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.
Articles About Puerto Rico Labor And Employment Law
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.
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 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.