Hire in Puerto Rico​

Regulation No. 13 issued by the Puerto Rico Minimum Wage Board outlines exemptions from overtime requirements for administrative, executive, and professional positions, provided employees earn a minimum of $455 USD weekly. This alignment reflects the existing regulations under the US Fair Labor Standards Act (FLSA). Additionally, Regulation No. 13 acknowledges exemptions such as outside sales and recognizes that specific computer professions may qualify for the professional exemption, aligning with the exemptions established by the FLSA.

The probationary employment duration is automatically established at 9 months for non-exempt employees or 12 months for exempt employees. Within this timeframe, termination can occur at will without the need for prior notice. Once this period concludes, employees gain protection from unjust termination under Act 80.

In Puerto Rico, a standard working day lasts eight hours, and the typical workweek spans 40 hours.

By mutual written agreement between employer and employee, an alternative workweek may be established, where the employee works ten regular hours over four non-consecutive days each week without triggering daily overtime pay. If, under this arrangement, an employee surpasses ten hours per day, overtime compensation is required. The agreements for alternate workweeks must be voluntary and documented in writing.

Meal break regulations in Puerto Rico stipulate that non-exempt employees are entitled to a designated meal break lasting at least one hour, typically occurring between the third and sixth hours of work. However, certain professions (e.g., nurses, security guards, croupiers) may, through written agreement, opt for a shorter break of at least 30 minutes. It is permissible for the meal break to be scheduled after the second hour of work if agreed upon in writing between the employer and employee.

Employees working less than six hours a day are no longer exempt from taking meal breaks. For those working over ten hours, a second meal break is mandatory unless the total hours worked in a day do not exceed 12 hours, and the employee agrees in writing to skip the second break while having their meal during the first one.

Non-exempt employees in Puerto Rico, who exceed 40 hours in a week or 8 hours in a single day, are entitled to receive compensation for their overtime hours. Alternatively, employers have the option to implement a 24-hour cycle that deviates from the traditional calendar day, provided it fulfills certain criteria. Overtime pay is also applicable on the seventh consecutive workday, irrespective of the day of the week or the number of hours worked on the preceding six days.

For overtime work, employees are remunerated at a rate of 1.5 times their regular pay. It’s important to note that employees cannot legally waive their right to receive overtime pay through contractual agreements.

Non-exempt employees are mandated to maintain timesheets, encompassing essential details such as employee identification, hours worked, wages earned, and other relevant information.

The Puerto Rico Equal Pay Act prohibits employers subject to the Act from inquiring about a job applicant’s current or prior compensation from the applicant or their current or former employer. Exceptions to this restriction include:

• If a job applicant voluntarily reveals their current or previous wages, the potential employer may verify or permit the applicant to confirm this information.
• The potential employer is allowed to inquire about or verify an applicant’s current or past wages if it engaged in negotiations regarding the compensation rate and extended a job offer to the applicant.

Employers in Puerto Rico are authorized to conduct background checks, encompassing criminal and credit checks, on job applicants. This must be done in accordance with federal regulations like the Fair Credit Reporting Act and recent guidance from the Equal Employment Opportunity Commission, taking into account potential disparities in the impact of background checks.

Employers overseeing a workforce of more than 20 individuals are obligated to grant a bonus to employees who have rendered at least 1,350 hours of service from October 1 to September 30 of the subsequent year. This bonus is equivalent to 2% of their annual salary, with a maximum limit of $600.

For employers managing fewer than 20 employees over the same 12-month period, a bonus must be provided to employees who have worked a minimum of 1,350 hours, amounting to 2% of their annual salary, capped at $300.

In the initial year of employment, the stipulated bonus payment is set at 50% of the aforementioned amounts.

It’s essential to note that the cumulative bonus should not surpass 15% of the employer’s annual net profit. Typically, this bonus is disbursed between November 15 and December 15 each year.

Puerto Rico legislation mandates that employers must establish “just cause” for terminating the employment of an individual hired for an indefinite duration after the probationary period. In instances where no just cause is identified, the discharged employee is entitled to a statutory severance, commonly referred to as the mesada, under Act 80. “Just cause” encompasses factors that impact the regular and effective operations of the employer, such as the employee’s misconduct and the following “business necessity” reasons:

• Full, temporary, or partial closure of the employer’s operations.
• Technological or reorganization changes.
• Layoffs necessitated by an anticipated reduction in production, sales, or profits or with the intent of enhancing competitiveness.

When terminating an employee based on any of these reasons, employers must prioritize retaining individuals with higher seniority, unless there is compelling evidence indicating that comparable employees possess greater competence.

In the absence of just cause, all employment terminations are presumed to be unjust and discriminatory. The burden of proof lies with the employer to demonstrate that the dismissal adhered to the standards outlined in the Puerto Rico Unjust Dismissal Act and was driven by legitimate business reasons free from discrimination. Moreover, under the Act, employees have a one-year window to file a lawsuit for wage, vacation, and sick leave claims or breaches of employment contracts.

In Puerto Rico, the application of the US Worker Adjustment and Retraining Notification Act (WARN) necessitates written notification at least 60 days before a plant closing or mass layoff to impacted workers or their representatives. However, in other termination situations initiated by the employer, there is no specific formal “notice period” requirement.

In line with WARN, compensation in lieu of notice may be offered under specific circumstances. It is important to note that Puerto Rico does not have a local WARN statute.

The legal severance entitlement comprises three months of salary with an additional two weeks for each full year of service, capped at nine months.

When determining statutory severance, any break in service exceeding two years is not considered in calculating prior tenure.

Severance payments, up to the specified statutory limit, are exempt from income tax, while any amount exceeding this limit is subject to taxation.

To be legally enforceable in Puerto Rico, a non-compete clause must adhere to the following general criteria:

• It must be in writing and entered into voluntarily.
• The duration of the covenant should not exceed one year.
• Adequate consideration is required, meaning the employee must receive something of value beyond continued employment for agreeing to the restriction.
• The restriction must be clearly necessary to protect the legitimate interests of the employer.
• The geographic area specified must be limited to what is necessary to prevent direct competition between the employer and the employee.
• Client limitations, if any, must be clearly defined and restricted to those clients previously serviced by the employee.

The Puerto Rico Constitution upholds the right to privacy for individuals, encompassing employees in private companies. Employers are obligated to preserve the confidentiality of employee files, as outlined in Articles 1, 8, and 16 of the Constitution.

Nevertheless, concerning the obligation to provide notice, the applicable law is U.S. federal law. For instance, employers must furnish advance notice to their employees before implementing a surveillance program.

While there are no mandatory requirements for payslips in Puerto Rico, employers are advised to provide a statement of wages, commonly referred to as a pay stub, on or before the day of the corresponding salary payment.

While there are no stipulated requirements for timesheets in Puerto Rico, it is advisable for employers to maintain specific records for each non-exempt employee. This should encompass essential details such as identifying information about the employee, hours worked, wages earned, and other relevant information.

In Puerto Rico, employees must accumulate a total of 130 hours of work each month to qualify for vacation leave. The eligibility for taking annual leave begins after one year of employment, and no vacation benefits are accrued during the initial six months of employment. However, once an employee completes six months of service, they will retroactively accrue vacation leave from the commencement of employment. The minimum monthly accrual is as follows:

• 0.5 days accrual during the initial year of employment
• 0.75 days accrual after the first year of employment up to the fifth year of employment
• 1 day accrual after the fifth year of employment until reaching 15 years of service
• 1.25 days accrual after the 15th year of service

Puerto Rico resident employers with 12 employees or fewer have a minimum monthly accrual of 0.5 days for annual leave.

Puerto Rico observes all official U.S. holidays, in addition to several local holidays. On these occasions, government offices are mandated to close, and many businesses opt to suspend operations. A total of seventeen public holidays are observed in Puerto Rico.

Accrual of sick leave begins at the commencement of employment, and the accrual rates are outlined as follows:

• For employees working a minimum of 130 hours per month, the monthly accrual rate for paid sick leave is 1 day.
• If an employee works at least 20 hours per week but fewer than 130 hours a month, the monthly accrual rate for paid sick leave is 0.5 day.

Additionally, employees with over one year of tenure facing specific severe illnesses, such as AIDS, tuberculosis, and chronic kidney diseases, are entitled to a special paid sick leave of 6 days annually.

Expectant employees have the right to eight weeks of compensated maternity leave, evenly distributed between four weeks before childbirth and four weeks after. Full payment of maternity leave benefits is required at the commencement of prenatal leave.

To calculate maternity leave pay, the basis for payment relies on the average salary received by the employee in the six months directly preceding the initiation of the leave.

Furthermore, mothers who are nursing are granted lactation breaks lasting one hour each day. This hour can be divided into two 30-minute periods or three 20-minute periods.

Women employees who adopt children aged 5 or younger, not yet enrolled in school, are eligible for a five-week compensated leave.

For adopting mothers, the leave commences upon the child’s arrival at home. To avail the leave, the employee must inform her employer of her intent to adopt a child at least 30 days before taking the leave. She needs to express her commitment to return to work after utilizing the adoption leave and furnish evidence of the adoption procedure. During the leave, employees receive their entire salary from the employer.

Employees have the right to take up to 15 days of unpaid leave annually for cases involving gender or domestic violence, abuse of minors, sexual harassment in employment, sexual assault, lewd acts, or aggravated stalking. This unique leave provision also covers family members and permits employees to seek reasonable accommodations or flexible work conditions to address these circumstances.

Additionally, employees affiliated with the Armed Forces of the United States, the National Guard, the Commission of the United States Public Health Services, and other groups specified by the President of the United States are entitled to unpaid leave during times of war or emergencies when called to serve, whether voluntarily or involuntarily.