After vetoing workplace bullying legislation this summer, the Governor of Puerto Rico has signed into law two amendments to existing employment laws that may increase litigation of retaliation and vacation and sick leave claims. The amendments are effective immediately.
Articles About Puerto Rico Labor And Employment Law
On September 19, 2014, Governor Alejandro García Padilla signed into law an amendment to the Puerto Rico Minimum Wage, Vacation, and Sick Leave Act (the “Act”) to include a subsection (c) to Article 9, imposing new civil penalties on employers for violations of the Act.
On September 29, 2014, Governor Alejandro García Padilla signed into law an amendment to Puerto Rico Act 115, effective immediately.
The Puerto Rico (PR) Treasury has issued Administrative Determination Letter 14-16 of August 6, 2014 (AD 14-16) providing rules governing the pre-payment of amounts accumulated under a retirement plan at a special reduced tax rate, allowed under Act 77 of July 1, 2014 (Act 77). The PR Treasury has also issued forms SC 2911 (for qualified plans) and SC 2912 (for non-qualified plans) for making these pre-payments. As previously discussed, as result of Act 77, during the period from July 1, 2014 to October 31, 2014 (the Window Period), participants in retirement plans (whether qualified or not) can elect to pre-pay at a reduced tax rate part or the total amount accumulated under the plan that is not currently distributable. The implementation of this window was on hold pending the issuance of guidance by the PR Treasury since the applicable rate and the rules for implementing such pre-payments were unclear.
In an effort to increase revenues and to set up the basis for an upcoming restructuring of our tax system, the Puerto Rico Governor signed into law Act 77 of July 1, 2014 (Act 77). Act 77 amends various tax legislation, including the Puerto Rico Internal Revenue Code of 2011 (the New PR Code).
Governor García Padilla did not explain his veto of Senate Bill 501, “Law to Prohibit and Prevent Workplace Harassment in Puerto Rico,” on June 13, 2014. Rather, he cited opinions issued by the Puerto Rico Departments of Justice and Labor and Human Resources withholding endorsement of the legislation. The Department of Justice noted the bill’s definition of “workplace harassment” was “vague” and its delegation of rulemaking authority to various agencies, the DOJ warned, would lead to inconsistencies. The Department of Labor observed the bill excluded private sector employees from reinstatement and back pay remedies, the Governor said.
On May 30, 2014, a Puerto Rico Joint House and Senate Conference Committee approved a joint version of Senate Bill No. 501, which would have required all Puerto Rico employers to prohibit, prevent and remedy all forms of unjustified harassment and bullying in the workplace. This legislation faced widespread opposition from employer groups in all industries, which were concerned with the adverse impact the bill was expected to have on Puerto Rico as a place to do business. The legislation was nevertheless approved by the Legislature, and Governor Alejandro García Padilla had been expected to sign it into law. In an unexpected action, on Friday, June 13, 2014, the Governor vetoed the bill, to the relief of employers doing business in Puerto Rico.
The stage is set for Puerto Rico to become the first U.S. jurisdiction to statutorily address “workplace bullying” or “workplace harassment” (sometimes known as “mobbing”), with potentially costly consequences for employers. It is now up to the Governor of Puerto Rico to decide whether to approve or veto the proposed legislation.
Two recent rulings from the Puerto Rico Court of Appeals provide guidance as to what constitutes the transfer of a going business vis-à-vis the closing of a business, to determine whether the employer is liable for payment of severance to employees who are discharged within the context of those transactions.
A recent ruling by the United States District Court for the District of Puerto Rico clarifies that Law 44, Puerto Rico’s counterpart to the federal American with Disabilities Act (ADA), applies only to employers and does not provide for individual liability. Accordingly, claims brought against individual defendants under Law 44 are subject to dismissal.
A recent ruling by the Puerto Rico Supreme Court interprets relevant sections of Act 59, known as the “Act to Regulate Controlled Substances Detection Tests in the Private Work Sector”, to clarify that, when subjecting employees to undergo drug testing, hair samples can be used only when the circumstances justify not conducting the drug testing with a urine sample. The High Court also elucidated as to when additional drug tests are permissible after the result of the first drug test has been deemed inconclusive or invalid.
On March 7, 2014, Governor Alejandro García Padilla signed into law the First Chance Youth Employment Act (“Ley de la Primera Oportunidad de Empleo Juvenil”) (“Law 36-2014”). Law 36-2014 aims to create employment opportunities for talented youth who have completed a college degree, so they can enter the workforce in Puerto Rico, rather than emigrate stateside to find employment.
Earlier this year, Jackson Lewis opened a new office in San Juan, Puerto Rico serving clients throughout the Commonwealth. We thought we would take the opportunity to discuss the enforceability of non-competes under Puerto Rico law. As in many other jurisdictions, the validity and enforceability of non-competition agreements in Puerto Rico depends on the reasonableness of the restrictions imposed. Employers must also strictly follow the requirements set forth by the Puerto Rico Supreme Court in Arthur Young & Co. v. Vega, 136 D.P.R. 157 (1994), to wit:
Puerto Rico Governor Alejandro García Padilla has signed legislation barring employers from discriminating against any employee or employment candidate on the basis of his or her sexual orientation or gender identity. Senate Bill No. 238, signed May 29, 2013, amends Puerto Rico’s Anti-Discrimination Statute, Act No. 100 of June 30, 1959, as amended, and is effective immediately.
The Senate of the Commonwealth of Puerto Rico has approved a bill prohibiting discrimination on the basis of sexual orientation or gender identity in the public and private sectors. Senate Bill No. 238 includes an amendment to Puerto Rico’s Anti-Discrimination Statute, Act No. 100 of June 30, 1959, as amended, barring employers from discriminating against any employee or employment candidate on the basis of his or her sexual orientation or gender identity.