Misclassification

Misclassification occurs when an employer incorrectly identifies a worker as an “independent contractor” rather than an employee.
With respect to Unemployment Insurance, New Mexico uses both the “ABC test”, which is found in New Mexico statute, as well as the “Economic Realities Test,” which is found in the Fair Labor Standards Act (FLSA). Those tests are used to determine whether a worker is an independent contractor or an employee. For employers, it is important to remember that no one factor in these tests can be weighed more heavily than the other factors when making a decision.

The "ABC" Test (3 parts)

The New Mexico statute defines a non-employee/contractor as one who established by a preponderance of the evidence that:
A. Such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact;
B. Such service is either outside the usual course of business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
C. Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the contract of service. N.M. Stat. § 51-1-42(F)(5).

Additional Resources

“Independent Contractor or Employee?” Special Article

“Get the Facts on Misclassification Under the Fair Labor Standards Act, Employee or Independent Contractor?”

“Myths About Misclassification”

New Mexico Department of Taxation & Revenue

New Mexico Workers’ Compensation Administration

Contact us

For more information contact a Tax Customer Service Agent at 1-877-664-6984, Monday through Friday, from 8:00 a.m. to 4:30 p.m.  Misclassification and Unemployment Insurance tax-related questions may be submitted to uitax.support@dws.nm.gov.

  • Do you want to become an

    Applications Developer?

    Develop, create, and modify general computer applications software or specialized utility programs. Analyze user needs and develop software solutions. Design software or customize software for client use with the aim of optimizing operational efficiency.

  • Do you want to become a

    Plumber?

    Assemble, install, alter, and repair pipelines or pipe systems that carry water, steam, air, or other liquids or gases. May install heating and cooling equipment and mechanical control systems.

  • Do you want to become an

    Ironworker?

    Raise, place, and unite iron or steel girders, columns, and other structural members to form completed structures or structural frameworks. May erect metal storage tanks and assemble prefabricated metal buildings.

  • Do you want to become an

    Electrician?

    Perform preliminary work with the material and tools of the trade; residential and commercial rough wiring and finish work including the installation of various kinds of wires, cables, and conduits per the National Electrical Code; industrial lighting and service installation; motors controls and installation including emergency generators, relays, and timing devices.

Can't find what you're looking for?

Contact us and we'll do our best to answer your questions.