Puerto Rico

Overview

Puerto Rico’s economy is mainly bolstered by the manufacturing industries such as textiles, pharmaceuticals, electronics, and petrochemicals, followed by services industry including insurance, finance, tourism, and real estate. With a GDP of USD 103 Billion and a per capita income of USD 25,968, the country has one of the most competitive economies in South America.

Currency: United States Dollar ($)

Principal Languages: Spanish, English

Government: Representative Democracy, Presidential System

Capital City: San Juan

Major Cities: Ponce, Caguas, Mayagüez, Bayamón

Employment Contracts

Employment contracts are governed by federal and state labor statutes, and also by the Puerto Rico Civil Code.

Article 20(7) of Act No. 379 as amended, P.R. Laws Ann. tit. 29, §288(7), treats any written or verbal agreement under which employees agree to render a service for the employer as part of an employment contract. The employer is required to pay the minimum wage to employees in case the contract does not stipulate the wages.

Probationary Period
Probationary employment contracts are governed by Article 8 of Act No. 80 of May 30, 1976, as amended, P.R. Laws Ann. tit. 29, §185h. The contracts must comply with the statutory requirements stated in Act no. 80 and should also be:

  • In writing
  • State the beginning and end date of the probationary period
  • Be implemented before an employee begins any work
  • Not exceed 90 days.

The contracts can be extended by 90 days with the approval of the Secretary of Labor and Human Resources if the nature of the work demands.

Work/Time Regulations

The regular work schedule comprises 8 hours in a day and 40 hours in a week.

Overtime
The federal Fair Labor Standards Act of 1938 (FLSA), governs the overtime requirements for non-exempt employees and applies to each employer with an annual business volume exceeding $500,000. The FLSA also applies to employers who do not meet the annual volume requirements but whose employees engage directly in the production of goods for interstate commerce.

Leave

Holidays
The following national holidays are observed in Puerto Rico:

  • January 1: New Year’s Day
  • January 6: Día de Reyes
  • Second Monday of Jan.- Natalicio de Eugenio María de Hostos
  • Third Monday of Jan. - MLK Jr. Day
  • Third Mon. of Feb. - Presidents Day
  • March 22 - Día de la Abolición de Esclavitud
  • late March/Early April - Good Friday
  • Third Monday in April - Natalicio de José de Diego
  • Last Monday of May - Memorial Day
  • July 4 - Independence Day
  • Third Monday of July - Natalicio de Don Luis Muñoz Rivera
  • July 25 - Constitución de Puerto Rico
  • July 27 - Natalicio de Dr. José Celso Barbosa
  • First Monday of Sept. - Labor Day
  • Second Monday of Oct. - Columbus Day
  • Nov. 11 - Veterans Day
  • Nov. 19 - Día del Descubrimiento de Puerto Rico
  • Fourth Thursday of Nov. - Thanksgiving
  • Dec. 24, after 12 noon - Christmas Eve
  • Dec. 25 - Christmas
  • General Elections Day

Under the Labor Act, certain employers are required to pay a minimum compensation of $11.50 per hour to non-exempt employees.

Annual Leave
Employees are entitled to 15 days’ annual leave in a year and the leave is accrued at the rate of 1.25 days for each month. The leave is accrued each month only if an employee has worked for a minimum of 115 hours in a month.

Maternity Leave
Female employees are entitled to 8 weeks’ maternity leave and are required to furnish a medical certificate indicating pregnancy and the expected date of birth. Employees can return to work even 2 weeks post-childbirth provided they submit a medical certificate stating their ability to perform work satisfactorily.

Sick Leave
Employees are entitled to 12 days’ sick leave in a year, and the leave is accrued at the rate of 1 day each month. The leave is accrued each month only if an employee has worked for a minimum of 115 hours in a month.

Maternity Leave for Adoption
Female employees who adopt a child are entitled to same maternity benefits as those who give birth. Employees who adopt must give a 30-day notice to their employer stating their intention to adopt a child, as well as the intention to return to work after maternity leave.

Uniformed Services Employment and Reemployment Rights Act (USERRA)
The USERRA provides for unpaid leave to armed forces’ members of the United States, National Guard, and the Commission of the United States Public Health Services and others designated by the US President during war or called during an emergency to serve involuntarily or voluntarily. The act forbids hostile environment, discriminatory acts, and acts of retaliation against current or former employees and employment candidates due to their military service.

Family and Medical Leave
The Family and Medical Leave Act of 1993 applies to private employers with 50 or more employees and requires them to provide a maximum of 12 weeks’ unpaid leave in a 12-month period. Employees who have worked with their employer for at least 12 months and have performed work for 1,250 hours or more in the last 12 months qualify for benefits under the Act.

The leave is provided:

For the care of a newborn child:

  • To look after a spouse, son, daughter or parent with a serious health condition
  • For placing a son or daughter in adoption or foster care
  • For any "qualifying exigency" due to the fact that the employee's son, spouse, daughter or parent is on active duty or is designated ‘active duty’ status as a member of the National Guard or reserves in support of a contingency operation
  • To take medical leave when an employee is unable to work because of a serious health condition

Benefits

Pension and Social Security

Supplemental Security Income
Supplemental Security Income (SSI), a federal cash assistance program provides monthly payments to low-income disabled, blind, and aged individuals in the District of Columbia, the Northern Mariana Islands, and other 50 states.

Non-Occupational Disability Insurance
The Temporary Non-Occupational Disability Insurance (SINOT, Spanish acronym) established under the Act No. 139 of June 26, 1968, is a government-sponsored benefits program for employees who have a disability caused by non-occupational injury or illness. Under SINOT, disabled employees are given reinstatement rights and leave. Employers are required to reinstate the employees if:

  • The employees provide reinstatement request within a year from the date the disability began and within 15 days from the date the employees were discharged from hospital or medical care
  • At the time of the request, the employees are physically and mentally able to perform duties
  • The employees’ jobs have not been eliminated at the time of the request.

 Workers' Compensation
The Puerto Rico Workers' Accident Compensation Act, Act No. 45 of April 18, 1935, requires both private and public employers to provide insurance to their employees against work-related injuries and accidents. The Puerto Rico State Insurance Fund Corporation (SIFC) is the sole workers’ compensation insurance provider in Puerto Rico. Works of limited duration such as construction projects are normally insured through temporary policies. Premiums for these policies are based on the cost of the work, type of work, and other regulations.

For permanent policies, premiums are calculated based on the type of work, industry, and paid as a percentage for each $100 of payroll. The insurance rates are published in the Manual of Job and Industry Classifications and Types of Insurance and revised in hearings open to the public. In case an employee suffers a work-related illness or injury during a coverage lapse, the employer is required to make payments to the SIFC for the expenses related to disability, medical treatment, and administration incurred by the SIFC in providing treatment to the affected employee.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Puerto Rico and hire their employees without having to establish a branch office or subsidiary in Puerto Rico.

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