(Thank you to our Baker McKenzie colleagues in Mexico for sharing this alert.)

As a result of a change in government leadership and recently signed laws and treaties, companies in Mexico now have an important “to do” for 2019: prepare to review any unions that are “on the books” and assess compliance in this new environment.

What are “White Unions”?

• White Unions in Mexico are usually employer-friendly unions that — due to current legislation deficiencies — can effectively bar entry of other unions who might otherwise attempt to gain a foothold in the workplace. They have little to no actual membership and do not actively represent workers. Historically, any union could petition for unionization without the need to prove the support of workers.

What changed?

• Significant amendments to the Mexican Constitution in 2017 strengthened the obligation that unions maintain “authentic and active” membership. Now, by law, unions must prove that they are actually supported by employee members and they cannot petition an employer for unionization without actual employee support. In other words, the union has to have actual members.
• Convention 98 of the International Labor Organization was approved and ratified by Mexico on September 27, 2018. The Convention seeks to sanction discrimination practices against employees considering union representation, as well as any employer interference in the establishment, administration and operation of unions, including providing financial support, among other things.
• The US, Canada and Mexico Commercial Agreement (USMCA), which includes provisions in line with the Convention, was signed on November 30, 2018. The USMCA prohibits the party members from engaging in practices that would interfere with or influence labor union activities and the discrimination against or coercion of workers for engaging in such activities. It also foresees the creation of an independent entity to verify that union agreements comply with all legal requirements and that they actually support workers.
• Mexican President Andrés Manuel Lopez Obrador took office on December 1, 2018, bringing a new Labor and Employment Policy that (among other things) seeks to eliminate what has been traditionally known in Mexico as the White Union.

What does this mean for companies operating in Mexico?

The new treaties are expected to come in force in the coming year and mark a profound transformation of Mexico’s labor relations law. Companies with manufacturing or commercial operations in Mexico should update their Human Resources operating procedures — from labor relations strategies, to hiring and termination practices, to industry-specific union practice review — and analyze the current union relationships and contracts.

To Dos

Employers should expect increased union organizing efforts as a result of these changes. To prepare, remember that positive employee relations are the best antidote to union organizing. This is most effectively done through actions showing commitment from senior leadership like:

• Implementing policies and practices that promote positive employee/employer relations, such as social benefit programs, leadership programs, HR training, etc.
• Auditing for compliance with existing employment and Social Security Laws, including Health and Safety, Internal Work rules and anti-discrimination laws
• Reviewing benefits to align with market trends

The start of 2019 is an ideal time to consider preventative approaches and to review existing labor relations practices in Mexico. We would be pleased to assist as your company navigates these historic changes.