Employment law in Puerto Rico
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Any business that is sending or hiring employees in Puerto Rico must first understand some basic information about employment law in Puerto Rico. This is because any business that hires employees that will work in Puerto Rico will in most cases have to be aware about the relevant rules and regulations that govern the employer-employee relationship in Puerto Rico. A business that fails to comply will faces serious legal, financial, and reputational risks.
Here, we will address the following issues:
- Employment relationship
- Employment contracts
- Time off
- Codes of conduct
- Employment information and privacy
- Workplace Safety
- Termination of employment
If you want personalized answers to your questions regarding employment law in Puerto Rico, ask an expert now on our website for free. We will connect you with an employment lawyer in Puerto Rico, who will follow up via email to address the issues you may face in Puerto Rico.
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In general, these are the relevant employment laws:
- Puerto Rico’s Constitution
- International treaties
- Domestic sources of law
- Collective bargaining agreements
- Employment contracts
- Local customs and usage
These laws can be difficult to understand; just reading the laws or a translation of the laws will not give you a full appreciation the legal complexity involved. This is why you will likely need ongoing expert assistance. You can ask a question now on this website to connect with a lawyer in Puerto Rico.
For now, let’s briefly review the top thirteen issues you will need to know:
1. The employment relationship
Employment law in Puerto Rico dictates the definition of key terms in the employment relationship, such as: employee, employer, independent contractor, contingent worker, and other types of workers. The distinction between these groups can be very specific and will depend on the facts of your particular situation. In general, the differences between these various definitions will affect your specific situation as far as compliance in all of the following areas.
2. Hiring employees in Puerto Rico
Certain restrictions may apply to the process in which you hire an employee in Puerto Rico. For example, discrimination based on certain traits may give rise to lawsuits, fines, and a negative business reputation. Laws may also restrict the tests and application procedures that you may use to screen employees. Other issues include: corporate formation, background checks, drug and alcohol testing, recruiting restrictions, and using contingent workers. Finally, a major factor in employing a person to work in Puerto Rico is whether the employee complies with the relevant immigration laws that will authorize a non-citizen worker to work in Puerto Rico.
3. Employment contracts
Legal provisions set certain standards that an employment contract may or may not be able to modify. Many of the legal standards in Puerto Rico will apply, regardless of what an employment contract says.
Some issues that employers must consider are:
- Is a written employment contract necessary in Puerto Rico?
- What are an employment contract’s essential terms?
- What language must an employer write the contract in?
- How long must a contract last?
- Can an employer hire an employee for a probationary period in Puerto Rico?
- How must a contract address termination provisions?
- What provisions can an employer include to protection of intellectual property, non-competition, non-solicitation, and confidential information?
An employment contract’s enforceability will depend largely on the relevant laws. As such, consulting with an employment lawyer in Puerto Rico may give valuable information to protect your company and your employees in Puerto Rico.
Discrimination on the job in Puerto Rico is a very important issue for companies with employees in Puerto Rico. In general, employers must not discriminate based on gender, religion, disability, and other traits. Employers should prevent harassment on the job, protect employees against reprisal, and make accommodations when possible. Employers should also be aware of the potential consequences of discriminatory practices.
A lawsuit or enforcement action against a company in Puerto Rico can have devastating consequences for a company, regardless of the action’s outcome. Companies must be aware of best practices that businesses in Puerto Rico follow to ensure that they do everything they can to comply with the discrimination provisions that exist in employment law in Puerto Rico.
Employment law in Puerto Rico may shape the ways that you compensate an employee in Puerto Rico. The main issues regarding employee compensation in Puerto Rico are: working hour restrictions, minimum wages, pay schedules, currency requirements, overtime pay, commissions restrictions, bonuses, and equity compensation. As you can probably tell, these provisions will have specific application and will likely require expert advice to ensure that your compensation structure complies with the relevant legal provisions in Puerto Rico.
6. Time off
Any employee in Puerto Rico will be entitled to minimum time off, based on provisions in employment laws in Puerto Rico. At base, the law generally requires that companies respect certain holidays or provide set levels of additional compensation for employees who work on those holidays. Employment law in Puerto Rico will also provide for a minimum number of short-term sick pay for employees. Legal provisions generally protect a minimum number of vacation days for employees. Certain provisions protect parental rights as regards to leave for new or expecting parents. Employers must thus give careful attention to these time-off requirements.
In addition to salary, employees in Puerto Rico are entitled to a minimum standard of employee benefits. These benefits generally include health care, pensions, and workers’ compensation. In addition to mandatory benefits, many employers in Puerto Rico offer voluntary employee benefits to attract and retain talent. Expert assistance is likely required to structure appropriate benefits for employees in Puerto Rico.
Of course, any business that operates and hires employees in Puerto Rico must consider its compliance requirements of the relevant tax authority in Puerto Rico. At base, employers must consider:
- social security/payroll contributions
- corporate income tax liability
- employee’s individual income tax liabilities
- double tax issues
This oversimplified analysis of employers’ tax issues in Puerto Rico masks the detailed complexity that tax compliance entails. If you are seeking specific tax advice in Puerto Rico, ask a question now to connect with a tax professional in Puerto Rico.
9. Codes of conduct
An employee code of conduct can provide great assistance to employers in Puerto Rico by helping them guide best practices in the workplace and comply with legal standards. In general, a code of conduct communicates rights and responsibilities to employees, helping ensure a comfortable and compliant workplace. Close consultation with an expert in Puerto Rico will help companies communicate best practices into the workplace and in turn help with employment law compliance.
10. Employment information and privacy
In Puerto Rico, employees enjoy strict information and privacy rights, which employers must respect. An employer faces significant restrictions regarding the use, storage, and sharing of employee information. Careful attention to these rights requires close analysis by an employment law expert in Puerto Rico.
Many workers also enjoy the protection of unions and collective bargaining agreements in Puerto Rico. These protections will in some cases govern the employment relationship above and beyond the minimum legal requirements in Puerto Rico. To thoroughly understand how union or collective bargaining affects the employment relationship in specific industries, a company will need to carefully analyze the existing agreements that are in place.
12. Workplace Safety
Though most employers will readily comply with workplace safety requirements in Puerto Rico, awareness of the relevant provisions in employment law in Puerto Rico will help ensure legal compliance.
13. Termination of employment
Finally, an employer must understand the liability that surrounds the employment relationship upon termination. Certain grounds for dismissal exist that allow for termination, while other grounds are strictly impermissible. A breach of contract or dismissal for impermissible grounds will likely give rise to actions in the legal system that may prove detrimental to the employer.
Certain notice periods may exist in employment laws in Puerto Rico, requiring an employer to notify employees in advance of dismissal. In many cases, employers can give payment in lieu of notice if immediate termination is necessary. Legal provisions will likely dictate the amount of pay required in addition to minimum severance packages.
Failure to follow the relevant termination provisions in Puerto Rico will likely lead to adverse action against an employer under the employment laws in Puerto Rico.
In sum, employers in Puerto Rico must examine many issues when hiring or sending employees abroad. In most cases, employers will need expert assistance. To find that expert assistance, ask a question now to experts in employment law in Puerto Rico.