a week and must compensate employees for this overtime work at double the normal rate.22 Moreover, employers must compensate employees who work more than nine hours of overtime a week at triple the normal rate. Mexican law also entitles employees to a half-hour rest period during the work day, which is not computed as part of the seven, seven and a half, or eight hour shift as long as the employee can leave the workplace (otherwise it must be counted as part of the work shift). Employees additionally have a right to one day of paid rest for every six days worked.23 Because Sundays are the preferred rest day, employees required to work on Sundays are entitled to an additional 25 percent of their wages as a bonus.24 Employers and employees may agree to increase the maximum daily hours to provide for two days of rest instead of one (e.g., Saturday and Sunday), as long as the maximum weekly hours are observed. While at first blush it may appear that employees in Mexico make out better than employees in Texas based on Mexico’s overtime rates, Sunday premium pay, and paid day of rest, this simply is not accurate. True, Texas employees are only entitled to one and a half times their regular rate of pay for all hours worked over 40 in a workweek under the FLSA, but Texas employees generally earn a significantly higher hourly rate than Mexican employees such that it makes employment in Texas more appealing and more lucrative. Non-Competition Agreements Texas employers often seek to restrain the activities of their former employees post-employment through covenants not to compete, covenants prohibiting the solicitation of customers, and covenants prohibiting the recruitment of existing employees. The Texas Business and Commerce Code governs the enforceability of non-competition covenants in Texas and provides that a covenant is enforceable if the covenant: (i) is ancillary to or part of an otherwise enforceable agreement 24
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at the time the agreement is made; and (ii) contains reasonable limitations as to time, geographic area, and scope of activity restrained that do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the employer.25 While the enforceability requirements for protective covenants under Texas law are highly technical and fact specific, covenants not to compete are allowed under the law and, in fact, there has been enhanced judicial enforcement of non-competition and non-solicitation provisions by Texas state courts. Contrary to the legal regime in Texas, both the Mexican Constitution and the Federal Labor Law make clear that employee covenants not to compete are unenforceable in Mexico. Mexican courts have additionally consistently held unenforceable the lesser restraint of nonsolicitation of customer provisions.26 Consequently, Texas employers looking to expand into Mexico must understand this lack of protection afforded to their goodwill and business interests by Mexican law. Likewise, Mexican employees considering expansion into Texas should consider the use of non-competition and non-solicitation covenants, especially as they endeavor to gain footing in the Texas market. Conclusion Because of the considerable substantive regulation of the employment relationship in Mexico, Texas employers may experience an initial “shock” when entering the Mexican market. Mexican businesses interested in expanding into Texas may experience a similar uneasiness given the highly unregulated employment relationship in Texas under state and federal law. Confronted with these differences, Texas and Mexican businesses may be inclined to forego their endeavors into the unknown employment climate of their neighbor. Texas and Mexican employers, however, should avoid this fear of the unknown, as the labor and employment landscape of each jurisdiction is easily maneuverable.
thehoustonlawyer.com
Yasser Madriz is a partner in the Business Litigation Section of Haynes and Boone in the firm’s Houston office. Felicity Fowler is a partner in the Labor and Employment Practice Group of Haynes and Boone in the firm’s Dallas and Houston offices. Meghaan McElroy is an associate in the Labor and Employment Practice Group in the firm’s Houston office. Endnotes
Moreover, once Mexican employers are aware of the limited statutory entitlements and rights afforded by federal and Texas law to employees, they may want to reconsider the employment terms and benefits provided to their Texas employees. 2. Stephen F. Befort & Virginia E. Cornett, Beyond the Rhetoric of the NAFTA Treaty Debate: A Comparative Analysis of Labor and Employment Law in Mexico and the United States, 17 COMP. LAB. L. 269, 275 (1996). 3. Ley Federal del Trabajo [L.F.T.] [Federal Labor Law], Diario Oficial de la Federación [D.O.], 1 de Abril de 1970 (Mex.), available at http://www.diputados.gob.mx/ LeyesBiblio/pdf/125.pdf. 4. L.F.T. arts. 24 and 26. 5. Id. at art. 25. 6. Id. at art. 27. 7. Id. at art. 26. 8. Id. at art. 35. 9. Id. at art. 47. 10. Id. at art. 48. 11. Id. at arts. 49 and 50. 12. Id. at art. 51. 13. Id. at art. 53. 14. 29 U.S.C. § 2601, et seq. The FMLA applies to all public agencies and private employers who employ at least 50 employees within a 75-mile radius. Employees are only eligible for leave under FMLA if they have been employed for a minimum of 12 months (during the prior seven years, as time need not be consecutive) and worked a minimum of 1,250 hours in the 12 months immediately preceding a request for FMLA leave. 15. 38 U.S.C. § 4301. Unlike the FMLA, which has an employee numerosity requirement, USERRA applies to virtually all U.S. employers, regardless of size. 16. 42 U.S.C. § 12101. An employer must have 15 or more employees to be covered by the ADA. Similar to the FMLA and USERRA, employees must meet certain statutory coverage requirements before being eligible for the entitlement of a reasonable accommodation. 17. 29 U.S.C. § 8. As the term connotes, exempt employees under the FLSA are exempt from the minimum wage and overtime requirements; however, to qualify for exemption, employees generally must be paid at least $455 per week on a salary basis. The FLSA salary requirements do not apply to outside sales employees, teachers, and employees practicing law or medicine. 18. L.F.T. arts. 74, 76, 80, 87, and 117-25; see also Befort & Cornett, supra note 2, at 280. 19. However, the seniority premium may not exceed twice the minimum salary then in effect in the economic zone where the employer is located. L.F.T. art. 162. 20. Anthony Harrup, Mexico’s 2012 Minimum Wage Increase Set at 4.2%, WSJ.COM, Dec. 10, 2011, http://online.wsj. com/article/SB100014240529702034133045770910504 95760194.html. 21. L.F.T. art. 60-61. 22. Id. at arts. 66-68. 23. Id. at art. 69. 24. Id. at art. 71. 25. TEX. BUS. & COM. CODE ANN. §§ 15.50–.52. 26. Mex. Const. art. 5; L.F.T. art. 4. 1.