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Puerto Rico

February 08, 2021

By  Carlos Rodriguez-Vidal and Angel Berberena 

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Puerto Rico

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

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Kirsty Devine
Associate, Employment Law Department

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Aashna Parekh
Associate, Employment Law Department