SCMP Breaking News - Labor & Employment
Year 8, Vol. 3 - March 6, 2023
On March 3, 2023, the Federal District Court for the District of Puerto Rico (Judge Laura Taylor Swain) issued an Opinion and Order granting the Financial Oversight and Management Board for Puerto Rico’s (“the Oversight Board”) motion for summary judgment and, thus, declaring Puerto Rico Law No. 41-2022, also known as the 2022 Puerto Rico Labor Reform, null and void ab initio.
Specifically, Judge Swain determined that Act 41 was nullified because the Governor of Puerto Rico had (i) failed to submit an estimate of the impact, if any, that the law will have on expenditures and revenues as required by section 204(a)(2) of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”); and (ii) failed to provide a certification by an appropriate entity that the law is or is not significantly inconsistent with the Fiscal Plan for the year 2022 as required under section 204(a)(4)(B) of PROMESA.
The Court held that the Oversight Board was entitled as a matter of law to the relief sought pursuant to sections 104(k) and 204(a)(5) of PROMESA “to ensure that the enactment or enforcement of [Law 41] will not adversely affect the territorial government’s compliance with the Fiscal Plan” and declared Law 41, and any actions that have been taken to implement it, null and void ab initio. In addition, the Court further permanently prohibited and enjoined the Governor and any other persons from taking any acts to help private parties implement or enforce Law 41.
What does this decision mean and how does it impact your business?
This decision means that Law 41 and all actions to implement it are deemed null and void ab initio, that is, as if it never had any legal effect. Yet, this decision is still subject to appeal and, thus, is not yet final and binding.
What should employers do?
Because it is not yet clear whether the Governor will appeal this decision and/or what the outcome of the appeal will be, and, thus, the District Court decision is not yet final and binding, employers should not take any action to revert or amend any changes to their employee manuals, policies or payroll procedures for the time being. However, employers should also suspend any efforts or plans to further implement Law 41 and/or any of its provisions for the time being.
SCMP will continue to monitor developments regarding this important decision and will provide updates in our newsletter as new information becomes available.
If you have any additional questions, contact us at (787) 945-0380
Because of the general nature of this newsletter, nothing herein should be construed as legal advice or a legal opinion. SCMP Breaking News and all its content is property of Silva-Cofresí, Manzano & Padró, LLC
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