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Client Alert
Recent Developments to PR Labor Reform of 2022
By: Angel Berberena, Esq.
July 20, 2022
Law 41-2022 of June 20, 2022, enacted a substantial number of labor and employment reforms in Puerto Rico. See Client Alert of June 21, 2022. On June 28, 2022, the Secretary of Labor and Human Resources of Puerto Rico issued Opinion 2022-01 on the prospective effects of the Labor Reform pertaining to probationary contracts. See Client Alert of June 29, 2022.
On July 19, 2022, one day before Law 41-2022 was to take effect for large employers,[1] the Secretary of Labor and Human Resources issued Opinion 2022-03 explaining how part-time employees will accrue vacation and sick leave under the Labor Reform. As per Opinion 2022-03, for part-time employees to be entitled to ½ vacation days and ½ sick days during the calendar month, the employee needs to work less than 115 hours during the month and 20 or more hours during each week of the month. For weeks that fall in two months, the total hours worked during the week must be used for both months.
As anticipated in our Client Alert of June 21, 2022, due to the potential economic impact of Law 41-2022, on July 19, 2022, the Financial Oversight & Management Board of Puerto Rico (FOMB)[2] requested additional information from the Government of Puerto Rico regarding the statute and asked for a postponement of its effective date due to potential conflicts with the Puerto Rico Oversight, Management and Economic Stability Act of 2016 (PROMESA) or the Board’s approved Fiscal Plans for the Government. In response, the Governor and the Secretary of Labor and Human Resources of Puerto Rico issued separate statements that Law 41-2022 will come into effect as scheduled and that the FOMB cannot prevent or stay the effects of the enacted statute. Consequently, the FOMB would have to seek remedy before the federal court to enjoin the implementation of the law. The Government also stated that it will defend the decision to enact and enforce the statute.
While the future of this statute is uncertain, as of June 20, 2022, Law 41-2022 is in effect for large employers. Micro, small and medium businesses will have an additional 60-day period to implement these changes. The FOMB is likely to challenge the statute under PROMESA. If the FOMB is successful, which is a likely scenario, all or most changes under Law 41-2022 will be reversed.
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[1]For large employers, the provisions and amendments of Law 41-2022 became effective on July 20, 2022, 30 days after the approval of the statute. Micro, small and medium business (those with gross income below $10 million dollars and with 50 or less employees) still have 60 additional days before the amendments become effective.
[2] The Financial Oversight & Management Board of Puerto Rico is the presidential appointed board overseeing the restructuring of Puerto Rico’s debt.
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