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INTRODUCTION. The labor and employment field is highly regulated in Puerto Rico. There are numerous statutes, regulations and judicial doctrines, as well as several constitutional provisions, that govern this matter. The topics generally cover the start of operations, the hiring of employees, wage and hour issues, employment discrimination and retaliation, leaves of absence, individual rights, welfare benefits, labor law and union matters, and employment termination. Below is a summary of the most important subjects in this field.
The employment contract is governed by state and federal labor statutes, as well as the Puerto Rico Civil Code. Article 20(7) of Act No. 379 of May 15, 1948, as amended, P.R. Laws Ann. tit. 29, §288(7), defines the employment contract as any oral or written agreement by which the employee binds himself or herself to execute work, perform labor or render a service for the employer for wages or any other economic remuneration. If there is no express stipulation as to wages, the employer must pay the employee the minimum wage established by law.
It should be noted that a written contract is not required for an employer-employee relationship to arise. When a termination date is not stipulated in the employment contract, it will be considered that the contract is for an indefinite term and the employee will be protected by Act No. 80 of May 30, 1976, as amended, P.R. Laws Ann. tit. 29, §§185a-185m. (See the "TERMINATION OF EMPLOYMENT" section below.)
In Puerto Rico, employee handbooks describing the rights and responsibilities of employees are construed to be part of the employment contract between the employer and the employee. Therefore, both the employer and the employee have a legal duty to comply with the provisions contained therein, unless the employer modifies them prospectively.
Article 1233 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, §3471, regulates the manner in which courts should interpret contracts, including employment contracts. It provides that courts should enforce the literal sense of a written contract unless the words are contrary to the intent of the parties.
The probationary employment contract is regulated by Article 8 of Act No. 80 of May 30, 1976, as amended, P.R. Laws Ann. tit. 29, §185h. For a probationary employment contract to be valid, it must strictly comply with the formal statutory requirements provided in Act No. 80. Therefore, this type of contract: (1) must be executed in writing, (2) must state the dates when the probationary period begins and ends, (3) must be executed before the employee performs any work for the employer, and (4) must not exceed 90 days. The contract may be extended up to an additional 90 days with the express authorization of the Puerto Rico Secretary of Labor and Human Resources when the nature of the work may so require. The Regulation of the Temporary Employment Contract, Act No. 6019 of September 23, 1999, provides, among other things, the requirements with which the employer must comply to request the extension. When employees are members of a labor union, the extension may be executed through a collective bargaining agreement or a written contract between the union and the employer, without the consent of the Secretary of Labor and Human Resources.
If the aforesaid requirements are not met, the probationary period will be null and void and the employee will be protected by Act No. 80. This statute excludes from its application those employees under a valid probationary employment contract.
If an employee continues to work for the employer after the expiration date of his or her probationary employment contract, the employment relationship becomes one of an indefinite term and the employee will be protected from unjust dismissal under Act No. 80. In any event, employees working under a probationary employment contract are protected by all other applicable employment laws, including, for example, those related to employment discrimination and retaliation.
Temporary employment for a fixed term or for the performance of a specific job is regulated by Article 11 of Act No. 80 of May 30, 1976, as amended, P.R. Laws Ann. tit. 29, §185k. There is no statutory limit as to the maximum duration of a contract for a fixed term. Nevertheless, a valid contract: (1) must be executed in writing; (2) must be signed by the employee during his or her first shift or, in the case of employees hired through temporary employment agencies, within 10 days of beginning the assignment; and (3) must set forth the purpose of the employee's hire. To comply with this last requirement, the contract should specify whether the temporary employee is being hired to temporarily replace another employee, to complete a specific job or project, or for any other specific activity of a short or fixed duration.
If the practice or circumstances of the hiring create an expectation of continuity in the employment, the relationship might be regarded as one of an indefinite term. Similarly, if a temporary employee continues to work for the employer after the expiration date of his or her temporary employment contract, the employment relationship becomes one of an indefinite term and the employee will be protected by Act No. 80. Furthermore, according to the opinion of the Supreme Court of Puerto Rico in the case of Whittenburg v. Iglesia Católica, 2011 TSPR 137 (2011), it is possible that a court may determine that an individual classified as a temporary employee was really a regular employee if he or she was hired to engage in the regular and usual work of the employer's business and the need to carry out that work either is indefinite or has such a prolonged duration that for practical purposes it becomes indefinite. This could happen when an employee classified as temporary is engaged in the same duties as regular employees; when a temporary employment contract is renewed automatically for prolonged periods of time; or when, at the end of the temporary assignment, the individual is replaced by another temporary employee to continue doing the same work.
In the case of employees hired through temporary employment agencies, Act No. 26 of July 22, 1992, P.R. Laws Ann. tit. 29, §§575-575e, defines the corresponding areas of responsibility of each company involved with respect to the rights of temporary employees.
An "independent contractor" can be defined as a person who, due to the nature of her function and the form in which she renders her services, turns out to be her own employer. The Puerto Rico Supreme Court has stated that because the employer-employee relationship and the principal-independent contractor relationship share common traits, there does not exist, generally, an unequivocal distinction between the two. S.L.G. Hernández-Beltrán v. TOLIC, 151 D.P.R. 754, 766 (2000); Fernández v. A.T.P.R., 104 D.P.R. 464, 465 (1975). The Puerto Rico Supreme Court has also stated that the determination that the parties give in a contract or agreement regarding the nature of their relationship is not decisive. S.L.G. Hernández-Beltrán v. TOLIC, supra. To make said determination, it will be necessary to examine the circumstances in which the parties operated, together with the following factors, among others, indicated by case law and reaffirmed in the landmark case of Whittenburg v. Iglesia Católica, 2011 TSPR 137 (2011):
The Puerto Rico Supreme Court has held that the final determination on whether or not someone is an independent contractor does not depend on a specific factor but on the totality of the circumstances present in the relationship between the individual and the company. Also, there are different interpretations and definitions for different purposes such as unemployment benefits, workers' compensation and income taxes, among other things. REGULAR WORK SHIFTPuerto Rico Act No. 379 of May 15, 1948, P.R. Laws Ann. tit. 29, §271 et seq., provides that the regular work shift for non-exempt employees is one of eight hours per day and a regular workweek is 40 hours. Any work performed in excess of these limits will be considered overtime work and must be compensated accordingly.OVERTIME Puerto Rico Act No. 379 of May 15, 1948, P.R. Laws Ann. tit. 29, §271 et seq., along with the federal Fair Labor Standards Act of 1938 (FLSA), govern the overtime requirements for non-exempt employees in Puerto Rico. The FLSA applies to every employer with an annual business volume in excess of $500,000. It also applies to employers that do not meet the stated annual volume but whose employees are engaged directly in interstate commerce or in the production of goods for interstate commerce. Under Act No. 379, employers covered by the FLSA are required to pay non-exempt employees an overtime rate of time and a half of the regular rate for all hours worked in excess of eight in any given period of 24 consecutive hours. A mandatory decree or wage order of the Puerto Rico Minimum Wage Board may provide for a higher daily overtime rate. However, this higher daily overtime rate is available only to those employees who were working for an employer before August 1, 1995, in an industry covered by a mandatory decree that provided a higher overtime rate for hours worked in excess of eight during the workday and who have remained employed uninterruptedly with that employer. Employers not covered by the FLSA are required to pay an overtime rate of two times the regular rate for any hours worked by an employee in excess of eight during the workday.To the extent that daily overtime is calculated over any given period of 24 consecutive hours (not based on a calendar day), it is important that non-exempt employees who work full time begin their daily shift and daily meal period at the same times every day.In addition, under Act No. 379, employers covered by the FLSA are required to pay non-exempt employees an overtime rate of time and a half of the regular rate for all hours worked in excess of 40 in a week. Employers not covered by the FLSA are required to pay an overtime rate of two times the regular rate for any hours worked by an employee in excess of 40 during the workweek. The workweek is a fixed and regularly recurring period of seven consecutive 24-hour periods that does not need to coincide with the calendar week. The beginning of the workweek, once established, may be changed only if the change is intended to be permanent or for an indefinite duration. It is noteworthy that on June 30, 2016, the President of the United States signed into law the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA. Section 404 of PROMESA excludes Puerto Rico from the U.S. Department of Labor's final rule regarding "white-collar" exempt employees (those in executive, administrative or professional positions). The exclusion will be in effect for at least two years. FLEXIBLE WORK SCHEDULEAct No. 83 of July 20, 1995, P.R. Laws Ann. tit. 29, §273a, provides the option of a flexible work schedule by mutual agreement between the employer and the employee. An employee who rejects a flexible work schedule will continue to be subject to the daily overtime norms. Under Act No. 83, an employer can allow an employee to adjust starting and quitting times for reasons of personal convenience without incurring the obligation to pay the overtime premium that would otherwise accrue when the employee advances the start of the workday from one day to the next or delays the start of the meal period, as explained in the preceding section. A flexible work schedule will be valid only under the following conditions: (1) the agreement must be voluntary; (2) the employee may start the workday up to three hours earlier or later than his or her regular starting time without incurring daily overtime, as long as no work is performed during a rest period of at least 12 consecutive hours between the end of one shift and the beginning of the next and the employee does not work more than eight hours during the workday; and (3) the employee's shift must be worked consecutively, to be interrupted only by the regular meal period. WEEKLY DAY OF RESTAct No. 289 of 1946, P.R. Laws Ann. tit. 29, §295, provides non-exempt employees with a day of rest for every six consecutive days of work. The day of rest is a calendar period of 24 consecutive hours during a calendar week and need not fall on any particular calendar day. Act No. 289 requires payment of work performed by a non-exempt employee on the day of rest at twice his or her regular rate of pay, regardless of the total number of hours that the employee worked in the preceding six days. Also, if an hour worked on the seventh day also constitutes weekly overtime, it is sufficient to pay that hour at double rate to comply with both penalties.MEAL PERIODAct No. 379 of May 15, 1948, P.R. Laws Ann. tit. 29, §283, requires an employer to grant all non-exempt employees a meal period commencing not before the end of the third hour of work and not later than before the beginning of the sixth hour of work. An employee should never be required to work more than five consecutive hours without pausing for a meal period. If an employee is required or permitted to work during his or her meal period, or if the period is enjoyed outside the time frame mentioned above, the employee will be entitled to payment at twice his or her regular rate. This penalty is independent of overtime requirements. A meal period must be for one hour, unless the employer and the employee mutually agree to reduce it. A reduction of the time of the meal period must be for the mutual benefit of the employer and the employee, and said reduction must be stipulated in writing. A reduced meal period cannot be for less than 30 minutes, except in the cases of nurses, security guards and croupiers, where it may be reduced to 20 minutes.Non-exempt employees are also entitled to a second meal period after five consecutive hours of work after the previous meal period. The time of this second meal period may also be reduced. Furthermore, if the employee works only two hours or less of daily overtime, the second meal period may be waived by the employee if it is for the mutual benefit of the employee and the employer and it is so stipulated in writing. CLOSING LAWThe Regulation of Operations of Commercial Establishments Act, as amended, commonly known as the Closing Law, regulates the opening of certain commercial establishments dedicated to retail sales. The law mentions many commercial establishments that are excluded from its coverage.The commercial establishments that have not been excluded by the Act are required to close to the public on the following days:
Also, these commercial establishments are required to close to the general public on Sundays from 5:00 a.m. to 11:00 a.m. The Act also requires that certain establishments pay non-exempt employees that work on Sunday a minimum compensation of $11.50 for every hour worked. ANNUAL (CHRISTMAS) BONUSAct No. 148 of June 30, 1969, as amended, P.R. Laws Ann. tit. 29, §501 et seq., also known as the Christmas Bonus Act, provides that every employer will be required to pay an annual bonus to each employee who worked 700 hours or more during the period of 12 months between October 1 of the preceding year and September 30 of the current year. Those employers that employ more than 15 employees will have to pay to the qualifying employees a bonus equivalent to 6% of the salary of each employee, up to a maximum of $10,000 (i.e., up to $600 of bonus per employee). Those employers that employ up to 15 employees will pay, instead, a bonus equivalent to 3% of the salary of each employee, also up to a maximum of $10,000 (i.e., up to $300 of bonus per employee). The bonus must be paid to each employee between December 1 and December 15 of each year, subject to a penalty should it be paid late. This date, however, can be modified by written agreement between employer and employee, in compliance with the applicable regulation. Likewise, the Act's dispositions will not apply in those instances when employees receive an annual bonus by virtue of a collective agreement. The total of the amounts to be paid by reason of said bonus should not exceed 15% of the net annual profit of the employer for the period from October 1 of the preceding year to September 30 of the current year. Should the total exceed that percentage, the employer may submit a request for an exemption to the Secretary of Labor and Human Resources. The request must include a general balance sheet and a profit and loss statement, duly certified by a certified public accountant, for the 12-month period from October 1 of the preceding year to September 30 of the current year. This statement must be submitted by no later than November 30 of the year to which the bonus corresponds. The Department of Labor and Human Resources has the authority to conduct an investigation on the financial situation of any employer that requests an exemption. MINIMUM WAGEThe Fair Labor Standards Act, 29 U.S.C.A. 201 et seq., (FLSA) currently establishes a minimum wage for non-exempt employees of $7.25 per hour. On February 12, 2014, the President of the United States signed Executive Order 13658, which provides for an increase in the minimum wage to the employees of federal contractors to $10.10 per hour for contracts that began as of January 1, 2015. Furthermore, for contracts that began as of January 1, 2016, the minimum wage of said employees shall be determined annually by the U.S. Secretary of Labor, based on the parameters set forth in the executive order. Locally, Act No. 180 of July 27, 1998, establishes that every employer not covered by the FLSA has to pay a minimum wage to non-exempt employees of at least 70% of the applicable federal minimum wage. Under the recent federal law known as PROMESA, the Governor of Puerto Rico, subject to the approval of the Financial Oversight and Management Board established by the statute, set a subminimum wage of $4.25 an hour for employees who are initially employed after the date of enactment of the Act and who are younger than 25.PAYMENT OF WAGESAct No. 17 of April 17, 1931, as amended, P.R. Laws Ann. tit. 29, §§171 et seq., establishes the requirements for the payment of wages to non-exempt employees.The payment of wages may be executed on a weekly basis, on a biweekly basis or every 15 days. If the employment ends during any given pay period, the employer is obligated to make the payment for the total number of hours worked by no later than the next official pay day.Pursuant to Act No. 17, the employer is allowed to make the payment of wages by check without the consent of the employees and without having to give them time off with pay to cash their checks. Wages can also be paid by electronic transfer of funds or by direct deposit in a bank account, including payments to a "payroll card" as defined by the statute, but only with the consent of the employees involved; however, although there is no case law on this matter, several Puerto Rico Department of Labor and Human Resources opinions suggest that these payment methods may be presented to new employees as a condition for employment. The employer shall bear the costs of the electronic transfer or direct deposit, if any, and shall submit to the employee a receipt of the funds paid or deposited. The employee has the option of having the voucher delivered through electronic means.If a check paid by the employer to an employee is returned for insufficient funds or because the employer has closed the bank account, the employee is entitled to an additional 100% of the amount as a penalty. In addition, if the employer does not reimburse the employee for the amount of the check within 10 days after the official pay day, the employer will commit a criminal offense that can carry up to five days in prison for each dollar not paid. The issuance of each check constitutes a separate criminal offense. If a check is returned for insufficient funds or because the employer has closed the bank account, an employee may file a complaint with the Secretary of Labor and Human Resources requesting that the employer be required to post a bond approved by the Commissioner of Insurance to guarantee the payment of wages to the employee. If an employee selects the electronic transfer or direct deposit method, the employer is required to provide the employee with information regarding electronic fraud and the degree of responsibility of the employee, the employer and the bank in such cases. Employees who are executives, administrators and professionals, as those terms are defined by Regulation No. 13 of the Minimum Wage Board of Puerto Rico, are excluded from coverage. SALARY DEDUCTIONSAct No. 17 of April 17, 1931, as amended, P.R. Laws Ann. tit. 29, §175 et seq., prohibits deductions from non-exempt employees' salaries unless they are covered by one or more of the exceptions summarized below or are otherwise authorized by law:
All of the above deductions, except the one for salary advances, must be previously authorized in writing by the employee before the deduction is made. Other deductions that are required or authorized by law include those for normal payroll taxes (income taxes, Social Security and Medicare), child support and garnishment of wages, among others.Failure to comply with this statute could lead to significant liability for the employer, such as the employee claiming reimbursement of the amounts illegally deducted. GARNISHMENT OF WAGESArticle 249, section 7, of the Code of Civil Judgment of 1904, as amended on multiple occasions, P.R. Laws Ann. tit. 32, §1130(7), establishes an exemption for the garnishment of wages in the execution of civil judgments. Except for garnishments to collect taxes, child support payments and payments due to bankruptcy trustees under Puerto Rico and federal law, only 25% of any unpaid earned income may be garnished pursuant to a court order.A worker's unpaid earned income in possession of the government of Puerto Rico, its municipalities, agencies or public corporations may not be garnished except as otherwise provided by special legislation such as Puerto Rico's Child Support Act (Act No. 5 of December 30, 1986, as amended, P.R. Laws Ann. tit. 8, §§501 et seq.). This legislation also adopted the maximum garnishment limits set in Section 303(b) of the Federal Consumer Credit Protection Act, 15 USCA §1673(b), which vary from 50% to 65% depending on the particular facts of each case. CHILD SUPPORT ADMINISTRATIONAct No. 5 created the Child Support Administration (ASUME, by its acronym in Spanish). ASUME is an agency established under Title IV-D of the Federal Social Security Act that is in charge of enforcing child support obligations and the Commonwealth of Puerto Rico's public policy regarding child support and the Support of the Elderly Program (PROSPERA, by its acronym in Spanish). Among the services that ASUME provides are locating fathers and mothers whose whereabouts are unknown and whose attendance is necessary to conduct the child support proceedings; establishing paternity and child support; and establishing, modifying, and revising child support garnishment orders, among others. A court or ASUME may require employers to withhold or deduct from an employee's income the amount indicated in the child support garnishment order to satisfy the payment of support and of any debt for due and unpaid support. Employers shall begin the withholding no later than seven business days from the first date that the amount should have been paid or credited to the employee after receiving the notice of the court or ASUME. Subsequently, employers shall remit to ASUME the amount withheld for each pay period within seven business days from the date the payment is made to the employee. The amount to be withheld from the employee's salary or wages for the payment of the current child support payment of each month, for the payment in arrears, if any, and to defray the cost of the withholding order by the employer shall not exceed the limits established by section 303(b) of the Consumer Credit Protection Act, 15 USCA §1673(b), which vary from 50% to 65% depending on the particular facts of each case.Employers shall comply with the child support garnishment orders in child support cases. Said orders shall be effective at the time of their notification and shall continue in effect as long as the duty to provide support exists, or until said order is rendered ineffective, suspended, modified or revoked by the court or ASUME. If an employer fails to withhold or remit the income withheld pursuant to a withholding order or fails to comply with any of the duties imposed by ASUME, at the request of the creditor, the court or ASUME, after due notice to the employer and notice for the holding of a hearing, shall enter judgment for the total amount the employer failed to withhold and remit, plus fines, expenses and interest that may be imposed, and shall order the collection of the same on the property of the employer. In the event that an employee terminates his or her employment, the employer shall notify the court or ASUME of the employee's last known address and the name and address of the new employer, if known, within 30 days following the date of the employee's termination. The employer must also procure an account statement certificate from ASUME and withhold from the employee's liquidation any outstanding amounts for child support or repayment plan in excess of a month. STATE REGISTER OF NEW EMPLOYEESIn 1996, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) was enacted to require the states that receive federal funds to administer their child support programs to adopt and amend their local statutes to conform the same to the Uniform Interstate Family Support Act. Puerto Rico enacted the Uniform Interstate Family Support Act (LIUA, by its acronym in Spanish), Act No. 80 of December 20, 1997, as amended, P.R. Laws Ann. tit. 8, §§541 et seq. This law granted the Child Support Administration (ASUME, by its acronym in Spanish) the necessary duties and powers to establish a State Register of New Employees (RENE, by its acronym in Spanish), as required by the PRWORA.The RENE contains current information about new employees who are employed or re-employed in a public or private establishment. Its purpose is to assist ASUME in locating people who have abandoned their children or who do not comply with their child support duties. Employers that employ or re-employ a person on a full-time, part-time or temporary basis shall furnish the following information to ASUME: the name, address and Social Security number of the employee; and the name, address and federal employer identification number or, if a federal employer identification number is not required, the employer identification number of the Government of Puerto Rico. Employers must provide this information for every person they employ, regardless of whether the employee has child support obligations. Employers shall notify by mail or by any electronic means of the information required in the RENE on the W-4 form furnished by the U.S. Internal Revenue Service or on the W-5 form furnished by ASUME. Effective March 2009, employers may report their new employees through the Commonwealth of Puerto Rico Department of Labor and Human Resources' website at www.dtrh.gobierno.pr. Employers may also print the corresponding form and review their employees' hiring history using said website. EMPLOYMENT OF MINORSAct No. 230 of May 12, 1942, P.R. Laws Ann. tit. 29, §§431 et seq., establishes the requirements and obligations that employers have to follow to employ minors. The law specifies various occupations in which a minor may not be employed. Also, every employer must have a special permit or an employment certification issued by the Puerto Rico Department of Labor and Human Resources for every minor it employs between the ages of 14 and 18. Furthermore, employers must have in a visible area of the work area a list of the minors it has employed, their work schedules, the maximum hours the minors can work in a day and the schedule for meal periods. Act No. 230 establishes, among other things, that: (1) no minor between the ages of 14 and 18 can work more than six consecutive days in a week, more than 40 hours in a week or more than eight hours in a day; (2) if a minor works and attends school, the maximum combined hours of work and school attendance will be eight; (3) minors between the ages of 14 and 16 can work between 8:00 a.m. and 6:00 p.m.; and (4) minors between the ages of 16 and 18 can work between 6:00 a.m. and 10:00 p.m.Every minor between the ages of 14 and 18 will have the right to a meal period of one hour after they have worked four consecutive hours. If the minor enjoys a meal period of less than one hour, it will be understood that the consecutive work period was not interrupted. Employers that violate any of the provisions of Act No. 230 will be subject to penalties, which may include fines between $25 and $1,000 and/or imprisonment for a term of not more than 90 days.MIGRANT WORKERSThe local statute that regulates the hiring of Puerto Rican workers to work outside of Puerto Rico, commonly known as the Migrant Workers' Act, prohibits the recruitment and/or transportation of workers without the corresponding authorization of the Secretary of Labor and Human Resources of Puerto Rico or the Secretary's authorized representative.According to the statute, in general terms, those who wish to contract the services of migrant workers will have to formalize a written contract with the persons to be recruited, including certain requirements established by the corresponding regulation.Any violation of the Act's provisions constitutes a misdemeanor, in addition to being bound to civil responsibility subject to payment of damages. TERMINATION OF EMPLOYMENTAct No. 80 of May 30, 1976, as amended, P.R. Laws Ann. tit. 29, §§185a-185m, requires that employers have "just cause" to terminate the employment of an employee hired for an indefinite period of time. If it is determined that there is no just cause, the discharged employee is entitled to an indemnification under Act No. 80 known as the mesada. This payment provides an exclusive remedy for an employee claiming unjust dismissal, and an employee can present such a claim within three years of the effective discharge date. This statute, however, does not bar an employee from presenting other claims against his or her employer related to a termination, such as claims of discrimination or retaliation.Act No. 80 provides a formula for computing the amount an employer must pay when an employee is discharged without just cause, based on the highest salary earned by the employee in the last three years and the amount of years he or she worked for the employer. An employee discharged without just cause is entitled under Act No. 80 to receive the equivalent of two months' salary plus one week of pay for each full year of service, if he or she has worked for the employer for up to five years. If the employee has worked for the employer for more than five and up to 15 years, he or she is entitled to receive three months of salary plus two weeks of pay for each year of service. Employees who have worked for an employer for more than 15 years are entitled to receive six months of salary plus three weeks of pay for every year of service. Although Act No. 80 does not provide a definition nor a conclusive list of what constitutes just cause for dismissal, it does specify that just cause exists when the following occurs:
Act No. 80 also clearly states that any capricious discharge unrelated to maintaining proper and normal business operations is not considered to have occurred with just cause. By the same token, this law establishes that firing an employee for making statements related to his or her employer's business before any administrative, judicial or legislative forum in Puerto Rico does not constitute a discharge with just cause, provided that such statements are not defamatory in nature and do not result in the disclosure of any privileged information. In the latter case, the employee would be entitled to reinstatement with back pay.
Act No. 80 contains other important requirements for how employers can undertake terminations in the specific context of closings, reorganizations or technological changes. In these cases, a termination is considered to have occurred with just cause when it is carried out on the basis of retaining in the impacted classifications the employees with the highest seniority in employment. By way of an exception, an employer may retain a less senior employee if it can show that the employee was clearly more efficient and capable. If within six months of such a termination the employer has an opening for a position requiring the same job functions previously performed by employees who were terminated, Act No. 80 requires that the employer grant preference to such former employees. Generally, the employer must also rehire such former employees based on seniority. When a clear difference of worker efficiency or capacity exists between former employees, the employer will be allowed to rehire a less senior employee.
WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT OF 1988
The Worker Adjustment and Retraining Notification (WARN) Act of 1988, 29 U.S.C.A. §§2101 et seq., establishes that, with certain exceptions, an employer with 100 or more employees, excluding part-time employees, or with 100 or more employees who in the aggregate work at least 4,000 hours per week must provide a written notice at least 60 days in advance of a plant closing or mass layoff to affected workers or their representatives. The notice must also be submitted to the Council of Occupational Development and Resources and to the mayor of the municipality where the plant is located. It must also be given to the labor union, if any.
The WARN Act defines a plant closing as "... the permanent or temporary shutdown of a single site of employment, or one (1) or more facilities or operating units within a single site of employment, if the shutdown results in employment loss at the single site of employment, during any 30-day period for fifty (50) or more employees excluding any part-time employees."
Further, a "mass layoff" under the Act is defined as a reduction in force that: (1) is not the result of a plant closing and (2) results in an employment loss at the single site of employment during any 30-day period for:
The WARN Act defines the term "part-time employee" as: (1) an employee who is employed for an average of fewer than 20 hours per week or (2) an employee who has been employed for fewer than six of the 12 months preceding the date on which notice is required. Although the full 60-day notice requirement under the WARN Act is mandatory, there are various exceptions to this rule, since there are particular circumstances in which providing advance notice is not possible or desirable. As such, there are three situations under the WARN Act in which an employer can give less than 60 days' advance notice. Notwithstanding, notice must be provided as soon as practicable even when these exceptions apply and must explain why a reduced notice is being given. The exceptions are as follows:
There are no requirements under Puerto Rico laws with respect to notification of plant closing or mass layoffs.UNEMPLOYMENT COMPENSATIONThe Puerto Rico Employment Security Act, Act No. 74 of June 21, 1956, as amended, P.R. Laws Ann. tit. 29, §§701 et seq., provides for unemployment benefits compensation. It requires the payment by the employer of a payroll tax, including wages paid for services rendered outside of Puerto Rico but within the U.S., Virgin Islands and Canada if: (1) the employees are not covered by the unemployment compensation statute of any other state, the Virgin Islands or Canada and (2) the services are controlled or directed from Puerto Rico.Employers in Puerto Rico must obtain coverage on the effective date of the commencement of operations. For such purpose, they must file the Form PR-SD-1 (Report to Determine Employer Status) with the Employment Security Bureau of the Puerto Rico Department of Labor and Human Resources. There is experience rating for unemployment compensation in Puerto Rico. Unemployment compensation rates for employers in Puerto Rico vary between 1.7% and 5.4%, depending on the company's experience rate. New companies in Puerto Rico will begin paying unemployment compensation at a rate of 3.3% plus an additional 1% for a special unemployment benefits fund. Only eligible employees are entitled to unemployment benefits. COBRA The federal statute known as the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) affords to employees, their spouses and their dependent children ("qualified beneficiaries") participating in an employer's health plan the right to continue coverage thereunder when certain events occur which cause the loss of their coverage.Generally, COBRA applies to all private-sector group health plans if the employer employs at least 20 employees during the previous calendar year. The continuation of coverage can last up to 18 months when the employee's termination of employment or reduction of hours occurs, or up to 36 months when the employee's divorce or death occurs or when a child loses his or her dependent status under the plan. The 18 months' continuation of coverage may be extended for up to 11 months if one of the qualified beneficiaries becomes disabled. Health plans can require qualified beneficiaries to pay 100% of the cost of COBRA coverage, plus up to a 2% of said cost for administrative fees or up to 50% during the 11 months of disability extension.COBRA requires that employers provide certain notifications to employees and their families enrolled in the health plan. Among these is the Initial COBRA Notice, which must be provided to the employee and his or her spouse within the first 90 days of coverage. When the employee, his or her spouse, and/or dependent children lose coverage, the employer also has to provide to them a Qualifying Event Notice, along with an Election Form. HIPAAThe Health Insurance Portability and Accountability Act (HIPAA) limits the ability of an employer health plan to exclude coverage for the pre-existing conditions of their new employees and dependent families. In addition, HIPAA provides additional opportunities to enroll in a group health plan if an individual loses other coverage or experiences certain life events. Employees and dependents who decline coverage due to other health coverage and then lose eligibility or lose employer contributions have special enrollment rights. Also, employees, spouses and new dependents are permitted special enrollment because of marriage, birth, adoption or placement for adoption. The employee must request enrollment within 30 days of the loss of coverage or a life event triggering the special enrollment. The plan must allow enrollment without requiring that the individual wait until the next annual enrollment period. The statute also prohibits health plans from discriminating against employees and their dependent family members based on any health factors they may have, including prior medical conditions, previous claims experience and genetic information.EMPLOYMENT DISCRIMINATIONAct No. 100 of June 30, 1959, as amended, P.R. Laws Ann. tit. 29, §§146 et seq., prohibits discrimination in the workplace by reason of age, race, color, sex, national origin, social origin or condition, military or veteran status, sexual orientation, gender identity, political or religious ideas, or marriage, or for being a victim or perceived victim of domestic violence, sexual aggression or stalking. Act No. 100 prohibits employers from taking adverse employment actions, such as the denial of employment opportunities or promotion, suspension, dismissal, or affecting compensation or other terms and conditions of employment when the reason for so doing is because the individual belongs to one of the categories or groups protected by the statute. Act No. 100, as amended, also requires employers to provide reasonable accommodation to employees who are victims of domestic violence, stalking and/or sexual aggression.Act No. 100 provides that a rebuttable presumption of discrimination against employers will arise when an employer dismisses an employee who belongs to one of the protected categories without just cause. The employer may rebut the presumption of discrimination by establishing that the adverse employment action was based on legitimate business reasons and not discriminatory.Act No. 44 of July 2, 1985, P.R. Laws Ann. tit. 1, §§501 et seq., which is very similar to the Americans with Disabilities Act of 1990 (ADA), is a special statute that prohibits discrimination against persons with disabilities who can perform the essential duties of their position, with or without reasonable accommodation. The ADA is further discussed in the next section. Also, Act No. 107 of September 9, 2013, prohibits discrimination based on employees' genetic information.Another special statute aimed at eradicating workplace sex discrimination in Puerto Rico is the Working Mothers Act, Act No. 3 of March 13, 1942, P.R. Laws Ann. tit. 29, §§467-474, which prohibits the dismissal, suspension, reduction in salary or any type of discrimination against working mothers and expressly prohibits the dismissal of a pregnant employee as a result of her diminished productivity or quality during pregnancy. Similarly, Act No. 69 of July 6, 1985, P.R. Laws Ann. tit. 29, §§1321-1341, provides several prohibitions aimed at discouraging and penalizing sex discrimination in the workplace. Finally, there is a special statute regarding sexual harassment, which is discussed in a section under that heading. Discrimination in the workplace is also prohibited by Title VII of the federal Civil Rights Act of 1964, 42 USC §§2000e et seq. (Title VII). This statute prohibits employment discrimination because of sex, race, color, national origin or religion. Furthermore, on July 21, 2014, the President of the United States issued an executive order that added the categories of sexual orientation and gender identity to the list of those protected from discrimination in the employment. This prohibition, however, applies only to the federal government and to the covered contractors and subcontractors that enter into a contract of at least $10,000 as of July 21, 2014. Sex discrimination is further prohibited by the Equal Pay Act of 1993, 29 U.S.C. §206 (d), which establishes that every employee, regardless of his or her gender, who performs equal work must receive equal pay. The Equal Pay Act expressly prohibits any difference in salary that is gender-based.The Age Discrimination in Employment Act, 29 U.S.C. §§621 et seq. (ADEA), is another federal statute that prohibits employment discrimination because of age. It protects any employee of 40 years of age or more who has been dismissed, subjected to adverse employment actions or otherwise discriminated against on the basis of age. The Antidiscrimination Unit of the Department of Labor and Human Resources (the ADU) is charged with the administration of Act No. 100 and handles discrimination charges under local law. The ADU also investigates discrimination charges under Title VII, the ADA and the ADEA (except retaliation claims) pursuant to an agreement with the Equal Employment Opportunity Commission (EEOC). In turn, the EEOC handles discrimination charges under the federal statutes mentioned above, namely Title VII, the ADA and the ADEA. AMERICANS WITH DISABILITIES ACTThe Americans with Disabilities Act of 1990 (ADA), 29 U.S.C. §§706 et seq., applies to all employers in interstate commerce who employ 15 or more employees. The ADA prohibits discrimination in the workplace against qualified individuals with a disability, and it requires the employer to provide reasonable accommodations in employment to qualified individuals with disabilities who are qualified to perform the essential duties of their job, with or without reasonable accommodation. The employer's failure to provide reasonable accommodation is considered a form of discrimination under the ADA.The ADA defines an individual with a disability as one who has a physical and/or mental condition that substantially limits his or her ability to perform at least one major life activity, when compared to the average individual. Included in the definition: an individual who has a record of a disability and an individual who is considered by the employer to have disability, whether or not he or she does. As a result, employers' adverse actions that are based on stereotypes or unfounded ideas regarding persons with disabilities is also prohibited.The ADA and its regulations impose upon both the employer and the employee the duty to engage in an interactive process to define the reasonable accommodations that are necessary. In each case, the reasonable accommodation to be provided will depend on the limitations that the disabling condition causes to the employee in his or her performance of the essential job functions and on the nature of the employer's business and its operations. An ADA-covered employer is not required to provide a reasonable accommodation to a disabled individual if it can demonstrate that the accommodation is unduly burdensome to or disruptive of company operations or that the individual poses a direct safety threat to himself and others that cannot be minimized or eliminated with reasonable accommodation.The ADA also prohibits discrimination against persons who are associated with or related to an individual with a disability. The ADA was amended in 2009 to clarify that the determination of who is an individual with a disability must be liberal, so as to extend the protections against discrimination and the right to reasonable accommodation in employment to an increased number of individuals that have physical and/or mental conditions. These amendments also establish that, as of January 1, 2010, it will not be relevant if an individual mitigates or uses corrective measures such as prosthesis, medications and surgery (with the exception of eyeglasses) to ameliorate his or her impairment or whether these measures allow the individual to adequately perform major life activities. The determination of who is an individual with a disability under the ADA will be made without regard to his or her mitigated state or corrected ailment or remission status. Neither will it be required to analyze the extent, duration or level of severity of an individual's impairment nor its effects on his or her ability to engage in major life activities. Wherefore, as of January 1, 2010, the U.S. Supreme Court opinions that had ruled to the contrary, by applying criteria of restrictive interpretation regarding who is an individual with a disability under the ADA, have been superseded.RETALIATIONAct No. 115 of December 20, 1990, P.R. Laws Ann. tit. 29, §§194-194b, prohibits employers from retaliating against an employee by reason of said employee's participation in an activity protected by the statute. Under Act No. 115, an employer may not dismiss, threaten or discriminate against an employee with respect to the terms and conditions of his or her employment if the employee provides information concerning the employer's business in various forums, as long as the employee's statements are not defamatory and do not constitute disclosure of privileged information. This is the case if the employee offers or attempts to offer, verbally or in writing, any testimony, statement or information concerning the employer's business: (1) before any legislative, administrative or judicial forum in Puerto Rico; (2) in the internal procedures established by the employer; or (3) to any employee or company representative in a position of authority. By way of an example, it has been held that the filing of a workers' compensation claim for benefits amounts to protected conduct under Act No. 115. An employer that dismisses or in any other way affects an employee's terms and conditions of employment as a result of the employee's expressions and/or participation before the aforementioned forums will be responsible for the damages suffered by the employee, reinstatement and double damages.Likewise, Act No. 80 of May 30, 1976, P.R. Laws Ann. tit. 29, §§185a-185m, Puerto Rico's general statute against unjust dismissal, prohibits the dismissal of an employee as a result of his or her participation as a witness or statements made concerning his or her employer's business in an investigation before any administrative, judicial or legislative forum in Puerto Rico, provided said statements are not defamatory and do not constitute disclosure of privileged information. P.R. Laws Ann. tit. 29, §185b.Act No. 69 of July 6, 1985, P.R. Laws Ann. tit. 29, §1340, which prohibits sex-based discrimination, and Act No. 17 of April 22, 1988, P.R. Laws Ann. tit. 29, §155, which regulates sexual harassment in the workplace, also protect employees from retaliation for the filing of internal complaints, opposing the employer's discriminatory practices and/or participating as a witness. Act No. 379 of May 15, 1948, P.R. Laws Ann. tit. 29, §282, which regulates hours of work and overtime pay, contains an anti-retaliation provision that protects employees who refuse to accept a flexible schedule agreement under said statute. There are various federal statutes that also prohibit retaliation against employees for testifying or participating in investigations concerning their employer or for opposing and/or denouncing their employer's illegal or discriminatory practices. These include Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA) and the Fair Labor Standards Act (FLSA), among others. SEXUAL HARASSMENTAct No. 17 of April 22, 1988, P.R. Laws Ann. tit. 29, §§155 et seq., prohibits sexual harassment at work. Sexual harassment consists of unwelcome sexual advances, requests for sexual favors or any conduct of a sexual nature when: (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment; (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual; or (3) such conduct has the purpose or effect of substantially interfering with an individual's work performance or creating an intimidating, hostile or offensive working environment. Where employment opportunities or benefits have been granted to one employee because of submission to sexual advances, other employees not so favored may have a cause of action for sexual harassment.Employers may be liable for an act of sexual harassment by a supervisor or agent, by a non-supervisory employee, or by non-employees such as visitors and contractors directed at its employees in the workplace. Act. No 17 also protects whistleblowers, witnesses and claimants from retaliation.Employers have a duty to keep the workplace free from sexual harassment and intimidation and must clearly communicate to employees and supervisors their policy against sexual harassment. To comply with this obligation, employers must take necessary measures to prevent, discourage and avoid sexual harassment. Every claim of sexual harassment must be investigated in a timely manner, and the employer must take any necessary corrective measures.Sexual harassment is also prohibited by Title VII of the Civil Rights Act of 1964. PROTOCOL TO HANDLE DOMESTIC VIOLENCE IN THE WORKPLACEAct No. 217 of September 29, 2006, requires employers in Puerto Rico to establish, promulgate and implement a protocol for the management of domestic violence when a female or male employee is the victim of violence in his or her home or workplace. The protocol must include a statement of the public policy, the legal basis and applicability, the employees' responsibility, and the procedures and uniform measures to be followed in managing the situation of domestic violence, such as how to conduct the investigation, the reasonable accommodation for the victim of domestic violence, confidentiality measures, and the guidelines to be followed by supervisors and employees.The Office of the Advocate for Women will offer technical counseling for developing and implementing the protocol. The Puerto Rico Department of Labor and Human Resources will monitor full compliance with the protocol, as to both the existence of the document and the training of employees.Act No. 23 of May 29, 2013, extended the protection of Act No. 54 to same-sex couples, consensual couples and immigrants without regard to their migratory status. Act No. 54 of August 15, 1989, deals with the prevention of and intervention with domestic violence. Employers should revise and modify their protocols and policies to comply with Act No. 23. PROTOCOL REGARDING DISCRIMINATION BASED ON SEXUAL ORIENTATION AND GENDER IDENTITYAct No. 22 of May 29, 2013, prohibits discrimination in employment based on sexual orientation and gender identity. Article 18 of the statute compels the Oficina de Capacitación y Asesoramiento en Asuntos Laborales y de Administración de Recursos Humanos (OCALARH) and the local Department of Labor and Human Resources to draft a protocol for compliance, education and training related to Act No. 22. The protocol covers matters such as the obligation of the employer to publicize the scope of Act No. 22 and related statutes; the confidentiality of the information regarding employees' sexual orientation and gender identity; the obligation to provide a workplace free from harassment and hostile environment related to the sexual orientation or gender identity of employees, for which the protocol includes specific examples of illegal conduct; and the adoption (or adaptation) of an internal procedure to handle claims of discrimination because of sexual orientation or gender identity. Two aspects of the protocol are particularly posing challenges in the workplace. The protocol identifies as evidence of illegal harassment and hostile environment the denial of access to restrooms identified by gender to employees who identify with that gender. Also, the protocol identifies as evidence of illegal harassment requiring a person to dress in a manner that is inconsistent with the gender with which that person identifies or that precludes the person from expressing his or her gender identity. VACATION AND SICK LEAVEStatutory requirements regarding the accrual and enjoyment of vacation and sick leave for non-exempt employees and outside salespersons in Puerto Rico are established in Act No. 180 of July 27, 1998, P.R. Law Ann. tit. 29, §250d. However, in Puerto Rico there are industries specifically covered by mandatory decrees issued by the Puerto Rico Department of Labor and Human Resources that must offer current employees hired prior to August 1, 1995, the vacation and sick-leave benefits provided by the applicable decree instead of those provided by Act No. 180, irrespective of the fact that these are higher or lower benefits. Employees in the categories of executives, administrators and professionals, as those terms are defined by Regulation No. 13 of the Minimum Wage Board of Puerto Rico, are excluded from Act No. 180, as well as the mandatory decrees' coverage. Accrual of vacation under Act No. 180 is at the rate of one and one-quarter day per month, for a total of 15 days per year, provided that the employee works at least 115 hours during the month in which the accrual takes place. Accrual of sick leave under Act No. 180 is at the rate of one day per month, for a total of 12 days per year, provided that the employee works at least 115 hours during the month in which the accrual takes place. The use of vacation and sick time will be considered time actually worked for purposes of accrual of these benefits. Vacation and sick-leave benefits are to be accrued on the basis of the regular workday during the months in which the benefits were accrued. In the case of employees whose daily work schedules vary, the regular workday will be determined by dividing the total regular hours worked during the month by the total amount of days worked. In the case of employees whose work schedules cannot be determined, the regular workday will be computed on the basis of an eight-hour workday. Sick leave will be accrued from the start of an employee's probationary period, if any is established as a condition of employment. Vacation benefits are not accrued during the probationary employment period; however, once an employee has passed the probationary period, he or she will accumulate vacation leave retroactively to the first day of employment. Vacation time off and sick leave will be used and paid on the basis of a regular workday at the time when the benefit is used or paid. To that effect, the employer may take into consideration a period of no more than two months prior to the use or the payment of the benefit.Vacation and sick-leave pay will be equivalent to at least the regular hourly rate earned by the employee during the month in which said leave was accrued, except in the case of employees whose salary is based on non-discretionary commissions or other incentives. In those instances, the employer may calculate the regular hourly salary by dividing the total commissions or incentives earned during the year by 52 weeks.An employee is not entitled to enjoy vacation time until it has been accrued for an entire year. Under statutory provisions, vacation time should be granted annually in such a way that it does not interrupt the normal operations of the employer, to which end the employer will establish the vacation schedule. In addition, vacation time should be enjoyed consecutively. However, by mutual agreement between the employer and the employee, vacation leave may be fractioned, as long as the employee enjoys at least five consecutive working days of vacation leave during the year. In addition, vacation time may be accrued up to two years by mutual agreement between the employer and the employee. To that effect, an employer that fails to provide vacation leave to an employee after he or she has accrued the same in excess of two years must grant the employee vacation leave for the total number of days accrued and pay the employee twice the amount for the vacation accrued in excess of two years. Also, at the written request of the employee, an employer may allow that vacation time include those non-working days within the period in which the employee will enjoy his or her vacation and/or non-working days immediately before or after said vacation period. Likewise, at the written request of the employee, an employer may partially "liquidate" or pay off the vacation leave accrued by the employee in excess of 10 days.When an employee's employment is terminated for whatever reason, the employer must pay the employee the total vacation leave he or she has accrued, even if it involves less than one year's worth of accrual of the benefit. Regarding this liquidation, please also refer to the discussion under the section titled "CHILD SUPPORT ADMINISTRATION," above.With respect to sick leave, except in cases of acts of force majeure, employees are required to notify the employer about an illness that prevents them from showing up to work as soon as it is foreseeable and not later than the same day of his or her absence. The enjoyment of sick leave cannot be used as an excuse by the employee for lack of compliance with rules of conduct validly established by the employer, such as adhering to attendance policies, providing a medical certificate if the absence exceeds two working days and providing periodic reports about the continuation of the illness. Sick time that is not taken by the employee during the year will remain accrued for successive years up to a maximum of 15 days. In case of a violation of Act No. 180 by the employer, the employee will be entitled to the salaries owed by the employer and a statutory double penalty, plus compensatory damages. MATERNITY LEAVEAct No. 3 of March 13, 1942, P.R. Laws Ann. tit. 29, §§467-74, provides paid maternity leave for a pregnant employee for the birth of a child. Under Act No. 3, a pregnant employee is generally entitled to eight weeks of maternity leave. The employee must present a medical certificate indicating that she is pregnant and the estimated date of birth. The leave is made up of four weeks of prenatal leave and four weeks of postnatal leave. However, an employee may remain at work up to one week prior to the estimated date of birth, provided she presents a medical certificate that authorizes her to work up to that time. An employee may also return to work as early as two weeks after giving birth, if she presents a medical certificate from her doctor certifying that she is able to return to work. If the date of birth is delayed, the employee may continue on prenatal leave until the birth of the child without affecting the postnatal leave. Also, if postnatal complications arise, maternity leave may be extended up to an additional 12 weeks of unpaid leave.Act No. 3 also protects pregnant employees from discrimination and dismissal under certain circumstances. Act No. 3 expressly provides that an employee may not be dismissed due to diminished productivity or a reduction in the quality of work insofar as these reasons will not be considered just cause for termination. Act No. 3 also grants pregnant employees reinstatement rights. Therefore, unless the employee's job has been eliminated for just cause, the employee must be reinstated in the same position that she occupied prior to commencing her maternity leave. If an employer is found liable for discriminating against an employee due to pregnancy, it will be responsible for double compensatory damages. The employer may also be found guilty of a misdemeanor. MATERNITY LEAVE FOR ADOPTIONAct No. 3 of March 13, 1942, P.R. Laws Ann. tit. 29, §§467-474, also provides maternity leave for adopting mothers of pre-school minors. Under such circumstances, an adopting mother is entitled to the same maternity leave benefits as a mother who gives birth. To enjoy maternity leave, the adopting mother must give her employer a 30-day notice of her intention to adopt a child, use maternity leave and return to work. Also, the adopting mother must submit evidence crediting the adoption procedures issued by the adequate entity. Adoption leave will begin on the date the minor joins the family nucleus. The adopting mother may choose to return to work at any time, waiving her right to the unused part of the leave.LEAVE FOR BREASTFEEDING OR TO EXPRESS MILKAct No. 427 of December 16, 2000, P.R. Laws Ann. tit. 29, §§478 et seq., provides working mothers with leave for breastfeeding or to express milk. The employer has to designate for this purpose an adequate area that must comply with reasonable privacy, accessibility and sanitary conditions. A woman who returns to work after maternity leave has a right to breastfeed her baby or express milk for one hour each full working day. This hour may be divided into two 30-minute breaks or three 20-minute breaks. Businesses covered by the Small Business Administration need only provide breastfeeding mothers a period of 30 minutes per working day, which may be divided into two periods of 15 minutes each. Breastfeeding leave shall be available for a maximum duration of 12 months from the date the employee has returned to work after her maternity leave. To enjoy breastfeeding leave, the employee must present a medical certificate during the infant's fourth and eighth month of age that certifies that the working mother is breastfeeding her baby.WORKERS' COMPENSATIONThe Puerto Rico Workers' Accident Compensation Act, Act No. 45 of April 18, 1935, as amended, P.R. Laws Ann. tit. 11, §§1 et seq., requires public and private employers in Puerto Rico to insure their employees against work-related accidents. Act No. 45 also requires those employers hiring independent contractors to insure the workers hired, unless the contractor is both an independent contractor and already insured. The principal who benefits from the services of the contractor's employees is known as the "statutory employer" of those employees.Absent a lapse in coverage, and with few exceptions (e.g., criminal acts, intentional torts), employers are immune from suits arising from the work-related accidents or illnesses of their employees. Statutory employers are also immune from suits. This means all medical treatment, disability payments and administrative expenses involved in treating or compensating the injured or ill worker are paid for by the insurer.The Puerto Rico State Insurance Fund Corporation (SIFC) is the sole, monopolistic workers' compensation insurance provider from which all workers' compensation coverage must be purchased in Puerto Rico. Works of limited duration (e.g., construction projects) are typically insured through temporary policies. Premiums for temporary policies are based on the type of work to be done and the cost of such work, pursuant to the Regulations to Determine the Percentages of Labor in Works Subject to Temporary Policies. Conversely, premiums for ongoing, so-called permanent policies are calculated as a percentage of every $100 of payroll, based on the type of work and industry. For these policies, insurance rates are published in the SIFC's Manual of Job and Industry Classifications and Types of Insurance and are periodically revised in hearings open to public comment. On or before every July 20, employers with permanent policies must report their actual payroll for the policy year that ended June 30 and provide an estimate of their payroll for the following year in the yearly payroll statement form. The policy year runs from July 1 of the prior year to June 30 of the current year. Employers with permanent policies may pay the premium calculated on their anticipated payroll or submit 50% of the prior's year premium with the payroll statement. Although payment at this stage is not due, failure to timely file a payroll statement will result in a lapse in coverage.The SIFC will subsequently send an invoice with the final calculation of the premium payment due, typically between September and October of the year in course. The final premium amount due will be based on the difference between what was reported as an anticipated payroll on July 20 of the prior year and what was reported as the final payroll on July 20 of the current year, minus whatever premium payment, if any, was submitted with the prior year's payroll statement.The final balance must be paid on the due date stated on the notice of premium payment due. Failure to pay this amount by the date specified will result in a lapse in coverage. Premium payments sent by certified mail are considered made on the date of the postmark, provided the postmarked receipt is legible. Otherwise, payments are considered made on the date the payment is received by the SIFC. If an employee suffers a work-related accident or illness during a lapse in coverage, the employer is liable to the SIFC for the cost of all medical treatment, disability payments and administrative expenses incurred by the SIFC in providing treatment to the injured worker. Such lapses may also expose employers to tort suits brought by the employee. Every work-related accident must be reported to the SIFC within five days. Employees determined by the SIFC to have suffered a work-related accident or illness may be ordered a leave of absence by the agency. In such cases, the worker is entitled to have his or her employment protected and to be reinstated upon conclusion of the leave, provided he or she is discharged from treatment and requests reinstatement within 360 days of the date of the accident or illness and 15 days from the date of discharge. The employee must also be physically and mentally capable of fulfilling his or her job duties, and the employee's position must still exist. Absent intervening "good cause" for termination of employment during a workers' compensation leave of absence, as defined by Act No. 80, the local severance indemnity statute, failure to reinstate an employee on workers' compensation leave will expose an employer to a claim for reinstatement, back pay and consequential damages. NON-OCCUPATIONAL DISABILITY INSURANCEAct No. 139 of June 26, 1968, establishes a government-administered benefits program for employees who became disabled because of non-occupational illness or injury, known as Temporary Non-Occupational Disability Insurance (SINOT, by its acronym in Spanish).An employer may substitute the SINOT coverage under the government plan with a private plan. However, such a plan must comply with a series of requirements, the most important of which is that the private plan be at least as beneficial to the employee as the government plan. An employer may also request authorization to become self-insured. To substitute the government plan with a private or self-funded plan, an employer must request approval from the Secretary of Labor and Human Resources no later than April 30 of the year in which the plan is to become effective. Besides payment of insurance benefits, Act No. 139 provides eligible disabled employees a leave of absence and reinstatement rights. That is, upon recovery from disability, the employer must reinstate the employee if:
CHAUFFEURS' SOCIAL SECURITY ACTPuerto Rico has a mandatory government insurance plan that requires employers to insure any non-exempt employee whose work requires the employee to drive a "motor vehicle" as part of that employee's regular duties. This includes, for example, a forklift car at a warehouse. Employees covered under the Chauffeurs' Social Security Act are not covered by SINOT. Also, the benefits due to illness will not be paid if such illness is covered primarily by the Workers' Accident Compensation Act or if the insured is receiving pay from his or her employer. The Chauffeurs' Social Security Act requires that an employer reserve the employee's position for one year and reinstate him or her in his or her position if: (1) the employee requests reinstatement within 30 working days from his or her release from treatment and such petition is made within one year from the beginning of the disability, (2) the employee is mentally and physically capable to occupy the position, and (3) the position exists at the moment of requesting reinstatement.MILITARY LEAVEMilitary and veteran employees have a variety of rights under federal and local statutes. Uniformed Services Employment and Reemployment Rights Act ("USERRA")This federal statute provides for unpaid leave for members of the armed forces of the United States (Army, Marine Corps, Air Force, Navy and Coast Guard, as well as its reserves), National Guard, the Commission of the United States Public Health Services and others designated by the President of the United States during war or an emergency when called to serve voluntarily or involuntarily. The statute also prohibits discriminatory acts, as well as a hostile environment and acts of retaliation, against employees, former employees or employment candidates because of their service in the military.USERRA also provides for the reinstatement of employees who are not temporary and who, having served honorably, return to work or request re-employment within the period of time provided by law. Once reinstated, the employee's seniority and all of his or her seniority benefits will remain as if the employee had continued to work uninterruptedly. Puerto Rico's Military CodeThis local statute applies to members of Puerto Rico's military forces: Puerto Rico's National Guard (Ground, Aerial and Inactive, and others designated by the President of the United States or by the Governor of Puerto Rico) and Puerto Rico's State Guard.Under penalty of a criminal offense, the Act provides that employers may not obstruct or otherwise disallow a member of Puerto Rico's military forces to be absent from work to serve during a training or in response to a call to serve in the active state military. Also, the Act prohibits the dismissal of, and discrimination against, an employee because of absences while serving or for being a member of Puerto Rico's military forces. To prevent a member of Puerto Rico's military forces from obtaining employment or to dissuade him of enlisting in said forces constitutes a misdemeanor.The statute also provides for unpaid leave for employees of the private sector who are members of Puerto Rico's military forces to be absent and serve as part of their annual training or to comply with any call to serve. Members of Puerto Rico's State Guard who are also employees in the private sector, upon honorable completion of their service or training, have a right to re-employment subject to the conditions provided by the Act. Puerto Rican Veterans' Bill of Rights of the XXI CenturyAny person who has served honorably in the armed forces of the United States and its reserves, as defined by the statute, and those who, according to law, are veterans have certain employment rights. The same applies to individuals who serve in the National Guard.According to this statute, the employer is obliged to:
Act for the Protection of Members of the Armed Forces of the United StatesThis statute provides members of the uniformed services of the United States, as defined by the statute, the Army Corps of Engineers and the National Disaster Medical System payment equal to the difference between their net salary as a private-sector employee and their net income during their military service. Also, the statute grants preference for appointment, promotion or employment opportunities to members of the uniformed services, the State Guard, the Army Corps of Engineers and the National Disaster Medical System with equal academic and technical conditions or experience as other employees. It also provides an extra 10 points or 10%, whichever is greater, in addition to any other bonus, to the score obtained by these employees in employment or promotion tests. These employees also have a right to take tests that, because of their military service, they were not able to take, as long as the employee requests it within 180 days following his or her return to work. According to this statute, the period of military service and the training sessions will be credited for purposes of employment evaluations, as long as they relate to the functions performed on the civil job. FAMILY AND MEDICAL LEAVEThe Family and Medical Leave Act of 1993 (FMLA) requires private employers with 50 employees or more to provide certain employees with up to 12 weeks of unpaid leave in a given 12-month period:
An eligible employee who is the spouse, son, daughter, parent or next of kin of a current member of the armed forces (including members of the National Guard or the reserves) with a serious injury or illness is also entitled to a total of 26 workweeks of unpaid leave during a "single 12-month period" for the care of the service member.
Upon their return from FMLA leave, employees are entitled to be restored to their original job or to an equivalent job with equivalent pay, benefits, and other terms and conditions of employment.
Under some circumstances, employees may take FMLA leave intermittently or on a reduced work schedule. When leave is needed for planned medical treatment, employees must make a reasonable effort to schedule treatment so as not to unduly disrupt the employer's operation.
Only employees who have been employed by the employer for at least 12 months (need not be consecutive) and who have worked 1,250 hours or more over the last 12 months are eligible for benefits under the FMLA.
The FMLA also requires employers to maintain employees' group health insurance coverage during the pendency of the leave.
FMLA benefits may apply concurrently with other Puerto Rico laws providing leave for the same covered reasons, such as maternity, workers' compensation and non-occupational disability leaves. Any paid or otherwise compensated leave may also count toward the 12-week leave entitlement provided by the FMLA.
RIGHT TO PRIVACY
An individual's right to privacy is guaranteed by Article II, sections 1 and 8, of the Constitution of Puerto Rico. Specifically, Article II, Section 8, of the constitution states that "every person has the right to the protection of the law against abusive attacks on his honor, reputation, and private or family life." The constitutional right to privacy operates ex propio vigore and may be enforced by an individual against his or her private employer without the need for state action. Although fundamental, the right to privacy is not absolute and may yield to compelling circumstances.
In the employment context, to prevail in an action for this type of constitutional violation, the employee must present evidence of the employer's concrete actions that infringe upon the employee's private or family life. In such claims alleging a violation to an employee's constitutional right to privacy, the central focus must be on whether the employee had a legitimate expectation of privacy, given the particular circumstances at hand. In this regard, it is imperative to examine any alleged violation of the constitutional right of privacy, always keeping in mind considerations of time and place. The employee must have a real expectation that his or her privacy be respected, and such expectation must be one that society is objectively willing to recognize as legitimate or reasonable. Notwithstanding, the individual's reasonable expectation of privacy must be weighed against the legitimate business interests that his or her employer is seeking to protect through the measures under attack.
To guarantee an individual's constitutional right to privacy, case law has established the conditions employers must observe when, among other things, they implement the use of electronic surveillance in the workplace. These will be discussed below.
Act No. 59 of August 8, 1997, 29 P.R. Laws Ann. tit. 29, §§161 et seq., establishes specific requirements for the drug testing of job applicants and employees in the private sector. Although Act No. 59 does not make drug testing mandatory, an employer that establishes a drug-testing program must adhere strictly to the provisions of Act No. 59.
Employers may require every job applicant to submit a drug-screening test as a condition for employment. While applicants have the right to refuse to submit to the drug testing, an applicant's refusal will be considered as a positive result and the employer may withdraw the conditional offer of employment.
Drug testing may also be administered to employees in certain sensitive positions, in cases of reasonable individual suspicion, in cases of certain accidents, as a follow-up to a drug rehabilitation program and as part of a program for random testing.
With respect to implementing disciplinary measures, Act No. 59 states that an employer may impose sanctions upon its employees for violations of its rules of conduct, subject to the provisions of Puerto Rico's unjust dismissal statute, Act No. 80 of May 30, 1976. However, Act No. 59 provides that the first positive result of a drug test shall not constitute just cause of termination of an employee without first requiring and permitting the employee to attend an appropriate rehabilitation program.
In Puerto Rico, there are no laws, rules or regulations concerning alcohol policies and/or alcohol testing in the private employment sector. However, taking a blood sample to conduct alcohol testing in the employment context may violate the express right to privacy guaranteed by Article II, Sections 1 and 8, of the Constitution of Puerto Rico. Notwithstanding, many private employers have ventured into this unsettled area of law and have established alcohol policies in their facilities. Employers have counterbalanced employees' constitutional privacy rights against the employer's constitutional and statutory duty to provide a safe workplace and have decided in favor of policies prohibiting alcohol abuse.
In Vega v. Telefónica de Puerto Rico,156 D.P.R. 584, 613 (2002), the Supreme Court of Puerto Rico held that a telephone company's video-recording security system, part of which recorded the activities of working employees, was not per se a violation of the constitutional right to privacy. The court emphasized that an employer has a right to protect its private property through reasonable and legitimate means, such as electronic surveillance.
However, the court left open the possibility that, depending on the circumstances, an employer's electronic surveillance system could breach an employee's constitutional right to privacy. The court laid down a number of rules that the employer must comply with to ensure that its electronic surveillance systems are valid.
When implementing electronic surveillance measures in the workplace, an employer must provide prior notice to its employees, except in cases where extreme circumstances justify otherwise. This notification could include, among other things, information regarding: (1) the type of electronic surveillance to be used, (2) the nature of the data or information to be obtained, (3) the frequency with which the surveillance system is to be used, (4) its technical specifications, (5) the place where the surveillance system will be installed, (6) the location of the monitoring equipment, (7) the group of employees that will be observed through the surveillance system and (8) the administrative mechanism available to channel employee grievances or complaints concerning the electronic surveillance system.
As a general rule, employers should not install a system of electronic surveillance in areas where, by their own nature, employees will have an enhanced expectation of privacy (i.e., restrooms, showers, dressing rooms). Employers must also create and distribute among their employees a clear and adequate policy detailing the use, access and disposition of the information collected and/or recorded by the electronic surveillance system.
RESTRICTIONS ON THE USE OF EMPLOYEES' SOCIAL SECURITY NUMBERS
Act No. 207 of September 27, 2006, and its Regulation 7413 prohibit the use of employees' Social Security numbers on identification cards or any document of general circulation. Employees' Social Security numbers may not be displayed in places that are visible to the public, may not be included in personnel directories, and may not be included in any list that is made available to persons who do not have a need to know or access authorization to this information.
The prohibitions provided in Act No. 207 may be waived by the employee in writing and voluntarily. Said waiver cannot be a condition for or of employment. Some exceptions to Act No. 207 include situations in which a local or federal statute or regulation specifically authorize or require the divulgation of the Social Security number.
BACKGROUND CHECKS OF APPLICANTS AND WORKERS
The issue of background checks raises the question of potential liability for invasion of privacy under the Puerto Rico and the United States constitutions, regardless of whether the employer conducts its own checks or hires a third party to do so. Misuses of background checks may also give rise to liability if employment decisions based on background-check information have an adverse impact on protected classes in violation of federal and Puerto Rico anti-discrimination laws. Nonetheless, there are some allowable background checks.
Regarding criminal background checks in particular, it is common practice in Puerto Rico to request a certificate of good conduct (i.e., a certification from the police department that a person lacks a criminal record) as a condition or requisite for employment. However, employers may not use criminal records to make employment decisions where such use causes a disproportionate impact on protected classes in violation of federal and Puerto Rico anti-discrimination laws. It has been held that not hiring an applicant because he or she has a criminal record may amount to social-condition discrimination in employment.
Another common type of background check sought by employers is the credit check. To lawfully perform in Puerto Rico a credit check for candidates and employees, these should be performed only for workers assuming roles where financial management and/or transactions are a function of the job. Moreover, the employer must abide by pertinent requirements under the Fair Credit Reporting Act of 1970 (FCRA). Under the FCRA, an employer, through a credit reporting agency, is able to assess a job applicant's background information. When an employer is seeking to obtain a credit report, the FCRA imposes the following obligations for employers: prior notification, consent by the applicant or worker, a notice of use and a copy of the report to the applicant or worker, and a certification of compliance to the agency.
An employer may verify the educational, licensing and work-experience credentials of an employment candidate insofar as said credentials are either required qualifications for the job in question or otherwise taken into consideration in assessing candidates for the job in order to select the person who is best qualified. Furthermore, under applicable disability laws and privacy rights in Puerto Rico, pre-employment physical examinations are lawful only if they are narrowly tailored to determining the fitness to perform the specific job that is being offered. Finally, the verification of driver's licenses and records are lawful for those employees who either have to drive as a part of their jobs or are given a company car.
EMPLOYMENT ELIGIBILITY VERIFICATION
Puerto Rico is fully under U.S. federal jurisdiction for all immigration matters. As such, employers in Puerto Rico are required to comply with the employment eligibility verification requirements established under the federal Immigration Reform Control Act of 1986 (IRCA). Under IRCA, employers are required to complete a Form I-9 (Employment Eligibility Verification Form) to confirm that every employee being hired is authorized to work in the U.S. Under Form I-9's verification process, workers being hired must provide, and their employer shall verify, documentation that confirms both the workers' identity as well as their eligibility for employment in the U.S. Form I-9 contains a list of acceptable documents to verify identity and employment eligibility.
Employers should make sure to use the version of Form I-9 that is current on the date when it is completed. The U.S. Citizenship and Immigration Services' website, at www.uscis.gov, contains information regarding the version of Form I-9 that is current at any given time, as well as an employer handbook with instructions for completing Form I-9 in full compliance with the law. Non-compliance with Form I-9 requirements, including incomplete and/or erroneous information on the form, can lead to costly monetary fines and other sanctions against employers, including criminal prosecution in some cases. Moreover, Act No. 48 of May 29, 1973, P.R. Laws Ann. tit. 29, §153, provides that any worker in Puerto Rico who is dismissed without just cause and replaced with an alien who is not authorized to work may seek reinstatement and back pay. Employers must retain I-9 forms for either three years after a worker's employment start date or one year after the date when his or her employment ends, whichever is longer.
Employers also have available the tools of the program known as E-Verify (which is mandatory for covered federal contractors and subcontractors, as well as for federal government agencies). E-Verify is an Internet-based program run by the federal government that allows employers to verify their employees' eligibility to work in the United States. In general terms, the program compares an employee's information included in the I-9 form with millions of records of the U.S. Department of Homeland Security and the Social Security Administration to confirm the eligibility of the candidate for employment. The program is fast and free of cost, and it provides mechanisms and terms to correct discrepancies in the information. Employers may obtain additional information or register with the program at www.uscis.gov/e-verify.
Notwithstanding the strict employment eligibility verification requirements under Form I-9, it is unlawful to discriminate against employment candidates or workers due to their national origin and/or citizenship. U.S. federal and Puerto Rico statutes provide multiple penalties against employers and remedies for workers who are discriminated against on those grounds, including monetary penalties, reinstatement and payment of damages.
An employer that requires its employees to wear uniforms to work must furnish them, free of charge, pursuant to the provisions of Act No. 180 of July 27, 1998, P.R. Law Ann. tit. 29, §250e. Employers in the health care industry are required to supply uniforms, or the equivalent amount of money to purchase the same, to nurses, laboratory technicians, radiology technicians, therapists or any other health professional technician whose practice requires the use of uniforms.
It should be noted that the Puerto Rico Department of Labor has taken the position that an employer must defray the cost of laundering any uniforms it requires its employees to wear. However, this is not a statutorily required action and the department has been lax on the enforcement of its position.
The National Labor Relations Board (NLRB) was created under the National Labor Relations Act (NLRA) of 1935, as amended by the Taft-Hartley Labor Act of 1947 (also known as the Labor-Management Relations Act), to administer the NLRA, the primary law governing relations between unions and employers in the private sector. The statute guarantees the right of employees to organize and bargain collectively with their employer, to engage in other protected concerted activities with or without a union, or to refrain from all such activity. The NLRB exercises jurisdiction over cases involving businesses whose activities affect interstate commerce. Puerto Rico is in the 12th Region of the NLRB, based in Tampa, Florida, with a sub-regional office in Hato Ray, Puerto Rico.
The Taft-Hartley Act is better known for its application to labor relations between employers and labor unions. However, the statute protects all employees involved in interstate commerce, regardless of whether they are represented by a union. If two or more employees engage in concerted, protected activity for their mutual aid and protection, they will be shielded from discrimination under this law.
In the last couple of years, the NLRB has decided several important cases related to employees' right to engage in concerted, protected activities. Likewise has the NLRB's General Counsel opined. In sum, they have stated that employers' rules of conduct and policies about the use of social media violate the law if they have the effect of interfering with employees' right to engage in concerted, protected activities. For example, a rule that has the effect of prohibiting employees from sharing with other employees on social media their negative view of their working conditions would be contrary to the rights guaranteed by Taft-Hartley. This has fostered numerous controversies and cases about the legality of what would otherwise appear as valid policies and rules of conduct.
Locally, Act No. 130 of May 8, 1945, as amended, P.R. Laws Ann. tit. 29, §§61 et seq. (also known as the Puerto Rico Labor Relations Act), was enacted to promote collective bargaining principles, to reduce certain labor disputes and to encourage economic productivity.
Act No. 130 created the Puerto Rico Labor Relations Board (PRLRB), a quasi-judicial organism authorized to consider and adjudicate labor disputes after they have been evaluated and investigated by the agency. The PRLRB is authorized to determine and recognize employees' representatives for the purposes of collective bargaining, to determine the appropriate units of workers for collective bargaining, to investigate and resolve controversies concerning representation, to consider cases regarding illicit labor practices, and to enforce mediation decisions. It also has discretion to implement determinations made by competent organisms in cases of labor disputes.
The PRLRB jurisdiction is limited to agricultural workers, non-agricultural employees of private businesses over which the NLRB does not have jurisdiction, employees of the Commonwealth of Puerto Rico government's public corporations or agencies dedicated to businesses whose purpose is to derive pecuniary gains, and those of employers that engage in interstate commerce in cases where a violation of a collective bargaining agreement is alleged.
PERMITS THAT EMPLOYERS MUST OBTAIN FROM THE SECRETARY OF LABOR AND HUMAN RESOURCES
LEGALLY MANDATED NOTIFICATIONSEvery employer shall affix in a conspicuous place in the establishment, shop, factory, plantation, office or place of work, as the case may be, the following printed notices:Anti-Discrimination Unit
Equal Employment Opportunity Commission
Labor Standards Bureau
Employment Security Bureau
Non-Occupational Disability Insurance Program
Puerto Rico Administration of Occupational Security and Health
Employers in Puerto Rico are also required to display in a conspicuous place in the establishment, shop, factory, plantation, office or place of work, as the case may be, the following printed notices of federal statutes that may apply:
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