Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Lujan, A.

DATE TYPED 02/26/05 HB 550/aHGUAC

SHORT TITLE

Public Employee Work Payment Transfers

SB

ANALYST Moser

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Transportation (DOT)

Department of Corrections (DC)

SUMMARY

Synopsis of Amendment

The amendment to House Bill 550 deletes on page 2 line 5 the following language “circum-

stances approved by the employer” and substitutes “accordance with the provisions established

by the federal Fair Labor Standards Act of 1938”.

Significant Issues of Amendment

The amendment clarifies compliance with the federal Fair Labor Standards Act (FLSA). The

federal law requires that if an employee who is covered by the FLSA works the time the em-

ployee is to be compensated.

Synopsis of Bill

House Bill 550 seeks to amend a provision of the criminal code, specifically Section 30-23-2,

NMSA 1978. That law states, in pertinent part, that “paying or receiving public money for ser-

vices not rendered consists of knowingly making or receiving payment or causing payment to be

House Bill 550/aHGUAC -- Page 2

made from public funds where such payment purports to be for wages, salary or remuneration for

personal services which have not in fact been rendered” and “whoever commits paying or receiv-

ing public money for services not rendered is guilty of a fourth degree felony.”

This bill seeks to amend the provisions allowing remuneration to public officers or public em-

ployees for vacation and sick pay as acceptable exceptions by additionally allowing payment for

“… work performed voluntarily by one public employee substituting for another public em-

ployee in circumstances approved by the employer.” An example of this type of payment could

be in the situation of a public employee trading a work shift(s) with another employee.

Significant Issues

State law requires that an employee be compensated for services rendered without any deduction

or reduction except as specifically stated in the written contract of hiring entered into at the time

of hiring (see Section 50-4-2 NMSA 1978). Therefore, the public employer must compensate an

employee for services rendered, regardless whether the employee has made arrangements with

another employee to “trade” schedules.

Substituting schedules might also cause significant ramifications in overtime calculations or enti-

tlements for public employees covered under the Federal Fair Labor Standards Act. The Act re-

quires that overtime be calculated based upon “hours worked.”

The Department of Transportation indicates in its FIR that their understanding of this bill’s intent

is to allow employees to exchange work schedules while maintaining continuity in their compen-

sation from pay period to pay period. In this type of scenario an employee would exchange shift

with another and each would continue to receive compensation for their own schedule as if they

had each worked their own shift. This scenario creates significant problems in record keeping

and could subject the employer to claims of violations of federal overtime protections established

for employees.

PERFORMANCE IMPLICATIONS

Passage of this law would require record-keeping changes required by state agencies to accom-

modate the ‘substituted” schedules, and to track “actual” time worked versus “claimed” time

worked.

FISCAL IMPLICATIONS

Potential liability for overtime is increased.

GM/sb:yr:lg