Hiring in Mexico: The Liability Your Staffing Partner Didn't Mention

Working with Mexican talent through a staffing platform? Here's the part of Mexican law that could make you the employer anyway.

You found great engineers in Mexico through a staffing platform. They work your hours, use your tools and report to your team leads. The platform sends one invoice a month, and on paper they're "contractors." Simple.

Except Mexican law doesn't care much about what's on paper. It looks at how the work actually happens, and it points at the company that directs and receives the work. That's usually you.

In Mexico, reality beats the contract

Under Mexican law, someone is an employee when three things are true: they do the work themselves, they work under someone else's direction, and they get paid for it. What the contract calls them doesn't change that (LFT, Arts. 8, 10 and 20).

How do you know if you're "directing" someone? Common signs:

• You set their schedule or expect them online at certain hours.
• They use your laptop, accounts or software.
• Your team assigns their tasks and reviews their work.

You don't need all three. Any of them can be enough.

And here's the key part: the law assumes it's employment. If someone does work for you and you receive it, Mexico presumes an employment relationship, and it's up to you to prove otherwise (LFT, Art. 21). Not having a written employment contract counts against the employer, not the worker (LFT, Arts. 26 and 784).

"But they work for the platform, not for us"

Since 2021, Mexico has banned companies from supplying their own workers to benefit another company. Agencies can recruit and screen, but they aren't treated as the employer. The company that benefits from the work is (LFT, Art. 12).

There's one exception: specialized services from a government-registered provider, and only if the work is outside your core business (LFT, Arts. 13 and 15). A developer building a software company's product rarely fits.

Even when the provider does everything by the book, you can still be on the hook if they stop paying their workers or their social security (LFT, Art. 14; LSS, Art. 15-A).

What's actually at stake

If a Mexican labor court decides the relationship was employment, the bill can include:

• Severance: 3 months of salary plus 20 days per year worked, and up to 12 months of back pay (LFT, Arts. 48 and 50).
• Missed benefits: vacation pay, vacation premium and the year-end bonus, or aguinaldo (LFT, Arts. 76, 80 and 87).
• Social security: unpaid contributions to IMSS, Mexico's social security institute. If someone gets hurt on the job, the employer can owe the full cost of their care and benefits (LSS, Arts. 12, 15 and 77).
• Taxes: payroll taxes that should have been withheld. In some cases, especially with sales roles, Mexico could even treat your company as having a taxable presence in the country (LISR, Art. 2; CFF, Art. 15-D).

The gray area, and when it stops being gray

Collecting a Mexican judgment from a company with no assets in Mexico isn't easy, and many companies quietly count on that. But the risk tends to show up at the worst moment:

• When investors or buyers run due diligence and find it.
• When someone gets hurt or leaves on bad terms.

A simpler way to hire in Mexico

The fix isn't to stop hiring in Mexico. It's to choose who the employer is on purpose:

1. Look at how your team actually works. If you set the hours, tools and tasks, assume Mexico sees you as the employer.
2. Keep contractors truly independent, or don't call them contractors.
3. Hire through your own Mexican company. It turns a hidden, open-ended risk into a clear, predictable cost.

That's where NearCorpMX comes in. We help foreign entrepreneurs and companies set up their Mexican company from scratch: incorporation, tax registration (RFC) and ongoing legal and tax compliance, so you can hire in Mexico with confidence.

Sources

• Federal Labor Law (Ley Federal del Trabajo, LFT): Arts. 8, 10, 12, 13, 14, 15, 20, 21, 26, 48, 50, 76, 80, 87, 784. Official text, Cámara de Diputados
• Social Security Law (Ley del Seguro Social, LSS): Arts. 12, 15, 15-A, 77. Official text, Cámara de Diputados
• Income Tax Law (Ley del Impuesto sobre la Renta, LISR): Art. 2. Official text, Cámara de Diputados
• Federal Tax Code (Código Fiscal de la Federación, CFF): Art. 15-D. Official text, Cámara de Diputados
• Subcontracting reform decree, Diario Oficial de la Federación, April 23, 2021. Copy published by IMSS