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Total Articles: 127

Puerto Rico Senate Approves Reverting to Pre-2017 Employment Law Reform Sick, Vacation Leave

The Puerto Rico Senate has approved a bill (Senate Bill 1524) that would reverse some vacation and sick leave provisions relating to private sector employees adopted under the controversial “Labor Transformation and Flexibility Act,” Law No. 4-2017, known as Puerto Rico Employment Law Reform.

Puerto Rico: Deadlines to File Qualification Amendments are Extended due to COVID-19 Lockdown

To combat exposure to COVID-19, Puerto Rico Governor Wanda Vázquez Garced issued Executive Order EO-2020-023 on March 15, 2020, ordering an island-wide lockdown and curfew. The restrictions have been extended several times. Executive Order EO-2020-038 issued on May 1 extended the curfew in place until May 25, 2020, while relaxing some lockdown measures and allowing certain businesses to begin reopening. These measures have affected deadlines imposed by government agencies, including deadlines imposed by the Puerto Rico Treasury Department (“PR Treasury”).

Puerto Rico Senate Passes Reasonable Accommodation Bill for Certain Workers during COVID-19 Pandemic

Section 9 of Puerto Rico Act No. 44 of July 2, 1985, known as the “Law Prohibiting Discrimination Against Disabled Persons,” to expand its protection and confer certain type of employees the right to a reasonable accommodation in the workplace during the COVID-19 pandemic. The House of Representatives is considering the bill.

Puerto Rico: Breach of Contract Claims in the COVID-19 Age and the “Force Majeure” Defense: Considerations for Employers

The term “force majeure” takes us on a trip down memory lane to the law school classroom where our contracts professor spoke of antiquated doctrines of limited practical use. Or so we thought. As the COVID-19 outbreak continues to wreak havoc on industries and businesses around the world, disputes regarding breaches of contractual obligations are likely to increase. Therefore, it is important for companies to be cognizant of defenses they may raise in the event of possible claims. One that is particularly important during these turbulent times is the “force majeure” defense.

Puerto Rico: Deadline to File Qualification Amendments are Extended due to COVID-19 Lockdown

To combat exposure to COVID-19, Puerto Rico Governor Wanda Vázquez Garced issued Executive Order EO-2020-023 on March 15, 2020, ordering an island-wide lockdown and curfew. The restrictions have been extended several times. Executive Order EO-2020-038 issued on May 1 extended the curfew in place until May 25, 2020, while relaxing some lockdown measures and allowing certain businesses to begin reopening. These measures have affected deadlines imposed by government agencies, including deadlines imposed by the Puerto Rico Treasury Department (“PR Treasury”).

Puerto Rico State Insurance Fund Clarifies Employer Obligations for Employees Working Remotely

Without requiring employers to make any changes to their relevant, existing workplace policy, on March 18, 2020, the Puerto Rico State Insurance Fund extended coverage to those employees who were sent to work from home due to the COVID-19 pandemic until April 30, 2020, or up to 10 days after services are restored. Now, the State Insurance Fund has advised employers that they must report the names of employees working remotely within 10 days after the agency resumes operations.

Puerto Rico Starts on the Path to Reopening, Requires Employers to Certify Exposure Control Plan

On May 1, the Governor of Puerto Rico issued Executive Order 2020-038 (the Order) effectively extending the existing lockdown order but expanding the scope of services and businesses exempt from limitations on business operations. The Order, which takes effect on May 4 and expires on May 25, also obligates employers to certify the existence of a plan to limit employee’s exposure to COVID-19 prior to opening. Key aspects of the Order are discussed below.

Governor of Puerto Rico Extends Curfew and Relaxes Lockdown

As the first phase of Puerto Rico’s plan to restart the economy, and following the recommendations of the Medical and Economic Task Forces, Governor of Puerto Rico Hon. Wanda Vázquez-Garced issued Executive Order 2020-038 (“EO-038” or the “Order”) on May 1, 2020.

Puerto Rico’s Secretary of Labor Issues Guidance on New Employer Requirements to File Auto-Certification and Adopt COVID-19 Exposure Control Plans

As Puerto Rico starts to reopen, the government is placing much of the burden to stop the spread of COVID-19 on employers. On May 1, 2020, Puerto Rico Secretary of Labor Hon. Briseida Torres Reyes issued Opinion Letter 2020-03 (OL 2020-03) to implement Executive Order 2020-38 (EO 2020-38), which eases some of the current business closure measures. Among other things, EO 2020-38 requires employers now permitted to operate to submit a self-certification to the Puerto Rico Department of Labor and Human Resources (PRDOL).

Puerto Rico Employers Must Provide Information on Unemployment Benefits Program to Laid Off Workers

Employers in Puerto Rico must provide a model notice to employees in the event of a layoff or reduction in working hours. The Secretary of the Puerto Rico Department of Labor and Human Resources, Briseida Torres-Reyes, issued Circular Letter 2020-02 (only in Spanish) on April 16, 2020.

Puerto Rico Employers Must Now Inform Employees Who Have Been Laid Off, Furloughed or Experience a Reduction in Hours the Right to Request Unemployment Benefits

Puerto Rico’s Department of Labor and Human Resources has issued Circular Letter 2020-02 (CC 2020-02) providing that, effective immediately, any private employer that lays off or reduces employees’ regular working hours is required to notify them of the benefits available under the Unemployment Insurance Program. The notification must be in writing and made at the time of layoff or reduction in hours. CC 2020-02 also includes the requirements that an employer must incorporate in this notification.

Puerto Rico Issues FAQs on Unemployment Benefits during COVID-19 Crisis

The Puerto Rico Department of Labor and Human Resources (PR DOL) has issued FAQs regarding unemployment benefits during the COVID-19 pandemic. The FAQs were issued only in Spanish.

Puerto Rico’s Secretary of Labor and Human Resources Issues Guidance Requiring Employers to Adopt Plans to Control Employee Exposure to COVID-19 in the Workplace

On April 15, 2020, Puerto Rico’s Secretary of the Department of Labor and Human Resources issued guidance discussing the basic elements employers are required to include in their plans to limit employee exposure to COVID-19 in compliance with Puerto Rico’s Safety and Health in Employment Act (PROSHA). The guidance first clarifies that the federal Occupational Safety and Health Administration (OSHA) has established a hierarchy of controls to limit workplace risks: elimination of risk, substitution of risk, engineering controls, administrative/practical controls and, lastly, personal protection equipment (PPE). Every employer is responsible for evaluating the risks in their particular workplace and for establishing the adequate controls of risk needed. After completing the evaluation, the employer must then implement the corresponding controls in the hierarchical order OSHA established.

Puerto Rico: Employers Must Develop a Contingency Plan against COVID-19 Exposure

The Puerto Rico Secretary of Labor and Human Resources, Hon. Briseida Torres-Reyes, has issued a memorandum that provides recommendations to ensure a safe and healthy work environment for employees and requires employers to develop and implement a contingency plan against COVID-19 exposure in the workplace.

Puerto Rico Supreme Court Holds Plaintiffs Bear the Burden of Clearly Asserting in Their Complaints the Elements of Constructive Discharge Claims

Constructive discharge is a form of wrongful termination under the Puerto Rico Unjust Dismissal statute, Act No. 80 of May 30, 1976 (“Act 80”). Unlike in traditional wrongful termination cases, plaintiffs alleging constructive discharge bear the burden of proof in establishing that the employer forced them to resign.

Puerto Rico Enacts Five-Day Paid Emergency Leave for Pandemic Illness

Puerto Rico’s Law 37-2020 provides certain employees up to five days of paid leave once they exhaust other paid leave.

Puerto Rico Enacts Law Creating Special Paid Leave for Non-Exempt Employees in the Private Sector

On April 9, 2020, in response to the COVID-19 pandemic, Puerto Rico Governor Hon. Wanda Vázquez-Garced signed into law House Bill No. 2428 (“Bill No. 2428”), now Act No. 37-2020, to amend the Puerto Rico Minimum Salary, Vacation and Sick Leave Act, otherwise known as Act 180-1998. The purpose of Bill No. 2428 is to establish a special paid leave for non-exempt employees infected (or are suspected of being infected) by the illness or epidemic that triggers a state of emergency declared by either the Governor of Puerto Rico or the Secretary of the Puerto Rico Health Department.

Key Takeaways from Puerto Rico’s Latest COVID-19-Related Executive Order

Balancing the recommendations of the Medical and Economic Task Forces convened to address the COVID-19 pandemic, Governor of Puerto Rico Hon. Wanda Vazquez-Garced on April 12, 2020 issued Executive Order 2020-033 (“EO” or the “Order”). While the priority continues to be curbing the spread of COVID-19, this Order attempts to slowly restart the economic sector. Generally, the Order extends the lockdown and curfew measures, but also adds exceptions to the application of the Order and expands certain business hours of operation, thus allowing certain services and industries to operate. Failure to comply with the EO may result in penalties.

Puerto Rico Extends Lockdown and Curfew, Imposes Additional Restrictions

On March 30, 2020, following the recommendations of the Medical Task Force convened to address the COVID-19 pandemic, Puerto Rico Governor Hon. Wanda Vazquez-Garced issued two additional executive orders to help contain the virus. The first, Executive Order 2020-29 (“OE 2020-29”), is of particular significance to employers as it extends the curfew and lockdown provisions currently in effect and establishes additional conditions upon which certain exempt businesses may continue to operate.

Puerto Rico Secretary of Labor Announces New Unemployment Benefits Available for Private Employees

In the wake of the Coronavirus/COVID-19, the Secretary of the Puerto Rico Department of Labor (Secretary) announced today the availability of additional unemployment benefits in Puerto Rico for eligible employees, as well as self-employed workers and independent contractors, due to the enactment of the federal statute known as the Coronavirus Aid, Relief, and Economic Security Act (CARES).

U.S. DOL Issues Additional Questions and Answers on the FFCRA which Directly Impact Puerto Rico Employers

On March 26, 2020, the United States Department of Labor (DOL) issued additional questions and answers (Q&As) that further explain employer and employee rights and responsibilities under the federal Families First Coronavirus Response Act (FFCRA). The DOL’s guidance directly impacts those private-sector employers in Puerto Rico that have closed their worksites in compliance with Executive Order OE-2020-023 (EO) issued by Governor Wanda Vázquez Garced on March 14, 2020, and had hoped to be able to provide their employees paid leave under the FFCRA. This article addresses certain Q&As that affect most employers and employees in Puerto Rico.

Considerations for Employers in Puerto Rico Monitoring Employees’ Body Temperatures

In response to the COVID-19 pandemic, the Secretary of the Puerto Rico Department of Labor and Human Resources issued guidance that specifically allows employers to take an employee’s body temperature provided they secure the individual’s express consent. Similarly, the U.S. Equal Employment Opportunity Commission (EEOC) recently updated its guidance to expressly permit employers to implement temperature-screening measures given the current pandemic situation. The EEOC’s guidance acknowledges that generally, such screening constitutes a medical examination under the Americans with Disabilities Act (ADA). The EEOC explains, however, that “[b]ecause the CDC [Centers for Disease Control and Prevention] and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature.”

Puerto Rico Secretary of Labor Issues New Opinion on Provisions Applicable to Exempt, Non-Exempt Employees

The Puerto Rico Secretary of Labor and Human Resources, Hon. Briseida Torres-Reyes, has issued Opinion No. 2020-02 on the applicable legal provisions related to exempt and non-exempt employees of the private sector as a result of the coronavirus (COVID-19) emergency.

Puerto Rico Department of Labor Issues New Opinion Regarding Employee Compensation and Available Leaves During the COVID-19 Emergency

On March 23, 2020, the Secretary of the Puerto Rico Department of Labor and Human Resources issued Opinion No. 2020-02 (Opinion 2020-02) discussing provisions applicable to both exempt and non-exempt private-sector employees impacted by the COVID-19-related lockdown imposed by Executive Order No. 2020-023. Opinion 2020-02 addresses permitted wage deductions, restates the employer’s duty to comply with occupational health and safety requirements, and briefly discusses the new paid leaves available to employees pursuant to the Families First Coronavirus Response Act, Pub. L. 116-127. The following highlights the most noteworthy aspects of Opinion 2020-02.

Puerto Rico Transportation Bureau Issues Additional Guidance on COVID-Related Shutdown and Curfew

On March 17, 2020, Luis D. García Fraga, Chief Commissioner of Puerto Rico’s Transportation and Other Public Services Bureau, issued guidance on Executive Order EO-2020-23 (EO) and the operations allowed during the lockdown resulting from the COVID-19 emergency crisis. The Bureau’s guidance focuses on the EO’s exemption for commercial businesses involved in the distribution chain of food, medicines, medical equipment and fuel.

Puerto Rico Department of Labor and Human Resources Urges Employers to Adopt Teleworking Policies

To help limit the spread of COVID-19, governments have implemented strict and serious measures on social distancing, population curfews and even total lockdowns. In Puerto Rico, Governor Hon. Wanda Vázquez-Garced issued a state of emergency followed by Executive Order 2020-023 (EO 2020-023), which instituted an island-wide lockdown and closure of all private and public entities to combat the spread of the virus, with limited exceptions. Due to the lockdown and closure of commercial businesses, many employers are implementing teleworking policies in order to keep their businesses running.

The Families First Coronavirus Response Act and its Interplay with Puerto Rico’s Local Provisions Regarding Vacation and Sick Leave

On March 18, 2020, the president signed into law the Families First Coronavirus Response Act (FFCRA). Among other things, the new law provides for paid sick leave and expanded FMLA provisions. The FFCRA takes effect on April 2, 2020, and sunsets on December 31, 2020.

Puerto Rico Agencies Issue Guidance Clarifying Executive Order on COVID-19 Shutdown and Curfew Measures

In the wake of Governor Wanda Vázquez-Garced’s March 15, 2020 Executive Order (EO 2020-023) enacted to facilitate the private and public closings necessary to combat the effects of the coronavirus (COVID-19) and control the risk of contagion, there has been much confusion within the private business sector regarding its scope and exceptions. The state of confusion was exacerbated by statements the Governor made during press conferences, which seemed to contradict the text of the EO and police mobilization to ensure compliance with its terms.1 To this end, on March 15 and 17, the Puerto Rico Bureau of Telecommunications, the Puerto Rico Department of Economic Development and Commerce, the Puerto Rico Tourism Company, and Puerto Rico Treasury Department, issued an Administrative Order, Circular Letters, and an Internal Revenue Informative Bulletin, respectively, meant to provide some clarification. We summarize them below.

Puerto Rico Senate Approves Bill on Sick Leave, Pay During Cessation of Operations Because of COVID-19

Following declaration of a state of emergency by Puerto Rico Governor Wanda Vázquez due to the Coronavirus (COVID-19) pandemic on March 16, 2020, the Puerto Rico Senate has approved a bill addressing sick leave for private sector employees and requiring employers to pay employees if the employer decides to cease its operations due to the pandemic.

Puerto Rico Bill to Provide Emergency Leave for Pandemic Illness Revised to Require Paid Leave

The Puerto Rico Senate has revised House Bill 2428 to replace the provision of 20 days of unpaid emergency leave due to diagnosis of a pandemic illness with five days of paid emergency leave.

Puerto Rico Clarifies Applicability to Private Sector Employers of Mandatory Lockdown

The Puerto Rico Department of Economic Development and Commerce has issued a clarification on the mandatory lockdown of non-essential commerce in response to employer appeals.

Puerto Rico State Insurance Fund Adopts COVID-19 Emergency Measures for Employers

On March 18, 2020, the Puerto Rico State Insurance Fund Corporation (PR-SIF) adopted additional measures for the benefit of employers in Puerto Rico due to the emergency caused by the coronavirus (COVID-19).

Puerto Rico Department of Labor and Human Resources Issues Guidance on COVID-19

On March 13, 2020, Puerto Rico’s Department of Labor and Human Resources’ Secretary, Hon. Briseida Torres Reyes, issued Opinion 2020-01 discussing statutory rights and other applicable measures in light of the coronavirus (COVID-19) emergency.

Puerto Rico Governor Issues Executive Order Imposing Significant Quarantine and Social Distancing Measures in Light of COVID-19

On March 15, 2020, the Governor of Puerto Rico, Hon. Wanda Vázquez Garced, issued an Executive Order to facilitate the private and public closings necessary to combat the effects of the coronavirus (COVID-19) and control the risk of contagion within the Island. Following CDC guidance, the Order includes several important quarantine and social distancing measures aimed at protecting the health and welfare of Puerto Rican citizens, including implementation of a curfew and the shutdown of non-essential commercial activity. Below is a summary of its directives, issued pursuant to the Governor’s emergency powers:

Puerto Rico Goes on Lockdown, Imposes Mandatory Curfew in Response to Outbreak of COVID-19

Amid the global spread of Coronavirus (COVID-19), Puerto Rico Governor Wanda Vázquez-Garced has issued Executive Order 2020-023, ordering a drastic lockdown of non-essential commerce and mandatory round-the-clock curfews until March 30, 2020, among other measures targeted toward detaining the spread of COVID-19 in Puerto Rico.

Puerto Rico Labor Department Publishes Mandatory Posting for Working Women’s Bill of Rights

Under the Puerto Rico Working Women’s Bill of Rights Act, Law No. 9-2020 (Act 9), employers with at least two employees must post the Bill of Rights in a place accessible to all employees and visitors. The Puerto Rico Department of Labor has published a poster that satisfies the Act 9’s requirements that employers may use.

Puerto Rico Senate Considers Unpaid Emergency Leave for Pandemic Illness

Following the outbreak of the Coronavirus (COVID-19) and the World Health Organization’s declaration of a pandemic, on March 12, 2020, the Puerto Rico House of Representatives approved House Bill 2428 to establish a new unpaid emergency leave of 20 days for employees with a suspected or actual diagnosis of a pandemic illness.

Puerto Rico Working Women’s Bill of Rights Posters Available

All governmental agencies, public corporations, municipalities and private employers in Puerto Rico with two or more employees are required to publish a poster in compliance with Law No. 9-2020, known as the Working Women’s Bill of Rights. The poster must be published in a place accessible to all employees and visitors. The law directed the Puerto Rico Women’s Advocate Office (WAO) to design the corresponding posters for this purpose. The WAO has published two posters, one for public sector employers and another one for private sector employers. They are both now available electronically in the WAO’s and the Puerto Rico Department of Labor’s websites.

Puerto Rico DOL Regulations to Administer the Equal Pay Program Will Take Effect on March 14, 2020

On March 14, 2020, new Puerto Rico Department of Labor and Human Resources Regulations to administer the Equal Pay Program will come into effect. The Regulations were enacted pursuant to Act. No. 16 of March 8, 2017, as amended, known as Puerto Rico’s Equal Pay Act, and encourage equal pay in accordance with the Uniform Guidelines for Self-Assessment of Equal Pay in the Workplace.

Puerto Rico Treasury Department Issues Post-Earthquake Rules for Qualified Retirement Plan and IRA Distributions and Loans

On February 20, 2020, the Puerto Rico Treasury Department (PR Treasury) issued Internal Revenue Circular Letter Number 20-09 (CC RI 20-09) to provide special rules and procedures applicable to distributions from qualified retirement plans and individual retirement accounts (IRAs) following the recent earthquakes. The following is a summary of the most significant provisions of CC RI 20-09.

Puerto Rico Department of Treasury Grants Tax Exemptions for Employer-Provided Payments and Certain Benefits to Employees and Independent Contractors Related to the Recent Earthquakes

On February 20, 2020, the Puerto Rico Treasury Department (PR Treasury) issued Internal Revenue Circular Letter No. 20-08 (CC RI 20-08) granting employers temporary income tax exemptions over payments and certain benefits made to their employees and/or independent contractors for relief due to the recent and continued earthquakes that have affected the Island since January 6, 2020. These employer-provided payments must be considered “Qualified Payments Made for Disaster Assistance” and meet certain other requirements to be tax-exempt.

Puerto Rico Working Women’s Bill of Rights Includes New Posting Requirement

On January 3, 2020, Puerto Rico Governor Wanda Vázquez signed Law No. 9-2020 (“Act 9” or “the Act”), known as the Working Women’s Bill of Rights. While the Act expressly states that it was enacted for informational purposes and does not create any new substantive rights, the Act centralizes a non-exhaustive list of previously established rights for working women in the public and private sectors.

Employees’ Compensation Following the Earthquake Situation in Puerto Rico

Since late December 2019, a series of earthquakes and aftershocks have struck the southwest region of Puerto Rico, causing many structures to collapse or to sustain severe structural damage. Intermittent electrical service, particularly in the southwest region, has also occurred. Given the impact these events have had on private-sector employers that operate or have facilities in this region, Opinion No. 2017-001 issued by the Puerto Rico Secretary of Labor on October 17, 2017, after Hurricanes Irma and María, provides guidance regarding compensation for exempt and non-exempt employees for workdays interrupted by these natural events.

Puerto Rico Department of the Treasury Announces 2020 Limits on Qualified Retirement Plans

On December 28, 2019, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 19-17 (CL IR 19-17) announcing the applicable limits for Puerto Rico qualified retirement plans for 2020. Pursuant to Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended (PR Code), the Secretary of the Treasury is required, before the beginning of each taxable year, to provide notice of the applicable limits under Section 401(a) of the Internal Revenue Code of 1986, as amended (US Code), which are incorporated by reference into the PR Code limits (e.g., annual compensation, annual benefit/contribution limits), once the IRS publishes its retirement plan limits under the US Code.

New Puerto Rico Law Limits Employers’ Use of Credit Reports in Employment Decisions

Puerto Rico has enacted legislation to limit the use of credit reports in making employment decisions.

New Legislation Precludes Employers in Puerto Rico from Using Credit Reports or Credit History to Take Employment Actions

On October 8, 2019, the Governor of Puerto Rico signed into law Act No. 150 of October 8, 2019 (“Act 150” or “the Act”), which prohibits employers from, among other actions, verifying or investigating credit history or credit reports concerning current employees or employment candidates, or from obtaining or ordering such reports from a credit agency. The Act further prohibits employers from taking adverse employment actions based on an employee’s or employment candidate’s credit history or report.

Littler Global Guide - Puerto Rico - Q3 2019

Browse through brief employment and labor law updates from around the globe. Contact a Littler attorney for more information or view our global locations.

Minimum Salary Level in DOL’s Final Overtime Rule Will Not Apply to Puerto Rico

On September 24, 2019, the Wage and Hour Division of the U.S. Department of Labor (DOL) announced its final rule concerning changes to the Fair Labor Standards Act (FLSA) “white collar” overtime exemptions. This final rule, which will take effect on January 1, 2020, (a) increases from $455 to $684 per week ($35,568 per year) the minimum standard salary level for overtime exemption; (b) raises from $100,000 to $107,432 per year the total annual compensation requirement for “highly compensated employees” (HCE); and (c) permits employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the minimum salary level as long as such payments are made at least annually.1

Puerto Rico Enacts Law Providing Unpaid Leave and Reasonable Accommodation for Victims of Abuse

On August 1, 2019, just a day prior to his resignation as Governor of Puerto Rico, Ricardo Rosselló signed into law Act No. 83 of August 1, 2019 (“Act 83” or “the Act”), a very detailed leave statute applicable to public and private employers. Act 83, in general terms, provides employees with 15 days of unpaid leave per year for instances of gender or domestic violence, abuse of minors, sexual harassment in employment, sexual assault, lewd acts or aggravated stalking. This special leave also extends to family members, and allows employees to request reasonable accommodations, or flexible work conditions, to address these situations. Employees may request to take this leave through apportioned, flexible, or intermittent schedules.

Puerto Rico Supreme Court Holds Act 2’s Counterclaim Bar Does Not Preclude Employer’s Independent Suit

Act No. 2 of October 17, 1961 (Act 2) created a procedural process for the expeditious adjudication of employment claims in Puerto Rico. Among other ways to streamline the process, Act 2 bars the employer from filing a counterclaim against the employee.1 In Bacardí Corporation v. Evaristo Torres Arroyo, 2019 TSPR 133, 202 D.P.R. __ (July 26, 2019) (Bacardí), however, the Supreme Court of Puerto Rico held that Act 2’s counterclaim bar does not preclude an employer from commencing a separate and independent action against the employee outside of Act 2’s summary proceedings.

Puerto Rico Enacts Leave for Victims of Domestic Violence, Sexual Harassment and Assault

Employees in Puerto Rico may take up to 15 days of unpaid leave each calendar year to address situations related to domestic or gender-based violence, child abuse, sexual harassment in employment, sexual assault, lewd acts, or felony stalking under a new law. The new “Special Leave” is in addition to any other leave to which the employee might be entitled under law.

Guidelines on the Interpretation of Puerto Rico’s Employment Legislation, Chapters 6 and 8

As we have previously discussed, the Puerto Rico Department of Labor (PR DOL) recently published the first edition of its Guidelines on the Interpretation of Puerto Rico’s Employment Legislation (Guidelines), which includes the PR DOL’s official statutory interpretation of nearly all of Puerto Rico’s employment laws. The over 200-page Guidelines are divided into 15 chapters and cover a wide range of statutes. This Insight is the third in a series that will provide a chapter-by-chapter analysis of the most important topics addressed in the Guidelines, including an interpretation of key provisions of the Puerto Rico Labor Transformation and Flexibility Act, Act No. 4 of January 26, 2017 (“Act 4-2017” or “LTFA”), which made substantial changes to virtually all existing employment laws in Puerto Rico. This installment includes a discussion of Chapters 6 and 8, which provide guidance on vacation entitlement, sick leave, lactation breaks, and equal pay.

Puerto Rico DOL Issues Guidance on Law Prohibiting Sexual Orientation and Gender Identity Discrimination

On May 2019, the Puerto Rico Department of Labor (PRDOL) revised and updated its Protocol on Sexual Orientation and Gender Identity Discrimination pursuant to Act No. 22 of 2013 (Protocol). The new Protocol contains guidelines to assist private and public employers on how to interpret and implement Act No. 22, which generally prohibits sexual orientation and gender identity discrimination in most public and private-sector workplaces.

Puerto Rico Supreme Court Holds Arbitration Clauses in Employment Contracts—Including Those Governing Unjust Dismissal Claims—are Valid and Enforceable

The Puerto Rico Supreme Court (PRSC) recently issued a judgment in José Méndez et al v. Carso Construction, 2019 TSPR 19 (May 22, 2019), validating an arbitration clause that covers a claim under the Puerto Rico Unjust Dismissal statute, Local Act No. 80 of May 30, 1976 (Act 80). The effect of the PRSC’s holding is that an arbitrator will have original jurisdiction to hear unjust dismissal disputes if the contract between the employer and the employee or contractor includes a valid arbitration clause.

Guidelines on the Interpretation of Puerto Rico’s Employment Legislation, Chapters 1-3

As we have previously discussed, the Puerto Rico Department of Labor (PR DOL) has recently published the first edition of its Guidelines on the Interpretation of Puerto Rico’s Employment Legislation (Guidelines), which includes the PR DOL’s official statutory interpretation of nearly all of Puerto Rico’s employment laws. The over 200-page Guidelines are divided into 15 chapters and cover a wide range of statutes.

Puerto Rico Treasury Again Extends Deadlines to Request Federal Employee Retention Benefit After Hurricanes Irma And María

On May 17, 2019, the Puerto Rico Department of the Treasury (“PR Treasury”) issued Internal Revenue Informative Bulletin No. 19-07, granting an additional extension until June 30, 2019 for employers to request the Federal Employee Retention Benefit (“Benefit”) related to Hurricanes Irma and María. Consequently, the deadline to submit a Benefit claim (for employers that have requested the Benefit and have not yet received it) has also been extended until July 10, 2019.

Puerto Rico Department of Labor Issues First Comprehensive Guidelines on Employment Laws

On May 8, 2019, the Secretary of the Puerto Rico Department of Labor (hereinafter, “PR-DOL”) issued the first edition of the “Guidelines for the Interpretation of Puerto Rico’s Employment Legislation” (hereinafter, the “Guidelines”) in an effort to provide guidance and a general overview of its position and interpretation over Puerto Rico’s employment statutes and regulations. Instead of having several publications by topic, the PR-DOL chose to compile in a single publication the interpretations that they have been carrying out for decades, as well as new ones.

Puerto Rico Treasury Department Issues New Quarterly Tax Return for Withholding Payments for Services Rendered

Act 257 of December 10, 2018 (Act 257) amended the Puerto Rico Internal Revenue Code to require any person or entity required to withhold income tax on payments for services rendered to submit a reconciliation quarterly tax return. Accordingly, the Puerto Rico Department of the Treasury (the “PR Treasury”) recently issued Internal Revenue Circular Letter No. 19-10 (“CL 19-10”) to: (i) announce the issuance the new form 480.6 SP-1 (the “Quarterly Return”) and the procedures related to the electronic filing of the Quarterly Return; and (ii) establish a minimum tax withholding amount requirement that may be deposited quarterly with the Quarterly Return.

Puerto Rico Supreme Court Holds that an Employee’s Felony Indictment Constitutes Just Cause for Termination

The Puerto Rico Supreme Court (PRSC) recently held that that a felony indictment constitutes just cause for termination under Puerto Rico’s Unjust Dismissal statute, Act No. 80 of May 30, 1976 (Act 80).1 In Edwin González Santiago v. Baxter Healthcare of Puerto Rico, 2019 TSPR 79, 202 D.P.R. ___ (April 25, 2019), the PRSC also established that the presumption of innocence that applies in the criminal context does not extend to the labor and employment context.

Puerto Rico DOL Allows Employers to File Unemployment Returns on Paper for First Quarter of 2019

Last month, the Puerto Rico Department of Labor and Human Resources (PR DOL) issued a press release announcing that all employers will be required to submit their unemployment quarterly returns electronically starting with the first quarter of 2019. This announcement was in accordance with the new regulations regarding the Administration of the Puerto Rico Unemployment Insurance Program. Although the March 14 press release specified that the PR DOL will not accept or consider any returns on paper, due to the difficulties that some employers are encountering with the electronic filing process, the PR DOL issued a last-minute administrative determination allowing employers to submit the quarterly return corresponding to the first quarter of 2019 on paper. The Secretary of the PR DOL clarified, however, that the deadline to file the unemployment quarterly returns continues to be April 30, 2019. Thus, employers still facing difficulties complying with the electronic filing should go ahead and file their returns for the first quarter of 2019 on paper with the PR DOL to ensure compliance with the reporting requirement. Please note that employers have until TODAY—April 30, 2019—to either file the return electronically or on paper with the PR DOL.

Puerto Rico DOL Announces that Employers Must Submit Unemployment Tax Returns Electronically

On March 14, 2019, the Puerto Rico Department of Labor and Human Resources (PR DOL) issued a press release announcing that in an effort to improve services and reduce public expenses, all employers will be required to submit their unemployment tax returns electronically starting April 1, 2019.

Puerto Rico Treasury Extends Deadlines to Request Federal Employee Retention Benefit After Hurricanes Irma And María

The Puerto Rico Department of the Treasury (“PR Treasury”) has issued Internal Revenue Informative Bulletin No. 19-01, extending until March 31, 2019 the deadline to request the Federal Employee Retention Benefit (“Benefit”) related to Hurricanes Irma and Maria. Consequently, the deadline to submit a Benefit claim (for those employers who have requested the Benefit and have not yet received it) has also been extended until April 30, 2019.

Puerto Rico Department of the Treasury Announces 2019 Limits on Qualified Retirement Plans

On December 31, 2018, the Puerto Rico Department of the Treasury (PR Treasury) issued Internal Revenue Informative Bulletin No. 18-24 (IB 18-24) announcing the 2019 applicable limits for Puerto Rico qualified retirement plans. Pursuant to Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended (PR Code), the Secretary of the Treasury is required, before the beginning of each taxable year, to provide notice of the applicable limits under Section 401(a) of the Internal Revenue Code of 1986, as amended (US Code), which are incorporated by reference into the PR Code limits (e.g., annual compensation, annual benefit/contribution limits), once the Internal Revenue Service (IRS) publishes the retirement plan limits under the US Code.

Puerto Rico Adopts New Regulation to Administer Unemployment Insurance

On November 8, 2018, the Secretary of the Puerto Rico Department of Labor and Human Resources published a new regulation governing the administration of Puerto Rico's unemployment insurance program. The Regulation to Administer the Unemployment Insurance Program (“Regulation”), which implements Puerto Rico’s Employment Security Act and supersedes three previous regulations,1 will take effect on December 8, 2018. Among other provisions, the Regulation reflects changes in weekly benefit amounts, revises partial payment plan requirements, and extends the time in which an employer can appeal a tax deficiency determination.

Puerto Rico Revises Form for Reporting Payments to Terminated Employees, Considers Credit History Ban

The Puerto Rico Department of the Treasury has announced changes to tax reporting for certain severance payments.

Puerto Rico Treasury Department Changes Tax Reporting on Act 80 Payments Made During Tax Year 2018

On October 22, 2018, the Puerto Rico Department of the Treasury (the “PR Treasury”) issued Publication 18-03, which makes tax reporting and tax deadline changes for certain severance payments.

Puerto Rico Treasury Department Extends Period to Make Hurricane-Related Retirement Plan Distributions

Last year, the Puerto Rico Department of the Treasury (the “PR Treasury”) issued Administrative Determination Number 17-29 (“AD 17-29”) to provide rules and procedures for allowing distributions from an IRA or a Puerto Rico qualified retirement savings plan following Hurricane María. The purpose of these relaxed tax rules is to temporarily allow Puerto Rico residents impacted by the hurricane to make distributions from qualified retirement plans and IRAs at a preferential tax rate. The PR Treasury subsequently issued Administrative Determination Number 18-02 on January 17, 2018, to clarify certain provisions of AD 17-29.

Puerto Rico Governor Signs Executive Order Increasing Minimum Wage for Construction Workers in Government-Funded Construction Projects

On July 30, 2018, the governor of Puerto Rico signed Executive Order No. 2018-033, increasing the minimum wage for construction workers, enforcing laws requiring use of locally produced cement, and requiring the use of project labor agreements in government-funded construction projects. More specifically, the Executive Order requires that if any construction project is financed in whole or in part with funds from the Puerto Rico Government, its agencies, instrumentalities or public corporations, the contractor or subcontractor must pay employees hired to work on that project at least $15.00 per hour.

Puerto Rico Law Authorizes Pay Deductions as Repayment for Employer-Provided Emergency Aid

Puerto Rico is still reeling from the aftermath of Hurricane Maria. Recently, the governor of Puerto Rico signed into law Act No. 115 of June 20, 2018, to promote recovery efforts and provide much-needed aid to affected non-exempt employees in situations of emergency. Ordinarily, Puerto Rico law does not allow deductions from a non-exempt employee’s salary, except for specific purposes defined in Act No. 17 of April 17, 1931, as amended. Act No. 115 amends Article 5 of Act No. 17 to lengthen the list of authorized payroll deductions. Consequently, employers in Puerto Rico are now able to prospectively recoup, via salary deductions, any loan, salary advance, or the cost of any equipment, materials, or goods provided to their non-exempt employees to help them in situations where there has been an emergency declaration by the president of the United States, the Federal Emergency Management Agency (FEMA), or the governor of Puerto Rico.

Littler Global Guide - Puerto Rico - Q2 2018

Guidance on the Federal Employee Retention Benefit for Certain Employers Affected by Hurricane Irma and María

Puerto Rico: New Act Extends the List of Authorized Deductions to Non-Exempt Employees' Wages

The Governor of Puerto Rico recently signed into law Act No. 115, extending the list of authorized payroll deductions under Act 17-1931 (“Act 17”). As a general rule, deductions from non-exempt employees’ wages in Puerto Rico are prohibited unless specifically authorized by Article 5 of Act 17.

Puerto Rico Department of the Treasury Issues Guidance on the Federal Employee Retention Benefit for Certain Employers Affected by Hurricanes Irma and Maria

On September 29, 2018, the Disaster Tax Relief and Airport Extension Act of 2017, as amended (the “Act”), was adopted to, among other goals, provide tax relief to those affected by Hurricanes Irma and Maria. The Act includes an employee retention benefit (the “Benefit”) available to eligible employers.

Employment-at-Will Comes to Puerto Rico?

Puerto Rico’s Financial Oversight and Management Board and Governor Ricardo Rosselló have sent bills to the Puerto Rico legislature to repeal the Unjust Dismissal Act, Act No. 80 of May 30, 1976 (Act 80). If either bill is enacted, employers in Puerto Rico will no longer be required to have “just cause” to dismiss employees hired for an indefinite term.

Employment Law Reform in Puerto Rico: Take Two

Last month, we reported that the Governor of Puerto Rico announced his “Initiative to Reform the Labor Force,” which would have created significant employment law changes to increase the employment participation rate on the Island. One week later, on March 28, 2018, in response to strong opposition from the Puerto Rico Legislature, the Governor withdrew his proposal. Now, it is the Fiscal Oversight and Management Board (FOMB) that is proposing additional employment law reform.

Puerto Rico Governor Announces Proposed Plan to Revamp the Labor Force

On March 21, 2018, the Governor of Puerto Rico announced his “Initiative to Reform the Labor Force,” with the express goal of increasing the employment rate. Standing alongside the presidents of the Senate and House of Representatives, the Governor anticipated this Initiative would include: elimination of the Christmas Bonus; implementation of a “Bonus for Work;” a tiered increase of the minimum wage; a reduction of sick and vacation leave; a reassurance that all recipients of the Nutritional Assistance Program (PAN, for its Spanish acronym) between the ages of 18 and 55 will join the labor force; and the repeal of Act 80 (indemnifying unjust dismissals). The Governor also intends to increase tax incentives and lower the current rates for individuals as well as corporations.

Puerto Rico Supreme Court Sets Standard to Apply the Successor Liability Doctrine

The Puerto Rico Supreme Court (“PRSC”) recently issued an Opinion in the case of Roldán Flores v. M. Cuebas, 2018 TSPR 18, 199 D.P.R. __ (Feb. 6, 2018), in which it addressed again the requirements for applying the “successor liability doctrine.”1 The PRSC held that prior to applying the successor liability doctrine, courts must first determine whether the prior owner/employer had any legal obligations or committed an illegal act with respect to the plaintiff-employee. If there was no employment obligation or illegal act attributable to the prior owner/employer, then there is no need to examine or apply the successor liability doctrine. In the context of unjust dismissal claims, the effect of the PRSC’s holding is that when there is a complete closing of operations, which is considered just cause for termination under Act No. 80 of May 30, 1976 (“Act 80”),2 there is no need to examine the applicability of the successor liability doctrine as there is no illegal act for which the acquiring entity could be held liable.

New Act in Puerto Rico Establishes a Special Paid Leave for Employees Suffering from Catastrophic Illnesses

The Governor of Puerto Rico recently signed into law Act No. 28 (“Act 28”), entitling all employees, including temporary employees, to take up to six days of paid leave per year if they suffer from a “catastrophic illness.” This bill, as presented to the Governor, defines catastrophic illnesses as those listed in the Health Insurance Administration of Puerto Rico Special Coverage (HIAPRSC), which currently includes: Acquired Immunodeficiency Syndrome (AIDS); Tuberculosis; Leprosy; Lupus; Cystic Fibrosis; Cancer; Hemophilia; Aplastic Anemia; Rheumatoid Arthritis; Autism; Post Organ Transplant; Scleroderma; Multiple Sclerosis; Amyotrophic Lateral Sclerosis (ALS); and Chronic Kidney Disease in levels 3, 4 and 5. To be entitled to this leave, employees must have worked for their employer for at least 12 months, and have worked an average of 130 hours per month during the previous 12-month period.

Puerto Rico Bars Use of Legitimate Absences in Performance Review, Adds Catastrophic Illness Leave

Just one year after substantial changes to Puerto Rico employment laws became effective, the Governor has enacted two new sick leave laws. One shields employees from adverse consequences from sick leave use. The other creates a special leave for catastrophic illnesses.

New Act Prohibits Employers in Puerto Rico from Using Absences to Measure Employee Efficiency and Performance

On Saturday, January 27, 2018, the Governor of Puerto Rico signed into law Act No. 60, establishing greater protections for non-exempt private sector employees by prohibiting employers from using sick leave to measure employees’ efficiency in their annual performance evaluations. This bill as presented to the Governor amends Article 6 of Act No. 180–1998, better known as the “Puerto Rico Minimum Wage, Vacation, and Sick Leave Act,” to include this protection.

Littler Global Guide - Puerto Rico - Q4 2017

Hurricane Aftermath: Available Government Assistance for Puerto Rico Residents

Plan Sponsors and Service Providers Must be Aware of Changes Made to Rules Pertaining to Puerto Rico Qualified Retirement Plans

Recent changes to Puerto Rico’s tax treatment of certain retirement plans have taken effect. Act No. 106 of August 23, 2017 (“Act 106”) amended Section 1081.01 of the Puerto Rico Internal Revenue Code as amended, (the “PR Code”), to reflect changes in the rules governing Puerto Rico qualified retirement plans. Employee benefit practitioners, service providers, as well as the Pension Plan Section at the Puerto Rico Department of the Treasury (the “PR Treasury”) were taken by surprise by these amendments, as they revised legislation designed to guarantee payment to government retirees and to establish a new defined contribution plan for government employees.

Puerto Rico Department of the Treasury Announces 2018 Limits on Qualified Retirement Plans

On December 15, 2017, the Puerto Rico Department of the Treasury (the “PR Treasury”) issued Tax Policy Circular Letter No. 17-02 (“CL 7-02”) announcing the 2018 applicable contribution limits 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, annual benefit/contribution limits).

Puerto Rico Department of the Treasury issues Q&As Clarifying Guidance on Qualified Payments Made for Hurricane María Disaster Assistance

As previously discussed, 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 exemption for payments considered “Qualified Payments made for Disaster Assistance” related to the recent hurricane. To clarify various aspects of AD 17-21, the PR Treasury issued a series of questions and answers (Q&As). The following is a summary of the clarification provided in the Q&As.

Employers Have until January 5, 2018 to Submit Comments on Proposed Regulation Implementing Puerto Rico’s Working Hours and Days Act

On December 6, 2017, the Puerto Rico Secretary of the Department of Labor and Human Resources (“Secretary”) published the proposed Regulation to Administer Act No. 379 of May 15, 1948, as amended, known as Puerto Rico’s Working Hours and Days Act. On the same day, the Puerto Rico Department of Labor and Human Resources (“Department”) published a Public Notice informing employers, employees, and the general public of its intent to adopt the Regulation and inviting any person to submit written comments on or before Friday, January 5, 2018. Comments can be mailed, submitted via email, or physically presented to the Office of the Solicitor of Labor.

Puerto Rico Treasury Department Issues Post-Hurricane Rules for Qualified Retirement Plan and IRA Distributions and Loans

On November 15, 2017, the Puerto Rico Department of the Treasury (the "PR Treasury") issued Administrative Determination Number 17-29 ("AD 17-29") to provide special rules and procedures applicable to distributions from qualified retirement plans and individual retirement accounts ("IRAs") following Hurricane María.

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.

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.

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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