Puerto Rico Governor Pedro Pierluisi signed Law No. 41-2022 on June 20, 2022, amending and repealing certain sections of the Labor Transformation and Flexibility Act of 2017, also known as Labor Reform. of 2017. The law aims to restore and expand labor rights for workers in the private sphere and to ask the Legislature to investigate prevailing working conditions and propose new protections for the class factory Girl.
The amendments come into effect within 30 days for most large employers on the island. Micro business (a business or enterprise that generates gross revenue of less than $500,000 per year and has seven or fewer employees), small business (a business or business that generates gross revenue of less than $3 million per year and has 25 or fewer employees) fewer employees) and mid-sized businesses (a business or enterprise that generates less than $10 million in gross revenue each year and has 50 or fewer employees) will have 90 days to comply with the law.
What is the 2017 labor reform?
The 2017 labor reform was passed with the goal of boosting Puerto Rico’s economy through employer-friendly provisions designed to attract new businesses to Puerto Rico while facilitating the operations of existing businesses. The 2017 Labor Reform made changes to Puerto Rico’s Wrongful Termination Law (Law 80), as well as various local laws on overtime, meal break requirements, wage rates accrual of vacation and sick leave and other local employment laws. The new law repeals some of the changes brought about by the labor reform.
2017 Labor Reform Amendments
The law says its goal is to reverse some of the changes brought about by the 2017 labor reform with a work plan that has two priorities: (1) restore and expand labor rights applicable to workers in the private sphere, and (2) Demand that the Legislative Assembly exercise its investigative power to investigate prevailing working conditions in Puerto Rico and propose new protections for the benefit of the working class.
Changes to the 2017 labor reform provisions include the following:
- Repeal the 2017 labor reform provision that provided consistent interpretation between federal and local laws that address a similar employment issue.
- provide that any ambiguity in an employment contract or policy will be construed in favor of the employee; employers may reserve discretion to interpret their own policies, so long as the interpretation is reasonable and not arbitrary or capricious or inconsistent with special law.
- Create a three-year statute of limitations for certain breach of contract, wages and hours, unjust dismissal, discrimination and other employment claims.
- Revise the statutory severance pay formula for employees wrongfully terminated under Bill 80 to (1) three months for employees terminated within 15 years of employment and six months for employees terminated after 15 years of employment. ‘use ; and (2) two weeks per year of service for employees terminated within 15 years of employment and three weeks per year of service for employees terminated after 15 years of employment. The law also removes the cap on severance pay for employees hired after the 2017 labor reform.
- Amend the definition of “just cause” in Bill 80, eliminate the definition of “constructive dismissal” from the 2017 labor reform and revise the requirements of the retention seniority analysis order under the law 80.
- Reduce automatic trial periods to three months (with a potential maximum extension of three months, provided written notice of extension is submitted to the Puerto Rico Department of Labor and Human Resources).
- Reinstate the presumption of dismissal without cause, requiring employers to allege in their responses to unjust dismissal complaints the facts supporting the dismissal and proving that there was just cause.
- Amend Bill 100, the Anti-Discrimination Act, to create a rebuttable presumption that discriminatory actions violate the act where the actions were taken without cause.
- Provide for time and a half remuneration, and double remuneration for employees who are also students, for employees who are required to work a seventh consecutive day and who, consequently, lose their day of rest. Micro-enterprises and small and medium-sized enterprises can still pay students time and a half for work on the seventh day in a row.
- Revise the schedules for taking meal breaks, remove the provision allowing the exemption of meal breaks for non-exempt employees who work six hours or less per day and modify certain provisions concerning agreements to reduce meal breaks.
- Increase the accrual of paid leave to 1.25 days and paid sick leave to one day, for each month in which an eligible employee works at least 115 hours, regardless of the date of hire; provide for the accumulation of paid leave and paid sick leave at the rate of half a day per month for employees who work at least 20 hours per week, but less than 115 hours per month.
- Employers with 12 or fewer (1) employees who work at least 20 hours per week, but less than 115 hours per month, will accumulate vacation at the rate of a quarter of a day and sick leave at the rate of a half-day. day per month; and (2) who work at least 115 hours per month will accrue one half day of vacation per month and one day of sick leave per month.
- Allow total or partial payment of the liquidation of accumulated vacation.
- Reverse the Christmas bonus hours worked requirement from 1,350 hours to 700 hours and revise the wage requirements as a percentage.
- Expand the definitions of “catastrophic illnesses” included in Law 28 of 2018, which provides special leave for these illnesses.
Consequences for employers
The law makes significant changes for employers in Puerto Rico, reducing or eliminating many employer-friendly provisions brought about by the 2017 labor reform. Employers on the island must immediately revise their employment policies and practices in Puerto Rico to ensure compliance with these new provisions.
If you have any questions or would like more information about the issues discussed in this LawFlash, please contact the author, Melissa C. Rodriguez, in our New York office.