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Total Articles: 44

Puerto Rico Labor Department Updates Regulations on Payment of Annual (Christmas) Bonus

Employers in Puerto Rico must comply with updated regulations on the payment of the generally required annual bonus to eligible employees. The Puerto Rico Department of Labor (DOL) updated the regulations, effective October 18, 2017, following legislation adopted early in the year.

Puerto Rico Secretary of Labor Issues Opinion Regarding Allowed Payroll Deductions Following Hurricanes Irma and María

On November 10, 2017, Puerto Rico's Secretary of the Department of Labor and Human Resources (“Secretary”) issued Opinion No. 2017-002 (“Opinion”) addressing allowable deductions from non-exempt employees’ pay following hurricanes Irma and María. Many employers have been helping their employees by advancing them funds for emergency needs and have sought advice as to whether payroll deductions allowing employees to slowly repay such advances is a viable option. According to the new Opinion, the answer is most likely "no."

Puerto Rico Governor Signs Executive Order Authorizing Rules for Retirement Plan and IRA Distributions in the Wake of Recent Natural Disasters

On November 8, 2017, the Governor of Puerto Rico signed Executive Order No. 2017-067 (“EO 2017-067”) authorizing the Secretary of the Department of the Treasury (the “PR Treasury”) to establish tax rules for distributions from qualified retirement plans and individual retirement accounts following Hurricane María and other natural disasters. Under EO 2017-067, the PR Treasury must create:

Puerto Rico’s New Post-Hurricane Guidance: A How-To on Paying Exempt and Non-Exempt Workers

On October 17, 2017, the Secretary of the Puerto Rico Department of Labor and Human Resources (Secretary of Labor) published Opinion No. 2017-001, providing further guidance to private-sector employers on how they should compensate their non-exempt and exempt employees in Puerto Rico in light of the prolonged interruption in business activities brought about by Hurricanes Irma and Maria. The Opinion is consistent with the Fair Labor Standards Act (FLSA) and Puerto Rico wage and hour law. Employers should observe the rules discussed below unless an employment contract, applicable collective bargaining agreement (CBA), or company policy or practice provides for more generous benefits.

Puerto Rico Agencies Issue Employee-Related Guidance, Tax Relief in Wake of Hurricane

The passage of Hurricane María through Puerto Rico in September 2017 left catastrophic damages. In an effort to encourage employer assistance and provide temporary economic relief to employees in Puerto Rico, local government agencies have issued the following measures and guidance related to employers concerning their employees.

Deadline to Make Contributions and File Quarterly Unemployment and Disability Tax Report in Puerto Rico Extended until December 15, 2017

On October 24, 2017, Puerto Rico's Secretary of the Department of Labor and Human Resources issued an Administrative Order granting an automatic extension for all employers required to file a Quarterly Unemployment and Disability Tax Report (“Quarterly Report”). Per the Administrative Order, the automatic extension applies to the filing of the quarterly salary statements required for both programs, as well as for the payment of contributions corresponding to the third quarter of 2017.

Puerto Rico Secretary of Labor Issues Opinion Regarding Employee Compensation Following Hurricanes Irma and María

On October 17, 2017, the Puerto Rico Secretary of Labor and Human Resources (Secretary) issued Opinion No. 2017-001 (Opinion) regarding the compensation of exempt and non-exempt private sector employees for workdays interrupted by Hurricanes Irma and María and their aftermath.

Employers Helping Employees—Are Disaster Relief Payments and Loans Exempt From Puerto Rico Income Tax?

With the havoc wrought by Hurricane Maria in Puerto Rico, employers are exploring options to provide emergency relief to those employees who have encountered financial hardship to meet their necessities and repair their homes in the wake of the disaster. Occasionally, aid from employers to employees comes in the form of disaster-relief monetary payments and interest-free loans. In light of the state of emergency in Puerto Rico declared by local authorities, on October 4, 2017, the Puerto Rico Department of Treasury released Administrative Determination No. 17-21 (AD 17-21), which provides necessary and well-timed guidance on the taxation of this type of assistance.

Hurricane Maria's Aftermath, Part II: Puerto Rico Government Provides Various Exemptions and Extensions to Multiple Upcoming Deadlines

In the aftermath of Hurricane Maria's catastrophic impact on Puerto Rico, in order to assist in rebuilding and recovery, Puerto Rico’s governor and several agencies have issued multiple exemptions to previously established rules for operations, as well as extensions to multiple deadlines.1 Highlighted below are some of these exemptions and extensions. Given the scope of the damage caused by María, it is likely that additional exemptions and extensions will be approved in the coming weeks and months.

Puerto Rico Department of the Treasury Grants Temporary Tax Exemptions for Employer-Provided Payments and Certain Benefits to Employees Related to Hurricane Maria Relief

On October 4, 2017, the Puerto Rico Department of the Treasury (the “PR Treasury”) issued Administrative Determination No. 17-21 (“AD 17-21”) granting temporary income tax exemptions for payments and certain benefits provided by employers to their employees for relief due to the passing of Hurricane Maria through Puerto Rico, provided such payments are considered “Qualified Payments Made for Disaster Assistance” and certain requirements are met.

Puerto Rico Employers May Pay Their Outstanding Workers' Compensation Debts Owed to the State Insurance Fund Corporation with a 50% Discount

The Puerto Rican government recently enacted Act 92, which establishes a debt payment incentive plan (the “Plan”) for employers in Puerto Rico that have outstanding debts with the Puerto Rico State Insurance Fund Corporation (“SIFC”). Under Puerto Rican law, workers' compensation can only be obtained through the SIFC, a government-owned corporation.1 In the event of a work-related accident at an uninsured employer, the SIFC nevertheless covers that accident and seeks reimbursement from the uninsured employer for any compensation plus medical expenses the SIFC incurred. The SIFC collects such amounts and deposits them into the Uninsured-Employer Cases Fund.

Puerto Rico Employers Prepare for New Guidelines Governing Equal Pay in the Workplace

On August 10, 2017, the Puerto Rico Secretary of Labor and Human Resources issued and made effective the Uniform Guidelines for the Self-Assessment of Equal Pay in the Workplace (“the Guidelines”).

New Puerto Rico Labor Department Religious Accommodation Regulations Effective May 25

The Employment Law Reform enacted earlier this year in Puerto Rico introduced a local requirement to accommodate an employee’s observance of religious practices or beliefs. (See our article, Top 20 Things You Should Know About the Proposed Puerto Rico Employment Law Reform.)

Puerto Rico Employers Brace for New Right to Religious Freedom Accommodation Requests

Earlier this year, the Governor of Puerto Rico signed into law the Labor Transformation and Flexibility Act (“the Act”). While the Act makes substantial changes to virtually all existing Puerto Rico employment laws, it also introduces a new employee right not previously recognized: the right to participate in religious services. Last month, the Secretary of Labor and Human Resources filed Regulation Number 8947 before de Puerto Rico Department of State to implement this new right. The Regulation is set to take effect on May 25, 2017.

Deadline for Plan Sponsors to Submit Qualification Amendments with the Puerto Rico Treasury is Fast Approaching

Employers that sponsor an employee retirement plan in Puerto Rico must review plan amendments and/or restatements adopted during 2016 to determine whether they need to submit their plan documents to the Puerto Rico Department of the Treasury (“Puerto Rico Treasury”) for qualification.

5 Groundbreaking Changes in Puerto Rico Employment Law

“It was California on steroids,” says Littler global attorney Shiara Diloné, mincing few words about the state of Puerto Rico employment law prior to January 26, 2017. But with the stroke of his pen, Governor Ricardo Rossello appears to have changed that in signing the most comprehensive overhaul of Puerto Rico labor and employment law in 50 years.

Puerto Rico Equal Pay Act Aims to Close Gender Pay Gap

On March 8, 2017, Puerto Rico continued the overhaul of its employment laws by enacting, with immediate effect, Act No. 16, known as the “Puerto Rico Equal Pay Act.” The act is not only similar to the federal Equal Pay Act of 1963, it also requires that Puerto Rico courts interpret the act in accordance with its federal counterpart and related federal regulations. Some of the key provisions of the act are summarized below.

Puerto Rico Enacts Equal Pay Law, Prohibits Employers from Inquiring about Past Salary History

Almost two months after signing sweeping employment law reform, Governor Ricardo Rosselló has signed Puerto Rico Act No. 16 of March 8, 2017, known as the “Puerto Rico Equal Pay Act.” Act 16 is effective immediately.

Puerto Rico Adopts Local Equal Pay Act

On March 8, 2017, Puerto Rico enacted Act 16, creating the Puerto Rico Equal Pay Act ("PR Equal Pay Act" or "the Act"). The law's stated intent is to eradicate the pay difference between female and male employees. To that end, the Act prohibits pay discrimination based on sex among employees performing comparable job functions or duties that require the same skill, effort or responsibilities under similar working conditions.

Puerto Rico Issues Comprehensive Labor Law Reform

Executive Summary: On January 26, 2017, Puerto Rico’s Governor, Ricardo Roselló, signed into law the Labor Transformation and Flexibility Act (the “Act”). The Act represents the first significant and comprehensive labor law reform to occur in Puerto Rico in decades. Prior to the Act, Puerto Rico’s labor laws were historically employee-friendly. The Act has changed the employment landscape in Puerto Rico making the labor laws more business-friendly. Unless otherwise stated in the Act, the revisions in the law will apply only to employees hired after January 26, 2017. The most significant changes to the labor law are explained below.

Governor Signs Puerto Rico Employment Law Reform

Puerto Rico Governor Ricardo Rosselló has signed the “Labor Transformation and Flexibility Act” (House Bill 453), a law that dramatically changes the employment landscape in Puerto Rico and provides more flexibility in the workplace.

Puerto Rico Redesigns its Business Environment Through an Overhaul of its Employment Regime

In an effort to become more competitive in the face of a flagging economy, an attractive jurisdiction for establishing businesses and creating employment opportunities, and to increase talent acquisition and retention locally, Puerto Rico is overhauling its employment law regime through the enactment of the Labor Transformation and Flexibility Act (the Act). Puerto Rico’s new governor, Ricardo Rosselló, signed the Act into law on the morning of January 26, 2017. The Act dramatically alters the currently very employee-friendly labor and employment landscape in Puerto Rico, making it both more attractive for employers, while also increasing flexibility for employee schedules. Key changes include:

Puerto Rico Approves Major Reform of its Employment Laws

On January 26, 2017, the Governor of Puerto Rico approved the Labor Transformation and Flexibility Act (“the Act"). The Act makes substantial changes to virtually all existing Puerto Rico employment laws, including those governing unjustified dismissal, wage-and-hour, vacation and sick leave, workers' compensation, unemployment, lactation leave, employment discrimination and employee benefits. An in-depth analysis of the almost 80-page Act is beyond the scope of this article. The below provides a quick overview of the Act and highlights the noteworthy changes that will alter decades-old statutes. It remains to be seen how these changes will play out in their application and how they will be interpreted by the courts.

Puerto Rico Treasury Issues New Guidance on Rules and Procedures for Qualification of Retirement Plans

The Puerto Rico Department of the Treasury (the “PR Treasury”) issued Tax Policy Circular Letter No. 16-08 on December 23, 2016 (“CL 16-08”). CL 16-08 establishes new rules regarding the validity of retirement plan qualification letters and the procedures that employers and service providers must follow to request such qualification letters. It also repeals PR Treasury’s Circular Letter 11-10 dated December 16, 2011, and Letter 13-02 dated May 28, 2013, which established guidance in connection with procedures for plan qualification (the “Previous Guidance”), to the extent not adopted by reference in CL 16-08. The following is a summary of the changes made to the rules and procedures for qualification of retirement plans:

Top 20 Things You Should Know About the Proposed Puerto Rico Employment Law Reform

Under a new government administration, Puerto Rico employment laws will undergo the most significant transformation in decades with the expected enactment of the “Labor Transformation and Flexibility Act.”

Puerto Rico Treasury Announces 2017 Limits on Qualified Retirement Plans

On December 8, 2016, the Puerto Rico Department of the Treasury issued its Tax Policy Circular Letter No. 16-07 (“CL 16-07”), announcing the applicable limits for 2017 for qualified retirement plans. Pursuant to Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended (the “PR Code”), the Secretary of the Treasury is required, before the beginning of each taxable year, to provide notice of the applicable limits under the U.S. Code, which are incorporated by reference into the PR Code limits (e.g., annual compensation, highly compensated, annual benefit/contribution limits).

Puerto Rico Employers Cannot Withhold Income Taxes for Christmas Bonuses of $600 or Less

Pursuant to the current income tax withholding rules issued by the Puerto Rico Department of the Treasury, there are specific income tax withholding rules applicable when a Christmas bonus is paid, which differ from those applicable to regular wages.

Top Eight Guidelines to Litigate Employment Claims under Puerto Rico’s Unique Summary Proceeding

A litigation trap that can ensnare unwary employers who may be sued in the Commonwealth of Puerto Rico is a piece of employment legislation that allows expedited proceedings: Law No. 2 of October 17, 1961 (“Law No. 2”), as amended, known as the “Law for the Summary Proceeding of Employment Claims.”

Puerto Rico Does Not Have to Comply with DOL’s Final Rule Amending ‘White Collar’ Overtime Regulations, For Now

The U.S. Senate has approved the controversial “Puerto Rico Oversight, Management, and Economic Stability Act” (“PROMESA”), H.R. 5278, which will establish an Oversight Board to assist the Government of Puerto Rico in managing its public finances and for other purposes. The Senate acted on June 29, 2016. The U.S. House of Representatives approved the measure on May 18, 2016. President Barack Obama signed the bill on June 30, and the law is effective immediately.

Election Year in Puerto Rico: Employee Rights

For Puerto Rico, the general elections, and June 5th primaries, are fast approaching. This means that every employer in Puerto Rico needs to be aware of their employees’ voting rights, especially since voter turnout is historically very high.

Application of New DOL Overtime Rule to Puerto Rico

On May 18, 2016, the U.S. Department of Labor, Wage and Hour Division, announced the final changes to the regulations that govern the “white collar” overtime exemptions to the Fair Labor Standards Act (“FLSA”). It remains to be seen, however, if and when these regulations will apply to employees in Puerto Rico. While these changes are scheduled to go into effect on December 1, 2016, pursuant to the latest version of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), H.R. 5278, 114th Cong. §404 (2016), it is possible that Puerto Rico will be exempted from this effective date.

Puerto Rico Qualified Retirement Plans: Treasury Eliminates Form 480.70(OE) Filing Requirement for Plan Years Beginning on January 1, 2015, Establishing New Filing Requirements and Deadlines

On March 11, 2016, the Puerto Rico Department of the Treasury (“PR Treasury”) issued Administrative Determination No. 16-05 (“AD 16-05”), eliminating the requirement to file PR Treasury Form 480.70(OE) for retirement plans whose tax year begins after December 31, 2014. AD 16-05 specifically provides that, for plan years beginning on January 1, 2015, PR Treasury Form 480.70(OE) will not have to be submitted to comply with the PR Code filing requirements. Instead, AD 16-05 provides: (i) a new way to comply with this reporting requirement; and (ii) establishes two different deadlines to file with the PR Treasury, depending on whether or not the sponsor or participating employer has to file a Puerto Rico income tax return.

The High Costs of Violating Puerto Rico’s Breastfeeding in the Workplace Law: Supreme Court Decides Right to Privacy Claim

Protections for breastfeeding employees in Puerto Rico just became even stronger. A recent ruling from Puerto Rico’s highest court in Siaca v. Bahía Beach Resort & Golf Club, LLC, held that failing to provide a safe, private, and hygienic space for employees who are nursing to breastfeed or extract breast milk while in the workplace constitutes a breach of an employer’s obligations under Act No. 427 of December 16, 2000. In addition, the Supreme Court of Puerto Rico, which issued the Bahía Beach decision on January 25, 2016, ruled that failing to provide a space for breastfeeding or extracting breast milk may also result in a violation of a nursing employee’s constitutionally-protected right to privacy.

Puerto Rico Supreme Court Scolds Employer for Interfering with Working Mother’s Breastfeeding Rights

Emphasizing that Puerto Rico legislation protects employees’ breastfeeding rights in the workplace and that maternity enjoys special judicial protection in the Commonwealth’s legal framework, the Puerto Rico Supreme Court has ruled that employers, public and private, regardless of their circumstances, must provide a “private, safe, and hygienic” space for employees to exercise their breastfeeding rights upon returning to work. Siaca v. Bahía Beach Resort & Golf Club, Num. AC-2012-102, __ P.R. Dec. __ (2016).

Puerto Rico Supreme Court: Failure to Provide Safe, Private and Hygienic Area for Breastfeeding in the Workplace May Violate Working Mother’s Constitutional Right to Privacy

On January 25, 2016, the Supreme Court of Puerto Rico held that employers in Puerto Rico should provide a safe, private, and hygienic place for working nursing mothers to extract breast milk during the nursing period as provided under Act No. 427-2000, as amended (“Act 427”).

Puerto Rico's Qualifying Employees May Use Paid Sick Leave to Care for Others

Effective December 31, 2015, all employers in Puerto Rico with at least 16 employees must allow eligible employees to use up to 5 paid sick leave days to care for an ill spouse, parent, or child. Eligible employees are those covered by the Puerto Rico Minimum Wage, Vacation, and Sick Leave Act (i.e., nonexempt employees and outside salespersons). This new leave is also available to care for the following ill individuals who are under the caregiver’s legal custody or guardianship: minors, persons who are 60 years of age or older, and disabled individuals.

Puerto Rico Governor Signs Law Allowing Employees to Use Accrued Paid Sick Leave to Care for Qualified Family Members

Governor Alejandro García Padilla recently signed Law No. 251 (House Bill 695), a measure that provides caregiver leave under Puerto Rico law. This law, which is effective immediately, amends the Puerto Rico Minimum Wage, Vacation, and Sick Leave Act, Act No. 180 of July 27, 1998 (hereinafter “Act 180”). Under Act 180, qualifying non-exempt employees are entitled to accrue paid sick leave of one day per month, up to 12 days per year, for each month in which they work at least 115 hours.1

Governor of Puerto Rico Signs Bill to Expand Paid Sick Leave Use

The New Year began with the Governor of Puerto Rico’s approval of an amendment, House Bill 695, to the Commonwealth’s paid sick leave law that expands the circumstances under which non-exempt employees can use paid sick leave. The stated intent is to improve the working conditions of employees with caregiving responsibilities.

Supreme Court of Puerto Rico Adopts the “Sham Affidavit by Contradiction Doctrine” and Reaffirms that Bona Fide Reorganizations of Employers Constitute Just Cause for Termination

In what has been a string of recent favorable decisions for employers, the Supreme Court of Puerto Rico recently issued another opinion, this time elaborating on the evidentiary standard for wrongful termination claims under Act No. 80 of May 30, 1978 (“Act 80”) after a corporate reorganization. Additionally, and perhaps the most important holding of the opinion, the High Court adopted the sham affidavit doctrine, developed by federal courts, making clear that courts cannot consider a plaintiff’s affidavit that contradicts prior deposition testimony in determining whether a genuine controversy of a material fact exists that would preclude entering summary judgment.

Puerto Rico Legislature Approves Bill to Expand Paid Sick Leave Use

Seeking to allow non-exempt employees to use paid sick leave for the illnesses of their family members and others, the Puerto Rico Legislature has sent a bill to Governor Alejandro García-Padilla to so amend the Commonwealth’s existing paid sick leave law. If House Bill 695 is approved, the amendments would become effective immediately. The Governor has 30 days to approve or veto HB 695.

Puerto Rico Employment Law: Six Key Differences US Employers Need to Know

A US employer considering expanding its operations to Puerto Rico may think that it will be relatively easy to manage a workforce in that location since Puerto Rico is subject to US employment laws, including Title VII, the Fair Labor Standards Act and the Family and Medical Leave Act. However, as is true with many states, Puerto Rico’s laws provide greater rights to employees than US federal law.

Supreme Court of Puerto Rico Reaffirms that Violence in the Workplace Justifies First Offense Termination

In a unanimous decision, the Supreme Court of Puerto Rico recently reaffirmed its previous position that an act of aggression by an employee towards a coworker is sufficient to establish just cause for termination under Puerto Rico's Unjustified Dismissal statute, Act No. 80 of May 30, 1978 ("Act 80"), even when the aggression is a first-time offense.

Puerto Rico Supreme Court: Former Exec Cannot Sue Individual Board Members for Breach of Employment Contract

A former employee cannot sue individual members of a corporation’s board of directors for breach of an employment contract and negligence in execution of fiduciary duties, where: 1) the individual board members are not parties to the employment contract; and 2) the employee and his relatives are not shareholders with standing to sue board members for alleged breach of fiduciary duty, the Puerto Rico Supreme Court has held. Randolfo Rivera San Feliz et al v. Junta de Directores de Firstbank Corporate et al., 2015 TSPR 61, 196 DPR ___ (2015).

Healthcare Reform in the U.S. Territories; Prepayment of Taxes for Puerto Rico Retirement Plans

The summer of 2014 has brought further guidance for health plan coverage in the U.S. territories and for retirement plan coverage in Puerto Rico. Issuers and employer sponsors of Puerto Rico group health plans and employer sponsors of Puerto Rico retirement plans should review their plans to ensure compliance and explore the possibilities provided by the recent guidance.
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