SCMP Breaking News - Labor & Employment
Year 7, Vol. 3 - July 20, 2022
Disputes between the Government of Puerto Rico and the Puerto Rico Financial Oversight Board (the “Board”) have caused uncertainty for employers as to the implementation of the changes introduced by the New Labor Reform, Law 41-2022.
Yesterday—one day before the effective date of Law 41-2022 for large employers—the Board issued a letter notifying the Government of its transitory conclusion that Law 41-2022, is inconsistent with the Fiscal Plan, and thus, instructed the Government to suspend its implementation and enforcement.
According to the Board, the documentation submitted by the Government pursuant to PROMESA’s requirements was insufficient. Section 204 (a) of PROMESA requires the Government to certify that any new law is not significantly inconsistent with the Fiscal Plan and to provide an estimate of its impact on expenditures and revenues.
The Board demanded that the Government fully comply with the required certification and formal estimate on or before July 22, 2022. The Board further urged the Government to issue a public statement confirming such suspension to avoid confusion for employers.
In response, the Governor and the Secretary of Labor issued separate statements indicating that the Government will comply with the Board’s request to provide additional information. However, they stated that Law 41-2022 will remain in full force and effect as of July 20, 2022. According to their position, the Board is not authorized under PROMESA to suspend a law by merely sending a letter to the Government and would have to seek remedy before federal court to enjoin implementation of the law. The Secretary of Labor encouraged employers to comply with Law 41-2022.
These opposing views by the Government and the Board create confusion as to the application of Law 41-2022 and leave employers without precise guidelines of how to act.
Under PROMESA, the Board may file a Complaint against the Government in federal court seeking remedies to prevent the implementation and enforcement of Law 41-2022 and/or have the law nullified. The District Court may or may not grant the requested remedies, depending on the assessment of the Government’s compliance with PROMESA’s requirements.
What should employers do?
Continue to be on alert as to what may happen after July 22, 2022 (deadline to submit the information requested by the Board).
If you are a large employer, review your policies to determine which may be impacted by Law 41-2022 and assess the risks of not implementing the law’s dispositions at this time.
If you are a micro, small or medium business, as defined by Law 62-2014, wait until further developments and/or the law comes into effect for you (September 20, 2022).
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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