Mexican Congress Seeks to Reform Employer-Friendly 'White' Unions

​Mexico is on the verge of replacing so-called white unions, which are notoriously pro-employer and whose existence within most companies often isn't common knowledge among employees, with unions that represent the interests of workers.

White Unions' Role

White unions sign collective contracts with companies and normally are under the total control of the employer, said Ernesto Velarde Danache, an attorney with Ernesto Velarde Danache Inc. in Brownsville, Texas, and Matamoros, Mexico, and Angel Smith, an attorney with the same firm in Reynosa, Mexico.

The white unions do not provide services like clinics, recreational areas, legal assistance or defense services. Often there are no union dues. White unions also are called "protection unions," typically are flexible in their interpretation of applicable labor law and contractual obligations, and do not belong to the large national unions. They do not have a political agenda, Danache and Smith observed.

Signing a collective bargaining agreement with a white union prevents other unions from gaining a foothold in the workplace, said Salvador Pasquel-Villegas, an attorney with Baker McKenzie in Mexico City.

The whole purpose of having a white union is to fight off other unions. White unions prevent other unions from demanding collective bargaining agreements, said Rodrigo de la Concha Alvarez, an attorney with Ogletree Deakins in Mexico City. A white union's leadership does not intervene in the company's decisions or premises and does not encourage employees to join. Companies pay white unions a yearly fee for their "protection services" against other unions. Such payment is a common practice in Mexico, he noted.

Reform Initiatives

In 2017, a constitutional reform was passed that requires a union to truly represent workers in order to execute a collective bargaining agreement. But Mexico's Federal Labor Law has not yet been amended to implement this reform.

In September 2018, the Mexican Senate ratified Convention 98 of the International Labour Organization, which calls for freedom of association and collective bargaining. The convention seeks to eradicate the execution of collective bargaining agreements that don't have the consent of the workforce, Pasquel-Villegas said. The convention becomes enforceable in November.

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In addition, the United States-Mexico-Canada Agreement (commonly referred to as the USMCA) includes a chapter on unionization freedom, although the agreement has not yet been ratified by the three nations.

Currently, the Mexican Congress is considering several initiatives to reform white unions. The proposals seek to require collective bargaining agreements to be executed by employees. There is uncertainty at this point, however, about what type of union election might be required, noted Mónica Schiaffino, an attorney with Littler in Mexico City. The elections would have to be secret, but the Mexican Congress has been debating what percentage of votes would be needed for a union to win. One proposal is that a union must be elected by 50 percent of employees plus one. Another is that a union must win a majority of union election voters.

Amendment of the Federal Labor Law is expected and could be as soon as later this month, she said. Mexican President Andrés Manuel López Obrador supports eliminating white unions.

Effects of a Ban on White Unions

Many workers may decide not to be part of a union, even if the Federal Labor Law is amended, noted Eduardo Gallástegui and María Ríos, attorneys with DLA Piper in Mexico City.

But unions that are much more pro-employee than white unions—so-called yellow or red unions—in some workplaces may replace white unions, according to Danache and Smith.

"Unions will be campaigning more than ever to obtain a real representation of workers," Pasquel-Villegas said. He predicted that white unions may seek to reinvent themselves to have formal representation of workers and, unlike in the past, to actively defend workers' interests.

How Employers Should React

"It is an ideal time to revisit old collective structures and practices in order to anticipate collective conflicts," Pasquel-Villegas said.

"Almost every employer in Mexico will be impacted," Schiaffino added, noting that once the Federal Labor Law is amended, employers will need to review agreements they have with unions and consider what they need to do to comply.

In the meantime, employers should engage with employees, she said. Employers should reinforce voluntary open-door policies and emphasize their commitment to workers. That doesn't change just because of the impending legislation, she noted.