Puerto Rico has been a commonwealth of the United States since 1952, and the 3.7 million citizens of Puerto Rico also have automatic U.S. citizenship. The World Bank Group ranks Puerto Rico #40 on its list of countries rated for ease of doing business.
Employment law in Puerto Rico is covered both by U.S. labor law and Puerto Rico’s Constitution, which affirms the right of employees to choose their occupation, to have a reasonable minimum salary, a regular workday not exceeding eight hours, and to receive overtime compensation for work beyond eight hours.
The Puerto Rico Department of Labor and Human Resources is responsible for overseeing the legislation affecting workers and employment programs in Puerto Rico.
Puerto Rico Minimum Wage
The Minimum Wage, Vacation, and Sick Leave Act of Puerto Rico (Minimum Wage Act) was enacted in 1998. The Minimum Wage Act establishes that the federal minimum wage fixed by the Fair Labor Standards Act (FLSA) applies automatically to non-exempt employees in Puerto Rico who are covered by the FLSA. Currently, the U.S. federal minimum wage for non-exempt employees is set at $7.25 per hour. Employers not covered by the FLSA must pay a minimum wage to non-exempt employees of at least 70% of the applicable federal minimum wage.
Puerto Rico Overtime
Employees covered by the FLSA are entitled to overtime pay at a rate of 150 percent of their regular wage (commonly known as “time and a half”). If employees are not covered by the FLSA, they are entitled to a rate of two times their regular compensation rate for every hour worked beyond forty within a week.
Puerto Rico Christmas Bonus – ¡Feliz Navidad!
Known as el Bono de Navidad in Spanish, the Christmas Bonus is a mandatory annual payment to employees based on their earned wages for the year; however, Puerto Rico’s credit rating was recently lowered to “junk” status, and legislators are considering a reduction in the Puerto Rico Christmas Bonus as one measure to spur the economy.
For now, the Christmas Bonus rates are based on company size.
- 15 or fewer employees: Bonus of 3 percent of employee’s earned wages
- 16 or more employees: Bonus of 6 percent of employee’s earned wages
The bonus must be paid between December 1 and December 15 of each year.
No At-Will Employment in Puerto Rico
What do Puerto Rico and Montana have in common besides having Spanish names? Employees in Puerto Rico and Montana are not at-will employees, meaning that employees in Puerto Rico (and Montana) cannot be fired anytime, for any reason.
Employers in Puerto Rico (and Montana) should anticipate more difficulty than in other locations in the U.S. as Puerto Rico law favors employees.
Employers must demonstrate just cause for employee termination or risk paying a premium (una mesada) to the discharged employee that can be a severance package on steroids – including two months’ salary (minimum) plus progressive compensation depending on length of service.
How can employees in Puerto Rico be fired? Example of just cause for termination include:
- Documented pattern of improper or disorderly conduct.
- Measurable work performance issues (efficiency, quality, etc.).
- Violations of reasonable written rules.
- Closing of business operations.
Puerto Rico Labor Law Posting Requirements
In addition to required Federal labor law posters, employers in Puerto Rico are required to display a variety of work place postings to remain compliant with Puerto Rico labor law.
Required Federal Postings
- Equal Employment Opportunity Is the Law
- Federal Minimum Wage Notice
- Employee Polygraph Protection Notice
- Family and Medical Leave Act (FMLA)
- Job Safety and Health “It’s the Law!” (OSHA)
- Uniformed Services Employment and Reemployment Rights Act (USERRA)
Required Puerto Rico Commonwealth Postings
- Working hours (29 L.P.R.A. § 283): Employers must display a printed notice of the:
- Number of working hours required daily from employees for each day of the week.
- Time to begin and end work.
- Time to begin and end the period for taking food within the regular working hours.
- Ley de Seguridad y Salud (Safety and Health Act)
- SINOT Sistema de Compensasion por Accidentes del Trabajo (Workers’ Compensation)
- Antidiscrimen “Discrimination Is Illegal”
- Negociado De Normas de Trabajo
Another Bonus: The National Anthem of Puerto Rico
Enjoy the Puerto Rico national anthem, La Borinqueña
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