Labor Reform of 2022 – Puerto Rico
By: Angel Berberena, Esq.
June 21, 2022
On June 20, 2022, the Governor of Puerto Rico, Hon. Pedro R. Pierluisi, signed Law 41-2022 amending a substantial number of labor and employment statutes including Law 4-2017 (“Labor Transformation and Flexibility Act”); Law 378-1948 (“Law to Establish Work Schedule in Puerto Rico”); Law 289-1946 (“Day of Rest Act”); Law 180-1998 (“Vacation and Sick Leave Act”); Law 148-1969 (“Christmas Bonus in the Private Sector Act”); Law 80-1976 (“Wrongful Termination Act”); Law 100-1959 (“Workplace Discrimination Act”); Law 28-2018 (“Special Leave for Employees with Catastrophic Medical Conditions Act”). The most relevant of said amendments are:
- Ambiguous or unclear employment contracts or policies will be interpreted in favor of the employee. As an exception, if an employer reserves the right to interpret a policy, the employer’s interpretation will stand only if it is reasonable and not arbitrary.
- The statute of limitations for employment, wrongful termination and wage/hours claims was increased from one (1) to three (3) years.
- The 24-hour alternate work schedule for overtime computation was eliminated. Daily overtime is based on any work performed in excess of 8 hours during any calendar day.
- Employers are required to create an internal procedure to process petitions by employees requesting changes to their work schedules, hours of work, or locations.
- Employees can no longer skip the meal period if they only work six (6) hours during workday.
- Meal periods must now commence not before the conclusion of the third hour nor after the commencement of the sixth hour. That is to say that the commencement of the meal period was changed from the conclusion of the second hour to the conclusion of the third hour.
- For unionized employees, the reduction of the meal period may be part of an agreement with the union without the need to seek individual consent.
Students that work during the Day of Rest (7th consecutive day of work) will be entitled to double compensation for any work performed during that day. To be covered, the student must be enrolled in secondary, university or postgraduate education. This provision is not applicable to micro, small or medium businesses as defined by Law 62-2014. To be exempted from this provision, the business must have a gross income below $10 million dollars and 50 or less employees.
- Part-time employees will now accrue vacation and sick leave. Employees that work no less than 20 hours per week but less than 115 hours per month will accrue ½ vacation days and ½ sick days per month.
- The number of hours required for the accrual of leaves and the accrual rates for vacation and sick leave were modified. Employees that work no less than 115 hours per month (130 hours previously) will now accrue 1¼ vacation days per month and 1 sick day per month (previous accruals rates varied by years of service).
- Vacation and sick leave accrual rates for employees with no more than 12 employees were also modified to a lesser degree.
- The 10-day reserve period when the employer pays off accrued vacation leave at the request of the employee was eliminated.
- Number of hours required to receive Christmas Bonus (Yearly Bonus) were reduced from 1,350 hours to 700 hours between October 1 and September 30 of the following year. The reduction for micro, small and medium businesses was to 900 hours for the same period.
- Severance payment for wrongful termination claims was modified to: i) three (3) months if the termination occurs within the first 15 years of service or 6 months if the termination occurs after 15 years of service; plus ii) 2 weeks of pay for each year of service.
- The nine (9) month compensation cap for severance payment was eliminated.
- Probationary periods were reduced to three (3) months and may be extended for three (3) additional months provided a timely notification is sent to the Secretary of Labor and Human Resources explaining the reasons why an extension is necessary. The previous probationary periods were nine (9) months for non-exempt employees and twelve (12) months for exempt employees
- The legal presumption of wrongful termination is reestablished. Employers now have the burden of proof that a termination was with just cause to avoid severance payment. Furthermore, absent just cause, wrongful terminations are presumed to be discriminatory.
- Hemophilia was included to the list of catastrophic medical conditions for which special medical leave is available.
These provisions and amendments will become effective 30 days after their approval. Micro, small and medium business will have 90 days to implement these changes. Some of these changes are likely to require additional amendments or judicial interpretation. Furthermore, it is possible that some of these amendments may be challenged due to their impact on the local economy.