Legislature establishes Workers' Compensation Administration Fund with new employer fees

New Mexico's Senate Bill 535 is set to reshape the landscape of workers' compensation funding in the state, introducing a tiered fee structure aimed at bolstering the Workers' Compensation Administration Fund. Introduced on April 7, 2025, the bill proposes incremental increases in fees assessed to employers and employees over the next decade, with the goal of ensuring the sustainability of the workers' compensation system.

Starting July 1, 2025, employers will see their fees rise from $2.30 to $2.55 per employee, with further increases scheduled every three years until reaching $2.80 by July 1, 2033. Employees will also face a fee increase from $2.00 to an undisclosed amount post-2025, which will be deducted from their wages. This structured approach aims to address the growing financial demands on the workers' compensation system, which has faced challenges in recent years due to rising claims and administrative costs.

The bill has sparked notable debates among lawmakers and stakeholders. Proponents argue that the fee increases are necessary to maintain adequate funding for injured workers and to ensure timely benefits. Critics, however, express concerns about the financial burden on both employers and employees, particularly in a recovering economy. Some business groups have voiced opposition, fearing that higher costs could lead to job losses or reduced hiring.

The implications of Senate Bill 535 extend beyond immediate financial concerns. Economists warn that increased fees could impact wage growth and employment rates, while advocates for workers' rights emphasize the importance of a robust compensation system for employee welfare. As the bill moves through the legislative process, its fate will likely hinge on negotiations between business interests and labor advocates, with potential amendments that could alter the proposed fee structure.

As New Mexico navigates these changes, the outcome of Senate Bill 535 will be closely watched, with significant consequences for the state's workforce and economy. The bill's progression will reveal how lawmakers balance the needs of injured workers with the economic realities faced by employers.