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Reopening the Automotive Industry in Mexico: Rules of the Road

The COVID-19 outbreak has caused companies serving the automotive industry in Mexico to face economic stress due to liquidity, labor, contract and other issues. This stress has manifested itself in many ways:

  • Impediments to ceasing payments to employees or landlords.

  • Shortages of raw materials when operating at limited capacity.

  • Partial or complete interruption in operations due to the Mexican government’s decision to not include auto manufacturing activities as an essential service despite the immediate potential adverse effects of such decision on the automotive supply chain.

These circumstances may start to improve in the near future.

In that vein, the Mexican government has already formally announced that it is exploring and discussing the best mechanisms to resume operations in the automotive industry in the near term. Consequently, in order to prepare in advance to such imminent reopening, auto-manufacturing companies should bear in mind the following set of practical recommendations prior to such moment and onwards during the COVID-19 scenario:

A)  Mandatory Health Measures

  • Refrain from requesting or enabling people over the age of 60 to be present at the workplace, as well as groups of people who are at risk of developing or dying from a serious illness. Such groups of people are defined as pregnant or lactating women, minors below the age of five, people with disabilities or chronic, non-transferable diseases (e.g., high blood and lung pressure, liver insufficiency, lupus, cancer, diabetes mellitus, obesity, metabolic or hepatic insufficiency, or cardiac illness), or those with a medical treatment or condition that would suppress their immune system.

    In this regard, since it is nearly impossible for companies to gain knowledge of such circumstance without employees’ express consent (and, if granted, it implies a data privacy obligation), it is advised that before employees access the companies’ premises, they execute an affidavit – preferably on a daily basis – stating that they have not been diagnosed with any of the referred conditions

    In that vein, it is also advisable that such affidavit covers: (i) COVID-19’s symptoms; (ii) a statement whereby they represent that to best of their knowledge they have not been in contact with infected individuals; and (iii) record of the temperature taken at the point of entry to the facility.

  • Prevent gatherings of more than 50 people. Considering the nature of the auto-manufacturing activities, if the layout of the relevant facilities enables two or more access points, and to the extent that such premises are ventilated, a temporary physical barrier could be installed to allow two or more groups of employees working in different lines of production. The preceding, coupled with the need to restructure work shifts (from one to two, or even three), enables the continuation of production.

  • Individuals shall wash their hands frequently. To such extent, it will be the employers’ burden to provide the necessary sanitary supplies (e.g., disposable tissues and towels, and antibacterial gel with at least 70 percent of alcohol content).

  • Individuals shall apply proper respiratory etiquette when sneezing or coughing (e.g., covering nose and mouth with a tissue or with the forearm).

  • No kiss, hand or hug salutations (e.g., only distant salutations).

  • Implement social distancing measures. The suggested distance is 1.5 to 2 meters between workstations.

B)  Practical Suggested Measures

  • Implement a health checkpoint at the entrance and exit of the facility. At such checkpoint, all employees and customers – as they access or leave the facility – should be subject to temperature screening and required to use hand sanitizer and step onto a sanitized carpet to sign the health affidavit suggested in the section above.

  • Provide employees with health-protective equipment (e.g., facemasks, gloves and goggles, if required). The facemasks do not need to be surgical standards, as the intent is to prevent the dispersion of virus if an employee inadvertently attends the workplace being asymptomatic.

  • Sanitizing the workplace, including transportation vehicles, when provided by the company. In such cases, transportation services should be increased to ensure social distancing between employees. If applicable, personnel lockers should have controlled access to prevent gatherings of employees, as well as set sanitization schedules when shifts change to ensure a sanitized space.

  • Throughout the workplace, post the health measures recommended and instructed by the health authorities (e.g., social distancing, 1.5 to 2 meters of distance between people or workstations, emergency lines posted by the federal government to report cases, etc.). A set of recommended posters in regards to COVID are available at the Ministry of Labor.

  • Require employees to attend to the workplace with staggered arrival times to prevent gatherings or lines of employees accessing the facilities. The same should apply to mealtimes. When possible, it is advisable to include a physical barrier on the dining tables to maintain social distancing.

  • Appoint an employee and employer’s representative to provide training in regards to the health recommendations and to cause employees to attend such training sessions.

  • Continue to require vulnerable employees to home-office.

  • Cause a Notary Public to attest to the security and health protocols implemented by the company. When possible, it is also advisable to have a representative of the labor union attend such attestation and for his or her name to appear on the public deed.

  • Provide flyers resuming the health measures implemented, as well as the protocol to notify the human resources department, and in its case, their medical service station.

  • Provide sanitizers to employees at the lunchroom to sanitize the wrapping of their meals.

  • When possible, locate video cameras that can hold many weeks of memory, particularly while the COVID-19 situation persists, to evidence that the totality of health measures was in place, not only when attested by a Notary Public but at all times.

C)  Risks Mitigated by Applying the Referred Mandatory and Suggested Measures

As provided under the Federal Labor Law, it is the employers’ burden to ensure a healthy and safe environment for their employees. As a result of that, failure to provide the same while operating it may cause not only a labor work hazard as already acknowledged by the Social Security Mexican Institute and the labor authorities, but also could result in undesirable exposure to tort claims. Likewise, failure to implement such measures, depending on the language and coverage of the company’s insurance policy, may provide room to the insurance company to refuse coverage for such tort or business interruption claims. Moreover, by applying the referred set of mandatory and suggested preventive measures, the company would be better positioned to face an inspection from the state or federal labor or health authorities while the sanitary emergency endures (so far until May 30, 2020).

In all cases, the suggested practical measures (though applicable in general) should be adapted on a case-by-case basis to each company’s particular needs and circumstances. Moreover, the referred measures may need to be revisited if the government issues a special set of rules as anticipated. 

For further information in regards to tort claims and insurance exposure, please click here. Although it is not expressly addressed to the auto-manufacturing industry, it does provide a general overview of them

For more information, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization

Foley has created a multidisciplinary and multijurisdictional team to respond to COVID-19, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time.

© 2020 Foley & Lardner LLPNational Law Review, Volume X, Number 120

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About this Author

Daniel Aranda Corporate & Trial Attorney Foley & Lardner Mexico City
Partner

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.

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52.55.5201.4518
Roberto Arena Reyes Retana, Foley Lardner Law Firm, Mexico, Insurance and Energy Law Attorney
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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.

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

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Mark A. Aiello is a partner with Foley & Lardner LLP where he focuses on business transactions and commercial litigation, including business transfer, supply chain and warranty litigation, product development and protection, as well as advising on business governance matters. His experience ranges from representing large businesses in complex matters to counseling small, closely held businesses concerning a wide range of commercial issues. Mr. Aiello is co-chair of the firm’s Automotive Industry Team.

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