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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 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 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.
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