leave for the hours they were scheduled to work or for hours they would have worked, absent a need to use earned sick leave.
· To determine the amount of time of paid sick leave used for per diem employees or employees with indeterminate shift lengths, use the number of hours the employer had a replacement employee for the same shift. If this method is not possible, use the number of hours that the employee most recently worked during the same shift.
Carryover Limit
Employers must permit employees to carry over up to 64 hours of unused sick leave from year to year. However, an employer is not required to permit an employee to use more than 64 hours in a 12-month period.
Rehires
If a former employee is rehired by the same employer within 12 months of the separation, the employer must reinstate any paid sick leave that the employee had accrued but didn’t use prior to the separation, even if it is more than 64 hours.
Rehired employees must be allowed to use accrued earned sick leave and accrue additional earned sick leave upon their rehire, unless they were paid for those days upon separation.
Pay Requirements
Under the Act, employers must pay employees for earned sick leave on the same scheduled payday as regular wages. And employers are not required to pay out accrued or earned sick leave that was not used upon termination, resignation, retirement or other separation from employment.
When an employee's number of hours worked fluctuates from week to week, an employer must use the average number of hours the employee worked the preceding two weeks when paying earned sick leave.
Employers must ensure they correctly pay tipped, salaried, task, piece or commission employees who use earned sick leave:
· Tipped employees that are ordinarily paid less than the full minimum wage due to a "tip credit" must receive the greater of the full state or local minimum wage.
· Salaried employees must receive their regular salary converted to an hourly rate based on the employee's regular workweek and weekly salary amount.
Example: A worker that normally works 40 hours per week and earns $1,000 must be paid at least $25 per hour for any earned sick leave used. ($1,000 divided by 40).
Note: For a salaried employee whose work hours fluctuate by week, divide the weekly salary by 40 to determine the hourly rate.
Task, piece, or commission employees must receive the greater of their hourly or salary rate or the state or local minimum wage.
See the reference guide for more examples.
Notice Requirements
Fully remote businesses may comply with the notice requirements using a website, email, or some other form of electronic communication or publishing that employees can easily access.
Pay Statement Requirements
The Act does not include pay statement requirements. However, employers must provide employees with an accurate year-to-date summary, in writing, of hours worked, sick leave accrued, and sick leave used at least once every calendar quarter. This may be electronically, including by email, website, mobile application, or other reasonable method. Employers will be in compliance with this requirement if this information is provided on regularly issued pay statements.
Recordkeeping
Employers must keep records documenting hours worked by employees, sick leave earned, and sick leave taken by employees for four years. Employers must provide this information to the state upon request.
Next Steps
Employers in New Mexico should review the reference guide and their paid sick leave policies and procedures to ensure compliance with the Act.