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Puerto Rico

January 15, 2021

By Angel Berberena

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Puerto Rico

KEY DEVELOPMENTS FOR 2021


 

Wrongful termination claims

Law 80 of 30 May 1976 (Law 80‑1976), provides for a mandatory severance if an employer terminates any employee hired for an indefinite period without "just cause." Law 80‑1976 provides an open list defining just cause, which includes:

  • The full, temporary, or partial closing of operations.
  • Technological or reorganizational changes, changes of style, design, or nature of the product made or handled by the employer and/or services rendered to the public.
  • Reductions in force that are necessary due to a reduction in volume of production, sales, or profits anticipated at the time of the termination, or with the purpose of increasing the competitiveness or productivity of the establishment.

Although these provisions cover terminations and reductions related to operational considerations, including coronavirus, employers that retain some workforce are required to follow seniority by occupational classification unless there is a clear and evident difference in favour of the capacity, productivity, performance, competence, efficiency, or conduct of the compared employees. This means that unless seniority is used, failure to follow clear, evident, objective, and verifiable criteria may result in wrongful termination claims. As a rule, for employers with multiple sites or stores, each physical location is considered separate and independent for the comparative analysis. However, if there is a regular transfer of employees between locations and common and direct supervision, employees must be compared based on integrated operations. Furthermore, employers that reopen operations within six months are required to rehire the same employees following the same criteria.

These lesser‑known provisions of Law 80‑1976 related to retention and rehiring of employees, in addition to the potential failure to follow or document an alternate selection criteria, will likely result in unintentional and avoidable wrongful termination claims.


 

Workplace harassment or bullying claims

On 6 August 2020, the Governor of Puerto Rico signed Law 90‑2020, also known as the Workplace Harassment Act of Puerto Rico. This new law establishes a vigorous public policy against all types of workplace harassment.

Law 90‑2020 provides a very broad definition of workplace harassment to include repeated conduct that is: malicious, not desired, repetitive, and abusive; arbitrary, unreasonable, and/or capricious; that falls outside the legitimate interests of the employer's company, against the employee's protected constitutional rights. The malicious conduct may be verbal, written, and/or physical, and may be performed by the employer, their agents, supervisors, and/or employees.

The new law also requires employers to take all the necessary measures to eliminate or minimise workplace harassment. Employers are also required to take action to correct any possible harassing behaviour in the workplace, create policies and provide adequate training to the workforce. The employer's obligations extend to workplace harassment by third parties if the employer knew or should have known of such conduct and failed to take immediate action to correct the situation.

Law 90‑2020, which faced staunch opposition from the private sector, will likely increase claims and complaints against employers in the years to come.


 

Risk management plan—return to the workplace

Since the beginning of the COVID‑19 pandemic, the Governor of Puerto Rico has issued several executive orders with limitations or restrictions to businesses and the public in general to reduce the spread of the disease. Executive Order 2020‑87, signed on 3 December 2020, restates that employers must comply with previous orders (Executive Order 2020‑38; Circular Letter 2020‑03 of the Puerto Rico Department of Labour and Human Resources) regarding the creation of a risk management plan to control exposure in the workplace to COVID‑19 and the notification of positive test results of employees to the Puerto Rico Department of Health.

Executive Order 2020‑87 further states that employers cannot require employees returning to the workplace to provide a negative COVID‑19 test result (PCR test) as a condition to their return to work as per the guidelines of the Puerto Rico Department of Health and the Centre for Disease Control.

As businesses continue to operate under COVID‑19 restrictions, there has been an increase in inspections and fines by Government agencies. In addition to more inspections and fines, we can continue to expect claims by clients and employees when businesses fail in their duty to provide a safe environment or follow government guidelines.

With thanks to Angel Berberena of Goldman Antonetti & Córdova, LLC for her invaluable collaboration on this update.

 

KEY DEVELOPMENTS FOR 2020


 

Paid Emergency Leave

Law 37 of 9 April 2020 amended the Minimum Wage, Vacation and Sick Leave Act of 1998 to create a new paid emergency leave. Qualified non-exempt employees that are sick, or suspected of being sick with an illness or pandemic that is related to a declaration of state of emergency, are now entitled to paid emergency leave of five days. This leave is available once the employee exhausts all other leaves and only when a state of emergency has been declared by the Governor of Puerto Rico or the Secretary of the Department of Health of Puerto Rico.


 

Equal Pay Program

The Department of Labor and Human Resources of Puerto Rico approved the Regulation to Administer the Equal Pay Program, a program initially created by Law 16 of 8 March 2017. This Regulation encourages employers to create and implement equal pay policies. Employers who voluntarily participate may avoid potential liability related to previous violations and are able to obtain a certificate of compliance that is being required from Government contractors.


 

Risk Management Plan and Self-Certification

Executive Order 2020-038 came into effect on 4 May 2020, which requires private employers to prepare and submit a risk management plan based on the current guidelines issued by the Occupational Safety and Health Administration (OSHA) and to file a self-certification of compliance before resuming their activities and services. The Puerto Rico Department of Labor and Human Resources subsequently issued Circular Letter 2020-03 providing specific guidelines for the creation of a risk management plan to control exposure to COVID-19 and for the self-certification required from employers. As businesses reopen, there has been an increase in inspections and fines by Government agencies. Claims that employers have failed to provide a safe environment or follow Government guidelines are also expected to increase.


 

Wrongful termination claims

Law 80 of 30 May 1976 provides for a mandatory severance payment if an employer terminates an employee hired for an indefinite period of time without 'just cause'. Law 80 provides an open list defining just cause, which includes:

  • the full, temporary, or partial closing of operations;
  • technological or re-organisational changes, changes of style, design or nature of the product made or handled by the employer and/or services rendered to the public; and
  • reductions in force that are necessary due to a reduction in volume of production, sales, or profits anticipated at the time of the termination, or with the purpose of increasing the competitiveness or productivity of the establishment.
 

Although these provisions cover terminations and reductions related to operational considerations, including coronavirus, employers that retain some of the workforce are required to follow seniority by occupational classification, unless there is a clear and evident difference in favour of the capacity, productivity, performance, competence, efficiency or conduct of the compared employees. This means that, unless seniority is used, failure to follow clear, evident, objective and verifiable criteria may result in wrongful termination claims. As a rule, for employers with multiple sites or stores, each physical location is considered separate and independent for the comparative analysis. However, if there is a regular transfer of employees between locations and common and direct supervision, employees must be compared based on integrated operations. Furthermore, employers that re-open operations within six months are required to rehire the same employees using the same criteria.

These less known provisions related to retention and rehiring of employees, in addition to the potential failure to follow or document an alternate selection criteria, will likely result in unintentional and avoidable wrongful termination claims.

With thanks to Carlos Rodriguez-Vidal and Angel Berberena of Goldman Antonetti & Cordova LLC for their invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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