2015 Border Law Conference
Federal Bar Association
El Paso Chapter
Presented by
Rosemary M. Marin
Roadmap
 NAFTA
 NAALC
 Labor Relationships
between American
employers and Mexican
employers
First, a little history
NAFTA
 The North American Free Trade Agreement entered
into force on January 1, 1994
 The agreement was signed by Canada, Mexico, and
the United States, and created a trilateral trade bloc
in North America
 It was the most comprehensive free trade agreement
negotiated at the time
NAFTA
 Purpose: To support globalization between Canada,
Mexico, and the United States
 Intent:
 Increase economic growth and employment
 Make the U.S. more competitive in the global economy
 Incorporated Mexico into the previously-established
CUFSTA: Canada-U.S. Free Trade Agreement
Has NAFTA been successful?
NAFTA: Success?
 Proponents say yes
 Created $19 trillion market with 460 million consumers
 400% trade increase between member states
 Exports from Texas to Mexico have increased
dramatically, with Texas acting as distribution hub
 Helped keep manufacturing jobs in North America
instead of being relocated to China
 Cemented strong relationships among the 3 countries
NAFTA: Success?
 Opponents say no
 Exploitation of cheap labor and displacement of
workers, particularly Mexican campesino farmers
 181 billion U.S. trade deficit with NAFTA partners
 Trade deficit costs jobs (some estimate 1 million net
U.S. jobs lost)
 Concerns about NAFTA’s investor-state dispute
settlement mechanism being abused by corporations
NAFTA and the TPP
 Regardless of whether NAFTA was a success, it is the
precursor for future trade agreements
 Pending are the Trans-Pacific Partnership (TPP) and
the Transatlantic Trade and Investment Partnership
(TTIP)
 The TPP includes 12 countries so far, including
Mexico and Canada
NAALC
 North American
Agreement on Labor
Cooperation
 A Supplemental Labor
Agreement to NAFTA,
effective January 1,
1994
NAALC
 Purpose: Safeguard workers’ rights in Canada, Mexico,
and the U.S.
 Before then, there was no connection between free
trade and labor movements through written
agreements
 Focus: Mutual review of labor matters and labor law in
defined areas
11 Labor Principles
Aspirations that apply to all three countries:
1. Freedom of association and protection of the right
to organize
2. The right to bargain collectively
3. The right to strike
4. The prohibition of forced labor
5. Labor protections for children and young persons
11 Labor Principals (Cont’d)
6.
7.
8.
9.
10.
Minimum employment standards
Elimination of employment discrimination
Equal pay for women and men
Prevention of occupational injuries and illnesses
Compensation in cases of occupational injuries and
illnesses
11. Protection of migrant workers
NAALC Enforcement
National Administrative Offices
 Created: at federal level of each
NAFTA country
 Function:
 Assist Commission for Labor
Cooperation
 Receive complaints from its
nationals about labor issues in
the other two NAFTA countries
NAALC Enforcement
National Administrative Offices
 Purpose:
 Point of governmental and public contact
 Designed to promote enforcement of labor laws in
NAFTA countries
 Not designed to provide relief
NAALC Enforcement
National Administrative Offices
Commission on Labor Cooperation
 Ministerial Council
 Governing body of Commission
 Labor Ministers from NAFTA countries
 Secretariat
 Headed by Executive Director appointed to 3 year
term by Council
NAALC Enforcement
National Administrative Offices (NAO’s) Steps Toward
Resolution
A. Ministerial Consultations
1. Receipt of Complaint
2. If in good faith
a.
b.
c.
Encourage parties to engage in ministerial consultation
If not in compliance: monetary penalty
If party doesn’t pay penalty: NAFTA benefits suspended in
amount equal to the penalty
National Administrative Offices
Steps Toward Resolution
A. Ministerial Consultations
-Types of complaints in Mexico:



Majority involve Mexican workers’ right to
organize independent unions
Pregnancy discrimination
Violations of child labor laws in fields
National Administrative Offices
Steps Toward Resolution
A. Ministerial Consultations
-Types of complaints in the U.S.:

Failure to protect workers from violations
of OSHA (Occupational Safety and Health
Administration)



Civil rights violations of field workers
Violations of child labor laws in fields
Breach of contract and fraudulent
inducement of field workers
National Administrative Offices
Steps Toward Resolution
A. Ministerial Consultations
Problems:
1. No Uniform set of labor standards

Subject to each country’s domestic labor laws
2. Lack of ability to secure sanctions


3-4 Complaints filed per year in early years
Less than one a year on average since 2000
National Administrative Offices
Steps Toward Resolution
A. Ministerial Consultations
Problems:
1. Of 23 filed between 1994 and 2002: None
resulted in sanctions for labor rights violations
2. Since then: Not one has yet resulted in more
than ministerial consultations
National Administrative Offices
A. Ministerial Consultations
If ministerial consultations are unsuccessful:
 Minister of Secretary of Labor may make a written
request for formation of Evaluation Committee of
Experts if:
 Matter is trade-related AND
 Matter is covered by mutually recognized labor laws
National Administrative Offices
Steps Toward Resolution
B. Evaluation Committee of Experts

Composed of 3 members

Chair selected from panel of experts

Evaluates the record of both parties

Prepares a report
National Administrative Offices
Steps Toward Resolution
C. Independent Arbitral Tribunal (IAB)

Party may request IAB if it believes that another
party is in a “persistent pattern of failure” to
enforce its labor policies
National Administrative Offices
Steps Toward Resolution
C. Independent Arbitral Tribunal (IAB)
 May enforce:
Occupational Safety & Health Policies
 Child Labor
 Minimum Wage
 Technical Standards

National Administrative Offices
Steps Toward Resolution
 Required to grant the parties broad discretion to
work out differences
 If no resolution by agreement binding arbitration
report
 After report/decision, may receive responses and
reconsider its findings
National Administrative Offices
Steps Toward Resolution
 If enforcement is necessary, disputing parties must
propose remedial action plan
 If parties cannot agree on remedial plan, then IAB
may fine offending party
 Money from fines goes toward improving labor
enforcement in offending country
Litigation Between the Nations
Choice of Law
Litigation: Choice of Law
 U.S.: Generally, apply the law of
the forum with the most
significant relationship to the
occurrence and the parties
 Texas: May apply Mexican law
when Mexico has the most
significant relationship to the
litigation
Litigation: Choice of Law
 U.S. and Mexico: Generally, both countries will
enforce forum selection clauses as long as:
 The forum chosen has a connection to the dispute
AND
 Dispute does not involve a matter of public policy
; AND
 Dispute does not involve a matter of purely local
import (e.g., labor disputes, real property issues)
Litigation: Choice of Law
 Other considerations when suing in a foreign country
 Hearing conducted in local language
 Local procedural rules apply
 Local substantive laws apply
 “Hometown” attitude of judges and juries
Labor Litigation in Mexico
 Mexican Constitution states
aliens have the same
constitutional guarantees as
Mexican citizens
 Federal Labor Law (FLL) states
at least 90% of the workforce
employed by Mexican companies
shall be Mexican citizens
Labor Litigation in Mexico
 Mexican Constitution guarantees workers the right to
 Form unions
 Minimum wage
 Eight-hour work-day
 Seven-hour shift for night work
 Maximum work week of six days
Labor Litigation in Mexico
 Mexican Constitution guarantees workers the right to
 Mandated benefits, such as the Aguinaldo (end of
the year bonus)
 Paid before December 20, equal to at least 15
days’ pay
 Terminate the relationship at any time (not vice
versa for employer)
 Notice from the employer of date and reason
regarding intent to terminate for cause
 Severance pay upon termination (unless for cause
or by mutual consent)
Labor Litigation in Mexico
 Mexican Constitution and FLL prohibit discrimination
in employment on the basis of:




Sex
Age
Race
Economic Status
 Protections apply to everyone working in Mexico,
regardless of their citizenship
Labor Litigation in Mexico
 Conciliation and Arbitration Boards (CABS)
 Employee’s right to appeal notice of termination
 Labor disputes initially decided by local or federal
CABS
 3-judge panels



Labor Judge
Management Judge
Government Judge
Labor Litigation in Mexico
 Subject to Federal Subject Matter Jurisdiction:
 Certain industries (textiles, electricity, motion
pictures, etc.)
 Enterprises managed directly by the federal
government
 Decentralized agencies of the federal government
 Companies acting under federal contract
 Companies who perform work in federal zones
Labor Litigation in Mexico
Labor Disputes
 Burden of Proof is on the Employer
 Must show good cause for termination
 If good cause is not shown, employees of at least
one year may receive back pay and reinstatement
 The employee may choose instead 3 months’
salary and benefits
 CAB decisions are final, unless constitutional
challenge
 CAB decisions not subject to appellate review, except
constitutional challenge
Labor Litigation in Mexico
 CAB decisions may only be challenged on
constitutional grounds by amparo suit
 Amparo suit
 Separate lawsuit
 Challenges constitutionality of certain acts of
government authorities
 Special procedural protections for workers (but
not employers)
Labor Litigation in Mexico
 Employer may choose to negotiate the resignation of
employees subject to termination
 Severance package usually includes:
 Bonus, depending on reason for termination, of
several months’ pay
 Seniority bonus for time worked
 Severance Agreements must be filed with CABS
Labor Litigation in Mexico
 Mexican Constitution, Article 123
 Imposes a duty on the government to intervene
when it has reason to believe that there may be a
violation of labor laws

Even if employee has not filed a complaint

Employer has burden of proof
Labor Litigation in Mexico
 Damages
 Federal Labor Law—Article 993
 Administrative and Pecuniary
 Fine: 250-5000 times minimum wage imposed on
employer for violating outsourcing regulations
 Damages: Percentage of basic payroll costs
 No criminal penalties or injunctive relief
Labor Litigation in the U.S.
 Employment litigation has exploded in the last 20
years
 In federal court, the number of cases filed
concerning employment concerns grew over 400% in
the last twenty years
 Complaints lodged with administrative agencies have
risen at a similar rate
Labor Litigation in the U.S.
 In the last 6 years, there has been a steep increase
in administrative regulation of the workplace, from
both federal and state sources, which impose costs
on employers and employees
 This has also given employees a broader array of
tools with which to hold their employers accountable
Labor Litigation in the U.S.
 There has also been an
explosion of litigation
under laws that rely in
whole or in part on
individual enforcement,
such as:
 Fair Labor
Standards Act
 Title VII
 Americans with
Disabilities Act
 Age Discrimination
in Employment Act
Labor Litigation in the U.S.
Fair Labor Standards Act
 Establishes minimum employment standards
 Enforced through U.S. Department of Labor and
Federal Courts
 Applies in U.S. to employers and employees engaged
in interstate commerce or in the production of good
for commerce
 Does not apply to any employee whose services during
the workweek are performed in a workplace within a
foreign country
 Does apply to foreign workers in a U.S. workplace
Labor Litigation in the U.S.
Title VII of the Civil Rights Act of 1964 (as
amended)
 Unlawful to discriminate in hiring, promoting, firing, or
with regard to employment in
 Compensation
 Terms
 Conditions
 Privileges
Labor Litigation in the U.S.
Title VII of the Civil Rights Act of 1964 (as
amended)
 Unlawful to discriminate because of:
 Race
 Color
 Religion
 Sex
 National Origin
Texas: Add Age, Disability
Labor Litigation in the U.S.
Title VII of the Civil Rights Act of 1964 (as
amended)
 Generally applies to employers with 15 or more
employees
 This includes federal, state, and local governments,
regardless of size
 Applied to private and public colleges and universities,
employment agencies, and labor organizations
Labor Litigation in the U.S.
Other federal Equal Employment Opportunity Laws
(EEO) laws that may apply:
 Americans with Disabilities Act
 Older Workers Benefits Protection Act
 Age Discrimination in Employment Act
 Family Medical Leave Act
 Lilly Ledbetter Act
 Fair Credit Reporting Act
 Etc.
Labor Litigation in the U.S.
Federal EEO laws:
 All employees who work in the U.S. are protected,
regardless of citizenship or work authorization status
 Employees who work in the U.S. or its territories are
protected whether they work for a U.S. or foreign
employer
Labor Litigation in the U.S.
Federal EEO Laws:
 Individuals who are not U.S citizens are not
protected when employed outside of the U.S.
 So a Mexican citizen who is a U.S. resident alien may
not seek redress if working for a U.S. company in
Mexico
Labor Litigation in the U.S.
Federal EEO Laws
 U.S. citizens who are employed outside the U.S. by a
U.S. employer are protected
 This also applies to U.S. citizens employed by a
foreign company controlled by an U.S. employer
Labor Litigation in the U.S.
Federal EEO Laws
 Bottom Line:

A Mexican citizen with legal right to work in the U.S.
has federal EEO protection
 While working in the U.S.
 But Not if working outside of U.S., even for U.S.
company
 If working outside of the boundaries of the
U.S., will be subject to the laws of the country
in which s/he is working
Labor Litigation in the U.S.
Federal EEO Laws
EXCEPTION:
If the employer is not a U.S. employer and is subject
to a treaty or other binding international agreement
that permits the company to prefer its own nationals
for certain positions.
Labor Litigation in the U.S.
Federal EEO Laws
 An employer will be considered a U.S. employer
 If it is incorporated or based in the U.S.
 If it has sufficient connections with the U.S.
Labor Litigation in the U.S.
Federal EEO Laws
 The nationality of the employer is determined by:





Place of incorporation
Employer’s primary place of business
Nationality of dominant shareholders
Location of management, officers, and directors
Locations of personnel who “control” the
corporation
Labor Litigation in the U.S.
Federal EEO Laws
 Whether a foreign company is controlled by a U.S.
employer will depend on a four-prong test
1. The interrelation of operations
2. Common management
3. Centralized control of labor relations
4. Common ownership or financial control of the two
entities
Labor Litigation in the U.S.
Federal EEO Laws
 Consequently, employers who satisfy the control test
shall be subject to federal EEO laws
 Except where:
 The action is taken in a foreign workplace where
compliance with Title VII would cause the
employer to violate the law in the foreign
country in which the workplace is located.
Labor Litigation in the U.S.
National Labor Relations Act
 Resolves labor disputes through the NLRB
But NLRB also involved with non-unionized work
places in the last 6 years
 Gives employees the right to unionize or engage in
“other concerted activity”
 Applies only in the U.S. to employers and employees
engaged in interstate commerce
 Applies to both documented and undocumented
workers, although some remedies may be unavailable
for undocumented workers (e.g., reinstatement)

Labor Litigation in the U.S.
National Labor Relations Act
Expensive, Time-Consuming, Difficult Process







Unfair Labor Practices Charge
Investigation
Complaint by NLRB
Hearing
Appeal
NLRB Order
Federal courts enforce or dismiss NLRB Orders
Labor Litigation in the U.S.
Department of Homeland Security, Immigration
and Customs Enforcement (ICE): Immigration
Reform and Control Act of 1986 (IRCA)
 One purpose is to prevent the hiring and retention of
undocumented workers
 Enforcement focus is now on employers, not
employees
 Paperwork errors can lead to 6-figure penalties
 Hiring undocumented workers can lead to prison
time and other penalties
Cross-Border Labor Litigation
Lessons:
 NAFTA and related laws make working together a
reality
 Joint laws make fairness to employees a must
 The individual labor laws of Mexico and U.S. are very
different
 Priority enforcement in both countries is against the
employer, not the employee
 Preparedness is key
“Spectacular achievement is always preceded
by unspectacular preparation.”
― Robert H. Schuller
Thank You!