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  • Writer's pictureRoberta Edwards

Accrued Unused Vacation Leave is Payable Compensation at Time of Employment Separation in New Mexico and More...

Updated: Mar 1

Keeping track of numerous employment laws and applying them correctly can be a daunting task. Many New Mexico employers may be unaware of and unwittingly out of compliance with the following state wage and hour laws:

1. The New Mexico Wage Payment Act (NMSA 50-4-1 to 50-4-4) considers accrued vacation or leave time to be wages that are due and payable at the time of an employee’s separation (voluntary or involuntary).

In past practices, the NM Department of Workforce Solutions (DWS) had allowed employers to utilize a waiver, signed by employees, to indicate that accrued unused vacation will not be paid out at the end of employment.


However, in 2017, the DWS updated the definition of wages within the regulations, clarifying that accrued unused vacation leave is considered wages payable at termination of employment. Employers are required to pay the accrued unused vacation leave at separation, whether voluntary or involuntary, and non-payment policies are no longer compliant with wage and hour law.


It is important to note that New Mexico's paid sick leave statue, The Healthy Workplaces Act, does not require that accrued sick leave be paid out at the end of employment. If an employer decides to combine sick leave and vacation leave into a PTO bank, it must all be paid out at termination of employment. It is best to contact a certified HR consultant or employment attorney for assistance with your company policies to ensure compliance with the laws in all areas.


2. New Mexico state statute 50-4-2: Semi-monthly and monthly pay days

This provision contains wording that bars an employer from:

· Requiring all employees to sign up for and be paid by direct deposit.

· Holding an employee’s paycheck beyond payday for any reason.

· Taking deductions from an employee’s paycheck without written authorization or a court order (make sure you have a signed agreement for any company property or other deductions you may want to take).


3. New Mexico state statute 50-4-13: Hours of Employment; Eating Establishments

This one states that your hotel and restaurant employees cannot be required to work more than 10 hours per day: “Any person or persons, firm, association or corporation, owning any hotel, restaurant, cafe, or eating house within this state, shall not be allowed to cause any employee therein to labor more than ten hours in any twenty-four hours of any one day, nor more than seventy hours in any one week of seven days”.


Now is a good time to check your company policies to ensure compliance and confirm that your leave policies outline exactly what happens to accrued time off when an employee leaves employment. Engage with a knowledgeable HR Consultant or Employment Attorney assist you with policy and handbook updates. You will find a helpful and easy to read fact sheet with more information on New Mexico wage and hour laws here:

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