February 4, 2023

Volume XIII, Number 35

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February 03, 2023

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February 02, 2023

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Employment Compliance Trends: New Litigation Ruling Impacts Mexican Companies

In September 2016, there was a major shift in the Mexican Supreme Court’s approach to damages, where the highest court in the country ruled on the legality of punitive damages. In April 2020, federal courts made pivotal changes in litigation, where companies doing business in Mexico should not only be concerned of compliance with the Federal Labor Law (FLL), but also be mindful of tort claims.

In recent precedents (May-June 2022), Mexican federal courts have confirmed that companies are not released from liability vis-a-vis its employees solely by paying their social security contributions for labor hazards or accidents or by paying their severance obligations. The courts have sustained that in addition to labor-related complaints, those claims addressing personal injury or pain and suffering in the workplace, which may include wrongful termination, are also subject to tort actions filed with civil courts. It may be worth noting that, as opposed to the parameters set forth under the FLL where the employer’s liability is capped, torts are not subject to a monetary threshold. In addition, courts have also ruled that in certain cases related to tort claims, specifically filed against an employer for personal injury or pain and suffering, the burden of proof may shift from the claimant (i.e., the employee), to the defendant (i.e., the company).

This new approach undertaken by the Mexican federal courts underscores the importance of our prior recommendations consisting in properly documenting and maintaining sufficient evidence of compliance with health and safety regulations addressing both physical and mental conditions at the workplace. The wording used in employment termination and settlement agreements should also be revised to minimize the company’s exposure to the aforementioned claims.

In sum, employees may now claim damages for personal injuries, pain and suffering, and perhaps even wrongful termination, not only in the Mexican labor courts, but also in civil courts via tort claims. In addition, the remedies available to employees are not only direct damages, but also punitive damages.

Therefore, considering the importance of labor related health and safety standards, both mental (NOM-35) and physical (FLL), as well as the clear dissection of remedies for employees, former employees, or even visitors to a company’s premises, companies should revisit the need of producing hard non-challengeable evidence of their compliance with the applicable laws and standards in order to mitigate their exposure to tort and punitive damage claims for failure to abide with same.

© 2023 Foley & Lardner LLPNational Law Review, Volume XII, Number 203

About this Author

Roberto Arena Reyes Retana, Foley Lardner Law Firm, Mexico, Insurance and Energy Law Attorney

Roberto Arena is a trusted advisor for businesses in the energy, insurance, electricity, financial, and oil and gas sectors, including many public companies with an interest in international tax planning and inbound and outbound international business transactions. He often handles sophisticated interpretation of treaties to avoid double taxation, large-scale mergers and acquisitions, real estate litigation, corporate organizations and reorganizations, and multi-jurisdictional litigation-related matters.

Roberto is the founding partner of the...

Daniel Aranda Corporate & Trial Attorney Foley & Lardner Mexico City

Daniel Aranda is a bilingual, bicultural corporate and trial lawyer serving clients in the U.S., Mexican and international energy law, pipeline, banking and finance sectors. Daniel is also a member of Foley's Energy Industry, and Government Procurement Practice in Mexico City.

Daniel represents foreign and domestic clients with all aspects of their international energy law needs, including:

  • Representation before the Mexican energy authorities (CRE, CNH, Ministry of Energy, Pemex and CFE)
  • Mergers and acquisitions
  • Project development and...
Andres Alvarez, Foley Lardner Law Firm, Dallas, Foreign Legal Consultant
Foreign Legal Consultant

Andres Alvarez is an experienced Foreign Legal Consultant in the corporate practice at Foley Gardere. He serves as a liaison on the interactions between the Dallas and Mexico City offices regarding all legal subject matters. He focuses on commercial matters, corporate and transactional law, as well as international trade and customs. Andres brings a deep understanding of decision-making processes and analysis of information and data, with experience in the technology, financial, consumer, hospitality and industrial sectors.

Andres previously...

Juan Carlos De Lucio Carrasco Litigation Attorney Foley & Lardner Mexico City

Since 2014, Juan Carlos has been a member of the Litigation Practice in Foley Arena's Mexico City office. Juan focuses his work on civil and commercial litigation practice, handling client's requirements before federal and local Mexican courts, with innovative litigation strategies. As a sample of some of the companies he represents, he works with companies within the technology, construction, maritime services and real estate industries.

Practice Areas

  • Business Litigation & Dispute Resolution 
  • Litigation