Since the inception of Law No. 41-2022, we alerted our clients and readers of the obstacles and challenges that lay ahead with the implementation of this legislation. The Fiscal Oversight & Management Board for Puerto Rico (“the Board”) made no secret of its opposition to House Bill 1244-2022, which eventually became Law No. 41-2022, and advised the government of Puerto Rico not to repeal Law No. 4-2017, also known as the Labor Transformation and Flexibility Act. The Board also vowed to take legal action to stop any legislation that would negatively impact the labor market flexibility that Puerto Rico needs, or any action that would interfere with PROMESA’s purposes.
Thus, on July 30, 2022, a few days after the effective date of the law, the Board provided the government of Puerto Rico with an economic impact analysis of Law No. 41-2022, and asked the government to suspend voluntarily such law no later than August 4, 2022. Failure to act on the part of the government would result in legal action to nullify Law No. 41-2022. The government, however, ignored the Board’s warning and decided to go full speed ahead with the implementation of the law.
The Board made good on its promise. On September 1, 2022, it filed a complaint in federal court with two (2) counts to repeal Law No. 41-2022. On September 29, 2022, the government answered and challenged the jurisdiction of the Court. On the same day, the Board moved for summary judgment. Accordingly, on March 3, 2023, after full consideration of the parties’ arguments and positions, the Court denied the government’s motion, holding that it may exercise jurisdiction, and granted in part and denied in part the Board’s summary judgment motion.
Granting in part the Board’s summary judgment motion was sufficient for the Court to find that such entity was entitled as a matter of law to the relief sought. Consequently, the Court held that Law No. 41-2022 was null ab initio. This means that the law and all actions taken to implement it are null and void from the beginning. In other words, Law No. 41-2022 never had any legal effect.
The decision of the Court validates and gives new life to Law No. 4-2017. However, the effects on employers of this new development could still be significant. In the past few months the government of Puerto Rico took the stand that all employers in our jurisdiction had to comply with the provisions and amendments of Law No. 41-2022. Thus, many employers modified personnel handbooks, offered employment under the new rules for probationary periods, calculated hours and paid Christmas bonuses according to the new guidelines of the Puerto Rico Department of Labor, and accrued vacation for part-time employees, to mention just a few. Others are perhaps litigating or have settled cases under the changes brought by Law No. 41-2022. Now the question turns out to be what to do next. Changing rules again for the existing workforce could have unforeseeable effects, and could result in staff turnover and difficulties in attracting good candidates.
This Court’s decision is not final yet. According to some government spokespersons, including the Secretary of Labor and Human Resources of Puerto Rico, they are analyzing the legal grounds that support the decision and will determine if the best course of action is to appeal. However, given this swift action and decisive language used by the Court, in addition to the good track record of the Board in PROMESA cases, it is likely that the decision will be upheld. Moreover, the least that is needed at this moment is further confusion and instability from a government appeal. At AMG we will follow closely all development related to Law No. 41-2022 and keep you updated. For your ready reference, we are attaching our newsletter of January 27, 2017, which contains a summary of Law No. 4-2017.
AMG’s Labor and Employment Practice Team secured a win before the Puerto Rico Court of Appeals in a discrimination and retaliation case and a reversal of a penalty over an awarded bonus payment to an exempt employee.
headlines when it fined a political party in Puerto Rico in the amount of $30,000, in connection with a sexual and workplace harassment claim. Among other findings, the Office for Women’s Advocacy determined that the political organization in question had failed to have protocols and procedures to handle sexual harassment claims.
On June 20, 2022, the governor of Puerto Rico signed into law the long-awaited amendments to Law No. 4-2017, the Labor Transformation and Flexibility Law of 2017 (also known as the Labor Reform of 2017). Now, with the benefit of an opinion of the Secretary of Labor and Human Resources of Puerto Rico issued on June 28, 2022, and a presentation by such agency on June 30, 2022, we have a better view of the scope of Law No. 41-2022, which is effective on July 20, 2022. For micro businesses and PYMES (small and medium enterprises) as defined in Law No. 62-2014, the provisions of Law No. 41-2022 will be effective ninety (90) days after its approval.
On September 21st, 2021, the governor of Puerto Rico, Pedro Pierluisi, signed into law the Puerto Rico Minimum Wage Act, Act 47-2021 (hereinafter the “Act”). When he made the announcement, Pierluisi expressed that, after more than 12 years without a raise to the federal minimum wage of $7.25 per hour, now through the PR Minimum Wage Act, on January 1st, 2022, the minimum wage salary in Puerto Rico will be raised to $8.50 per hour.
The new Chambers & Partners Global Practice Guide- Employment 2021 covers 52 jurisdictions. The Puerto Rico chapter of the guide, contributed by AMG, provides the latest legal information on the legislative initiatives to cope with the COVID-19 crisis, terms of employment, non-compete and non-solicitation clauses, data privacy law, foreign workers, the role of unions, and employee representative bodies, termination of employment, employment disputes and dispute resolution. It also discusses the latest trends and developments in the area of Employment Law in Puerto Rico.
Puerto Rico remains under a state of public health emergency first announced on March 12, 2020, in connection with the COVID-19 pandemic.
AMG’s Mariel Y. Haack and Edwin J. Seda-Fernández featured in Summer 2021 Edition of The In-House Lawyer Magazine.
Last week, Governor Pedro Pierluisi signed into law, Act 15-2021, which amends Act No. 42-2017, “Act to Manage the Study, Development and Research of Cannabis for Innovation, Applicable Standards and Limits”, to provide employment protections to registered and authorized medical cannabis patients by creating a protected category for these employees in their workplaces.
During the 2020 election campaign in Puerto Rico, several candidates ran on a platform that included amending the Labor Reform Act of 2017, Law No. 4 of January 26, 2017 (“Law No. 4-2017”). Accordingly, it should come to no surprise that in the opening 2021 legislation session, there is a flurry of bills in the House intended to amend or repeal Law No. 4-2017.
On August 7, 2020, the Governor of Puerto Rico signed into law House Bill 306 to prohibit workplace harassment (commonly referred to as “mobbing”).
The Complementary Act to Counter the Effects on Puerto Rico's Economy caused by the Covid-19 Emergency, signed by the Governor on June 14, 2020 (Act 57-2020), incorporates certain permanent and temporary tax measures
On June 15, 2020, in a landmark decision, the United States Supreme Court (“Supreme Court”) held in the case of Bostock v. Clayton County, that employers cannot take adverse employment actions against employees on the basis of their sexual orientation or gender identity.