The New Mexico employee separation process varies from other states’—which is why it’s critical for employers to understand state-specific employee termination laws.
This employee separation checklist is your guide to New Mexico’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
New Mexico Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in New Mexico
New Mexico law requires that separated employees receive their final wages on a specific timeline. Terminated employees with a fixed salary must be paid within five days. Employees paid by task, piece, or commission must be paid within 10 days. Employees who resign should be paid on the next scheduled payday.
All wages, including accrued and unused vacation time, must be paid in full. While state law doesn’t specify the method for delivering final paychecks, using the normal payment methods is recommended. Employers who fail to pay wages can face misdemeanor charges, with penalties including fines up to $50, imprisonment for up to 90 days, or both for each offense.
2. Firing Employees in New Mexico
Unlike many states, New Mexico doesn’t require any sort of notice when separating from or firing employees. Because it’s an at-will employment state, both employers and employees may end employment at any time for any legal reason.
3. Severance Agreements in New Mexico
When asking employees to sign a severance agreement, employers have several obligations. Severance agreements may contain claims releases—but they must explicitly list the claims the employee is releasing under both federal and state law.
In New Mexico, the state law claims that may be released are those under the New Mexico Human Rights Act, New Mexico Minimum Wage Act, New Mexico Wage Payment Act, and New Mexico’s leave laws. The claims release may only release claims that have arisen prior to its effective date.
Furthermore, non-disparagement clauses in severance agreements can’t restrict employees from disclosing or discussing facts related to a dispute or claim of sexual harassment, sexual assault, discrimination, or retaliation. It makes no difference if the claim occurred in the workplace or was a work-related event coordinated by the employer.
Employers must also remember to review applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision suggests a restriction in the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in New Mexico
If your separated employee has an Income Withholding for Support Order (“IWO”), report the employee’s termination to the child support agency, court, or attorney that issued the IWO as soon as possible. You may register for online reporting with the Federal Office of Child Support Enforcement here.
Alternatively, report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. Prepare the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in New Mexico
When separating from your last New Mexico employee ends your business dealings in the state, you may want to formally withdraw your business registration in the state. The forms an organization fills out and submits to the New Mexico Secretary of State depend on its legal structure.
For-Profit Corporations must file this Application for Withdrawal, and submit a Certificate of No Tax Due from the New Mexico Department of Taxation and Revenue. They must also file a Certificate of Compliance from the New Mexico Department of Workforce Solutions. Non-Profit Corporations should file an Application for Withdrawal. Lastly, Limited Liability Companies (LLCs) need to file this Application for Cancellation.
Stay Compliant with New Mexico Employee Separation Requirements
Staying compliant with Employee Separation Agreement requirements helps employers ensure regulatory compliance, honor state-specific employee rights, and mitigate potential risk.
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