While it seems much of the country and the U.S. government are fixated on the Texas – Mexico border, changes that are more important to U.S. companies may be happening further south in Mexico City. The new Mexican administration under President Andres Manuel Lopez Obrador (AMLO), his Secretary of Labor, Luisa Maria Alcalde, and his political party, MORENA, have all emphasized the importance of improving social justice in Mexico. Given this new government’s interest in social justice reform, changes to either the structure or enforcement of current labor laws are likely on the horizon in Mexico.

An early indication of what is to come can be found in the 16% increase in the minimum wage in Mexico—the largest increase in the country’s history. Other changes in the form of legislation to give workers more of a say in their representation by unions and in the collective bargaining process are in the works as well. Among its provisions are requirements that all union contracts must be made public and must be ratified by a majority of the employees covered by the agreement in a secret ballot vote. While Mexican labor law has long recognized employee rights in terms of union representation, actual employee involvement in that representation—especially in bargaining with their employer—has been limited. We are still early in this process; the new labor law reform bill advancing these changes was only just introduced on December 23, 2018. Regardless, U.S. companies operating in Mexico should pay close attention to these developments in collective bargaining.

Of course, the implementation of any newly enacted laws is a separate issue to consider. The rule of law has at times suffered in Mexico, which has made doing business there somewhat unpredictable. This potential for change however makes it even more important that U.S. companies examine how they employ workers in Mexico. In particular, the practice of employing workers in Mexico through U.S.-based companies should be closely reviewed not only in this new environment but also in terms of existing laws in Mexico, including the tax and profit sharing laws.

Changes are coming in Mexico—what those changes will ultimately be, and how they will be implemented, is difficult to predict. AMLO and his administration are focusing not only on labor law, but also the law governing energy, tax, and intellectual property, in addition to the overall rule of law in Mexico. The Texas Bar’s International Law Section will be discussing these developments in Mexico City on April 3–6 of this year (see more details).

Do not be distracted by the border politics. The more important developments for U.S. businesses operating in Mexico are coming in the form of changes to the Mexican labor law legal landscape, brought to you by AMLO and the new Mexican government.