Transcript NAFTA: Minimizing Risks as a North American Employer

NAFTA: Minimizing Risks as a
North American Employer
Rafael Medina
Rachel Solyom
Monica Schiaffino
Carolyn Lam
“GoingNative”
Last year’s winner of Project Walkway, Helen Sriracha, has big
plans. Her new company, “GoingNative,” will be harvesting
ecologically sustainable materials from right outside Canada’s
Great Bear Rainforest. She’s confident that by hiring “First
Nation” Canadian workers to gather the raw materials for her
clothing, she’ll be able to bless the Mexicans garment workers
who will be whipping the cloth into fashion forward
headdresses.
Putting aside your opinions on Helen’s business
plan and design ideas, how do you advise her on…
Her plan to involve the employees in profitsharing…….in exchange for a minimum wage of
$5.00/hour in Canada and Mex$50/day in Mexico?
What are the repercussions of ignoring your advice
and proceeding with – in her eyes – a more
innovative and market-driven plan?
Mexico
• Minimum rights established by the FLL cannot be
contracted out
Minimum wage (MXP$64.76/MXP$61.38 per day)
Mandatory profit sharing
Criminal liabilities
Administrative fines
Call to strike by Union
Individual complaints filed by employees requesting
difference in salary and benefits
Canada
• Each Canadian province has employment standards
legislation that sets out an hourly minimum wage
(currently $9.50-$11 per hour).
• Minimum wage requirements are mandatory, or of
‘public order’, which means that you cannot contract out
of them.
• Profit-sharing income is included in the definition of
‘wages’ – however….
• If the profit-sharing income is not sufficient to bring the
average hourly wage above minimum wage, employees
will have claims for the difference.
In Canada, non-First Nation workers need not
apply. In Mexico, Helen is willing to accept nonindigenous factory workers, but no Catholics!
Helen doesn’t want the taint of the
conquistadors anywhere near her headdresses.
Your thoughts?
Canada
• Every jurisdiction in Canada has human rights
legislation that prohibits discrimination in
employment on certain protected grounds, including
race, ancestry and ethnic origin, among others.
• A hiring condition that is on its face discriminatory,
will only permissible if it is a bona fide occupational
requirement (“BFOR”) – i.e. that there is a rational
basis and that it is necessary for the job.
Mexico
• The Mexican Constitution and the FLL contain
prohibition to establish differences and/or exclusions
based on religion
• Decent and dignified work is understood as the work
where the dignity of the employee is fully respected,
including no religious discrimination
• Express prohibition for employers to refuse to employ
workers based on their religion
• Administrative fines
• Individual complaints?
• Calls to strike?
To be honest, Helen hasn’t quite worked out how often she’ll need
employees. Depending upon how quickly employees in either
country work, there may be quite a few layoffs. Or maybe she’ll
just fire all the employees and re-hire when necessary. Helen
figures that shutting down the plant would give her (former)
employees time to meditate upon GoingNative’s spiritual mission,
and help her determine who’s really committed to the cause.
What’s your suggestion for Helen? Does your country have
employment-at-will? Laws about reductions-in-force?
Mexico
• No employment at-will in Mexico
• Reduction in force is not a cause of termination
• Severance payment in case of termination
 3 month’s aggregate salary
 20 days’ aggregate salary per year of service
 Seniority premium
• Advice: temporary or seasonal agreements
Canada
• There is no employment-at-will in Canada!
• Unless there is just and sufficient cause for the
termination (which does not include downsizing or
economic hardship), the employer will have to give
notice or pay in lieu of notice respecting:
 Mimumum labour standards;
 Common or civil law ‘reasonable notice’; and
 Any contractual severance entitlements.
In addition, what if Helen needs employees to
work 80+ hours a week?
Helen doesn’t believe in artificial lighting, so
employees will be expected to be more
profitable in the summer and work a reduced
schedule in the winter.
Canada
• Employment standards legislation in each province contains
mandatory provisions for:
 Overtime pay (with limited exceptions; there is no
‘exempt/non-exempt’ distinction);
 In some cases, maximum hours of work and the right to
refuse work over a set number of hours per week.
• Hours of work must not compromise the health and safety of
workers.
• In some cases, averaging of hours agreements can be made for
seasonal or cyclical operations.
Mexico
Schedule
Maximum lenght
Permitted by the FLL
DAY SHIFT
From 6 a.m. to 8 p.m.
8 hours/day
48 hours/week
NIGHT SHIFT
From 8 p.m. to 6 a.m.
7 hours/day
42 hours/week
MIXED SHIFT
Contains periods of time of day and 7 ½ hours/day
night shifts. (The night period must 45 hours/week
be less than 3 ½ hours, otherwise it
will be considered as night shift).
OVERTIME
• 200% of hourly base salary for the first 9 hours worked per week or more
than 3 hours per day
• 300% of hourly base salary afterwards
• New case law resolution
“OatmealLace”
Thanks to your good counsel, GoingNative is
now OatmealLace, granola for the fashionforward snacker. Better yet, her hourly
workers seem to be in good hands and
humming along. Helen, however, is surprised
when…
Union organizers show up. In Canada and
Mexico. Outraged, Helen is convinced that
unions are just another social construct –
damaging to the artistic soul and inhibiting
creativity. She wants them gone. Now.
What questions do you ask to guide her
through this process?
Mexico
• Is it a call to strike to execute a CBA with the
Labor Board or an informal campaign?
• Do you have a non-active CBA?
• How are your working conditions?
 Union’s right to strike
 Non Active collective bargaining agreements
(aka white unions)
 Union Certification
 Employer’s obligation to publish CBA’s
Canada
• Have you received a petition for certification?
• If not:
 Who is organizing? Are they your employees?
 Where are they doing it? On your premises or not?
 What are they doing? Are they disrupting your
operations?
• Who are your trusted managers?
• Most importantly: Do you have a communications
plan?
After her first brush with the unions, despite all that granola, Helen
needs her own spiritual scrubbing in Tibet. To assist with the
running of the company, Helen has hired Felicity Goodship. Felicity
lost to Helen on Project Walkway; Helen’s assistant privately
confides to you that he believes Felicity suffered severe depression
and substance abuse issues since the show. You’re not surprised –
on the show, Felicity lashed out at a seamstress, threw a
mannequin, and used animal blood in her designs.
What policies should OatmealLace have in place to address the
risks Felicity poses? Is there any way to stop Felicity from walking
out the door with all of Helen’s design plans?
Canada
• Key Considerations:
 Depression and addiction are considered handicaps
under human rights laws;
 Workplace harassment and health and safety laws
require you to protect your other employees;
 Workplace conduct and harassment policies should set
guidelines for acceptable behaviour;
 There are legal confidentiality obligations and protection
of intellectual property rights in work product; these
should be supplemented by contractual undertakings.
Mexico
• Employer’s obligation to provide a safe and free of
harassment workplace
• Employee’s obligation to disclose to the employer the
use of any medication (including but not limited to
depression medications)
• Breach of notice to the Employee will lead to
termination for cause
• Confidentiality agreements
 Termination for cause
 Criminal liability
 Obligation of the owner to protect confidential
information
QUESTIONS?
• United States:
Rafael Medina
McDonald’s Corporation
Chicago, Illinois
• Mexico:
Monica Schiaffino
Littler Mendelson, P.C.
Monterrey, Mexico
• Canada:
Rachel Solyom
McCarthy Tretault S.E.N.C.R.L., s.r.l.
Montreal, QC, Canada
• Moderator:
Carolyn Lam
PLH Group, Inc.
Irving, Texas