A Puerto Rico federal judge has nullified a Puerto Rico law (House Bill 1244 / Act No.41-2022) that made major revisions last year to rules governing probationary periods, vacation and sick leave, meal periods, annual Christmas bonuses, and other requirements under the island’s labor laws. House Bill 1244 went into effect in 2022. On March 3, 2023, a federal judge nullified the law. The Puerto Rico government can appeal the ruling.
The Details
Here is a summary of many of the changes that will occur if the federal court’s ruling is left standing.
Probationary Periods
The automatic probationary period reverts back to nine months for non-exempt employees and 12 months for exempt employees.
Vacation and Sick Leave
The threshold for employees to be eligible to accrue paid vacation and sick leave reverts back to working at least 130 hours in a month.
For employees hired after January 26, 2017 and who work for an employer with 13 or more employees, vacation leave accrual reverts to:
· Half day per month during the first year of service;
· Three-quarters of a day per month after the first year and until the fifth year;
· One day per month after five years until 15 years; and
· One and a quarter days per month after 15 years.
For employees hired after January 26, 2017 and who work for an employer with 12 or fewer employees, vacation accrues at a half day per month.
Sick leave accrual is one day for each month the covered employee works at least 130 hours.
Note: Employees hired before January 26, 2017 are entitled to accrue vacation at a rate of one and a quarter days per month, provided that the employee works at least 130 hours during the month in which the accrual takes place.
Annual (Christmas) Bonus
To be eligible for the annual Christmas bonus, employees hired after January 26, 2017 must work 1,350 hours within the applicable 12-month period. The bonus will be two percent of the total salary earned, up to $600 for employers with more than 20 employees and up to $300 for smaller employers.
Note: Employees hired before January 26, 2017 must work 700 hours to be eligible for the annual Christmas bonus. The formula for calculating the bonus also differs.
Unjust Dismissal Law
The island’s unjust dismissal law will have several provisions that will revert back to the way they were before the 2022 changes, including:
· The calculation of the remedy for an unjust dismissal
· The definition of constructive discharge
· The concept of “just cause” in performance-related terminations
Meal Periods
Meal periods must begin no earlier than the second hour of work but before the start of the sixth hour of consecutive work. Employers may omit a meal period if the total work hours are no more than 6 hours in a working day. A second meal period is no longer required, provided total work hours are no more than 12 hours, and the employee has taken the first meal period.
Day of Rest
A premium rate will no longer apply to non-exempt “student” employees who work on the day of rest required after six consecutive workdays.
Next Steps
If you have employees in Puerto Rico and made changes based on the 2022 law:
· Determine whether you wish to revert to the pre-2022 law considering the employee relations impact of your decision and the possibility of a future appeal by the government. Consult with counsel as needed before deciding.
· If you do decide to revert to the pre-2022 law:
o Update policies and practices to reflect the changes.
o Notify employees of the changes and the reason they are being made.
o Train supervisors on the changes.
· We will continue to monitor developments including any government appeal.