Conduct of Labor Inspections

February 10, 2013
Conduct of Labor Inspections

Stemming from the recent reforms to the Federal Labor Law, Mexico's Department of Labor and Social Welfare ("STPS") will commence a campaign to regulate the annual visits made to employers for the purpose of verifying that operations comply with the guidelines on general labor, safety and hygiene conditions in the workplace. Such visits are known as "inspection visits" and are performed by federal or local labor inspectors, according to their jurisdiction based on the corporate purposes and activities of the company. Companies must allow this inspection to take place pursuant to the terms of Article 132 of the Federal Labor Law. Upon conducting their visits, labor inspectors must provide their official identification credentials issued by the STPS, for federal inspectors, or by the Department of Labor and Social Welfare, for local inspectors. The inspectors must prepare a report on the facts as a result of their inspection visit and on the results of their review of the documentation and facilities of the companies. If, as a result of such report, the authorities determine that a violation of any of the applicable legal provisions stemming from the labor law exists, the agency will proceed to impose a fine for each violation identified. In accordance with the new labor reforms mentioned above, such fines can range from between 50 and 5000 times the daily minimum salary applicable in the Federal District for each employee who is affected, which can significantly impact the finances of the company. Further, should the respective violation or violations persist, this could result in the total or partial closure of the company. Given all of this, in order for companies to be in compliance with applicable rules, it is necessary for companies to have proper documentation, including, without limitation: (i) receipts for payment of salaries, benefits, bonuses, commissions, Christmas bonuses, vacation, vacation bonuses, profit sharing distributions, etc.; (ii) timesheets or cards or any other type of work attendance verification and verification of overtime; (iii) individual employment agreements; (iv) outsourcing agreements with contractors, agents and service providers; (v) interior work regulations; (vi) documentation regarding employment of women; (vii) documentation regarding employment of minors; (viii) mixed commissions; (ix) documentation related to compliance with profit sharing distributions; (x) documentation relative to compliance with education, training and productivity; (xi) detailed documentation showing compliance with safety and hygiene matters and the corresponding official Mexican norms on labor; (xii) collective bargaining agreement and compliance with such; (xiii) compliance with the obligations for registration and payment before the Mexican Institute of Social Security ("IMSS"), the National Worker Housing Fund ("INFONAVIT") and the National Fund for Worker Consumption ("FONACOT"); (xiv) general seniority chart; and (xv) documents showing the company's promotion of cultural and athletic activities.

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