SCMP Breaking News - Labor & Employment
Year 7, Vol. 2 - June 21, 2022
On Monday, June 20, 2022, the Governor of Puerto Rico, Hon. Pedro Pierluisi Urrutia signed Bill 1244 into law, despite opposition from the Fiscal Control Board. The new law is a complete overhaul of Law 4-2017, known as the “Labor Reform Law”. Below we highlight some of the more significant changes Puerto Rico’s Labor and Employment Laws:
1. Any ambiguity in employment contracts will be resolved in favor of the employee.
2. The statute of limitations for claims arising under an employment contract or under Law 80-1976, Law 379-1948 or Law 180-1998 increases from one (1) year to three (3) years.
3. The alternate work cycle of twenty-four (24) hours which was introduced by the 2017 reform is eliminated.
4. The procedure that must be followed when an employee requests a change in work schedule, number of hours or place of work now incorporates specific response and recordkeeping requirements for employers. Moreover, the conditions of any change granted must be agreed upon between employer and employee.
5. The Secretary of Labor will create new Regulations regarding wages and hours within ninety (90) days of ratification of the Law. These new Regulations may include major changes in the calculation of overtime.
6. Student employees who work on their “day of rest” must be compensated at twice their hourly rate, unless they work for micro, small or medium businesses as defined by Law 62-2014.
7. All non-exempt employees will now accrue vacation and sick leave when they work 115 hours or more per month at a rate of 1 ¼ of a day (vacations) and 1 day per month (sick leave). Employees who work between 20 to 114 hours per month will now accrue vacation and sick leave at a rate of ½ day per month. Special accrual rates apply for employers with 12 employees or less.
8. All employees who work 700 hours or more during the applicable period must receive the mandatory Christmas Bonus, regardless of their hire date. However, for employers with less than twelve (12) employees, the requirement is 900 hours. Employers that request exemption from payment of the Christmas Bonus must submit a Business Report signed and stamped by a CPA.
9. The definition of just cause under Law 80-1976 reverts to a similar version as prior to Law 4-2017 (Labor Reform Law).
10. There are major changes to the Unjust Dismissal Law (Law 80-1976), including:
A new formula for the severance payment is established, based on whether the termination occurs during the first fifteen (15) years of service or after fifteen (15) years of service.
The automatic probationary work period is reduced to three (3) months for all employees and may be extended for a maximum of three (3) additional months with authorization from the Puerto Rico Department of Labor.
Certain special payments issued by employers resulting from the liquidation or closing of a business, or profit sharing as part of a reorganization or Reduction in Force cannot be deducted from the severance payment due under Law 80-1976. However, additional guidance is required, as these special payments are not defined in the current version of Law 80-1976.
The presumption of unjust dismissal under Law 80 is reestablished.
The nine (9) month cap for severance pay is eliminated.
11. The presumption of discrimination is reestablished for purposes of the Puerto Rico Antidiscrimination Statue (Law 100-1959).
12. For non-exempt employees who work for more than five (5) consecutive hours, mealtime periods shall be enjoyed between the third and sixth hour of work. Mealtime periods for non-exempt employees who only work for six (6) hours in a day can no longer be bypassed; thus, after the fifth hour of work in a day, a mealtime period must be granted. Stipulations to reduce mealtime periods will remain in force only if employee and employer consent to the same. Therefore, said stipulations will no longer last for one (1) year.
What should employers do?
Review and amend all applicable employment policies and procedures, including employee manuals.
Review and amend payroll procedures and forms.
Review and amend record retention policies, as necessary.
Provide trainings and guidance to supervisors, managers, Human Resources and payroll personnel.
NOTE: The new law becomes effective on July 20, 2022, thirty (30) days after its signature for all employers, except for micro, small or medium businesses, as defined by Law 62-2014, for whom the law will become effective ninety (90) days after its approval.
Remember that, while we have provided a general guide of the most significant and impactful changes contained in the new labor reform law, the new law’s changes include many nuances that may impact your business in different ways. SCMP can assist you and provide you with more detailed advice, based on your company’s specific needs.
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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