Puerto Rico Update: New Employment Benefits Approved

• Published date: 23 September 2022
• Law Firm: Seyfarth Shaw LLP
• Author: Ana Cid and Juanita Vera-Trujillo

On June 20, 2022, Puerto Rico's governor signed Act No. 41, which modifies several of Puerto Rico's current employment statutory entitlements, providing greater employment benefits to employees in the private sector (the "Act").

The Act was intended to be effective within 30 days of its signature (on July 20) for large employers, and within 90 days (September 20) for microbusinesses, small and medium-sized businesses, if approved by Puerto Rico's Financial Oversight and Management Board'an entity that is empowered to temporally suspend the enforcement of Acts if it believes new legislation does not comply with Puerto Rico's fiscal plan.

However, on July 20, 2022, the Board released a statement instructing Puerto Rico's governor to suspend the implementation and enforcement of the Act. In spite of this, Puerto Rico's governor declared that the Act would not be suspended and that the Board would need to obtain such suspension via court ruling.

Although the Board recently filed a lawsuit challenging the governor's action and seeking for the Act to be declared null, it is not clear what and when a court will decide. To date, the court has not suspended the implementation of the Act, and therefore it is enforceable.

To avoid breaching the Act and incurring sanctions from the failure to implement its provisions, companies should review their current policies...