Articles About Puerto Rico Labor And Employment Law

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.

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.

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.

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).

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”).

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

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.

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.

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.

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.

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).

The Puerto Rico Supreme Court recently held that, in fulfilling their obligation to prevent, prohibit and eradicate sexual harassment in the workplace, employers may adopt rules and regulations that go beyond the requirements of Law No. 17 of April 22, 1988 (“Law 17”), which prohibits sexual harassment in the workplace. In doing so, the Supreme Court clarified that an employer is not required to establish a prima facie case of sexual harassment under Law 17 to be able to terminate an employee for violating its sexual harassment policy.

Act 135 of August 7, 2014 amended the Puerto Rico Internal Revenue Code (PR Code) to exempt from taxation up to $40,000 of salary income earned by a “young employee.” PR Code defines a “young employee” as an employee between the ages of 16 and 23. The Act 135 exemption is in effect for all taxable years through December 31, 2019, including this most recent tax year.

As previously reported, Act 77 of July 1, 2014 (“Act 77”) provided a period during which participants in retirement plans could prepay, at a reduced tax rate, the amounts accumulated under such plans. The original window period covered from July 1, 2014 through October 31, 2014. On December 22, 2014, however, Puerto Rico Governor signed into law SB 1189 (now, Act 238 of December 22, 2014) which, among other provisions, extends the aforementioned period until January 31, 2015.

In this blog post, we discuss important updates, including upcoming deadlines, with respect to employee benefits impacting plan sponsors.