The hiring of independent commissioned contractors or those known as commercial agents in Mexico is anissue that must be analyzed very carefully by companies interested in entering into such arrangements, even ifthese companies are foreign. Parties seeking to hire independent commissioned contractors to carry out certaineconomic activities in Mexico, or who already use such, should take into account different aspects of Mexicanlaw to avoid falling into situations that can lead to obligations for which such parties may not be prepared. Thehiring of independent commissioned contractors may have implications not only of a labor nature, but also withrespect to social security and fiscal matters. In this regard, in accordance with that established in Article 285 ofMexico’s Federal Labor Law (FLL), the independent commissioned contractors in Mexico hired as commercialagents, insurance agents, as well as vendors, travel agents, promoters, or sales or commission agents and othersimilar agents, may be considered employees of the contracting company for all purposes under the FLL when“his or her activity is permanent, except when they do not personally conduct the work or when they onlyintervene in isolated operations.” Mexico’s judicial and labor authorities, under various interpretations of theFLL, have determined criteria pursuant to which those parties hiring such service agents may be consideredtheir employers. This rule applies regardless of whether the foreign company has a physical presence in Mexico,given that this does not allow them to avoid being subject to the application of the provisions established in theFLL and other applicable Mexican laws, as well as various other obligations such as taxes, payment of socialsecurity fees and other obligations with which all employers within the Mexican territory must comply.Additionally, social security authorities may also petition the aforementioned judicial and labor authorities toattempt to charge social security fees, in the event that it is determined that these agents were employees of suchcompanies when they rendered services. Another important topic to consider in such relationships is thepossibility that the hiring of these agents may constitute the creation of a permanent establishment in Mexicofor tax purposes for the employer. In accordance with that established in the Mexican Income Tax Law.Therefore, it is important for those companies that intend to hire independent commissioned contractors orcommercial agents to render services in Mexico to seek legal advice from attorneys who will help them todetermine, on a case by case basis, the best strategy to follow in conducting such contracting activities, inaccordance with the results sought by the company and in compliance with applicable law.