Labour & Employment

Last verified on Tuesday 6th February 2018

Puerto Rico

Diana J Nehro, Enrique Del Cueto-Pérez and Ryan Correia
Ogletree Deakins Nash Smoak & Stewart PC
  1. 1.

    May foreign employers hire employees directly in your jurisdiction or is it necessary to act through a local subsidiary? Are secondments or loans of personnel lawful?

  2. Technically, a foreign employer may hire employees directly in Puerto Rico, without registering to do business locally or establishing a local subsidiary, provided that services are to be rendered within the jurisdiction of Puerto Rico. However, in practice, doing so may trigger corporate registration and tax registration and reporting obligations, in addition to employment liability, for the foreign employer. Furthermore, recruiting Puerto Rico-based employees to perform work abroad requires approval from the Puerto Rico Department of Labor under Act No. 87 of 22 June 1962, as amended.

    A foreign company may engage the service of workers in Puerto Rico through an outsourcing arrangement, subject to compliance with Act No. 26 of 22 July 1992, as amended (also known as the Temporary Employment Companies Act).

    Secondments or loans of personnel are lawful in Puerto Rico. A non-US citizen, however, will need authorisation from immigration authorities to work in Puerto Rico. As a US territory, Puerto Rico is governed by US immigration law.

  3. 2.

    Is there a limit to the number (or ratio) of foreign employees an employer may have in your jurisdiction?

  4. Local law does not restrict the number of foreign employees that an employer may have in Puerto Rico. That said, Puerto Rico is subject to US immigration law and, thus, options for employers to bring foreign workers into the US (including Puerto Rico) on a temporary or permanent basis are limited.

  5. 3.

    May labour or employment agreements, and the termination of those agreements, be subject to any legislation other than that of your jurisdiction?

  6. In theory, a choice-of-law provision in an employment contract will be upheld and enforced by Puerto Rican courts as long as the chosen jurisdiction has a substantial connection to the contract; the provision was freely negotiated, absent fraud or deception; the agreed governing law is not unreasonable, unfair, or unjust; and that enforcing the choice-of-law provision does not defeat a fundamental public policy of Puerto Rico. This means that a choice-of-law provision will be upheld as long as it provides for employee rights/protections that are equal to or greater than those set out by Puerto Rican law provided the chosen jurisdiction has a substantial connection to the contract.

    Furthermore, the recently approved Labour Transformation and Flexibility Act (LTFA), signed into law on 26 January 2017, provides that, in certain situations, the employment relationship of an employee from another jurisdiction, who is temporarily assigned to work in Puerto Rico for a term not to exceed three consecutive years, will continue to be subject to the governing law of his or her employment agreement. This means that a properly drafted contract or assignment letter, as applicable, with a clear choice-of-law provision, will exempt an employee from another jurisdiction, who is temporarily assigned to render services in Puerto Rico for a company other than his or her employer, from most of the local labour and employment law requirements. Such an employee, however, will still be subject to Puerto Rico laws regarding local income tax, discrimination in the workplace and work-related injuries or accidents.

  7. 4.

    What are the requirements for an enforceable agreement? Are there any formalities that labour or employment agreements must adopt to be enforceable in your jurisdiction? Are fees, duties or taxes generated by any of them?

  8. Generally, Puerto Rico law does not require a written contract for the creation of an employment relationship. In other words, an oral employment contract is just as binding and enforceable as one in writing. However, certain types of contracts such as meal period reduction, flexible work schedule, and non-competition agreements must be in writing. There are no fees, duties or taxes resulting from the hiring of an employee.

    Employment agreements are not subject to registration with local authorities. There are, however, new hire reporting requirements. For example, employers are required to provide certain details about their newly hired employees to the Directory of New Hires managed by the Puerto Rico Child Support Administration (ASUME) within 20 days of the date of hiring. 

  9. 5.

    What are the implications of hiring personnel without a clear, written, employment agreement in place? May this have any effect in the event of litigation?

  10. As stated above, a written employment contract is not required to establish an employment relationship under Puerto Rico law because an oral employment contract is as valid and enforceable as its written counterpart. That said, there may be exceptional circumstances that warrant the execution of a written employment agreement, such as when enticing a highly skilled executive to come work for the company instead of a competitor. In this context, having a written agreement memorialising the parties’ understandings about matters such as job stability and expectations, incentives to perform, and ex gratia (non-statutory) benefits, which may not be available to lower-level employees, is beneficial.

  11. 6.

    What are the employers’ obligations (social security and related benefits) regarding employees after contracting? Are any social benefits tax deductible? Are these applicable to foreign employees?

  12. In Puerto Rico, an employer is required to withhold and remit Puerto Rico income tax from a local employee’s wages. For tax purposes, Puerto Rico residents are exempt from US federal income tax on income derived from sources within Puerto Rico. An employer’s payroll tax responsibilities also include withholding from an employee’s compensation, and paying its own contributions, for FICA tax, SINOT and the chauffeurs’ social security death and disability benefits program, where applicable. Additionally, employers are required to pay worker’s compensation insurance premiums.

    For foreign nationals working in Puerto Rico, the employer must withhold Puerto Rico income tax from the expatriate’s assessable employment income. If the expatriate is a bona fide Puerto Rico resident, he or she will be taxed on his or her worldwide income, regardless of source. A non-resident expatriate will be taxed on his or her Puerto Rico-sourced income only. An expatriate working in Puerto Rico is also subject to FICA tax unless the expatriate’s employer obtains a certificate of coverage under a totalisation agreement and SINOT contributions. Finally, an employer’s obligations about workers’ compensation and SINOT also apply to expatriates.

  13. 7.

    What benefits, other than cash remuneration are employees in your jurisdiction entitled to? What severance entitlements may employees claim?

  14. Generally, both exempt and non-exempt (ie, those who usually work and are paid by the hour) employees are entitled to the following benefits:

    • paid maternity leave;
    • paid breastfeeding breaks in a safe, private and hygienic space;
    • workers’ compensation in the event of a work-related illness or accident;
    • non-occupational short-term disability;
    • chauffeur’s social security, where applicable;
    • unemployment insurance;
    • Christmas bonus;
    • up to 12 weeks of unpaid leave per year for certain family and medical reasons under the Family and Medical Leave Act;
    • jury duty leave;
    • witness leave;
    • Olympic leave;
    • sports leave;
    • municipal legislator leave;
    • driver’s licence leave; and
    • severance pay (mesada) when an employee hired for an indefinite term is terminated without “just cause,” as required by Act No. 80 of 30 May 1976, as amended (Act No. 80).

    Under Act No. 80, “just cause” for the termination of an indefinite term employee is any reason that is not motivated by legally prohibited reasons or the employer’s whim. Additionally, “just cause” is understood to be anything that affects the good and normal functioning of the establishment and includes, but is not limited to, the following:
    (i) the employee engages in a pattern of improper or disorderly conduct; (ii) the employee exhibits an attitude of not carrying out work in an efficient manner, or doing it tardily, negligently, or in violation of the employer’s quality and security standards, poor performance, lack of competency or ability to carry out the work in accordance with the reasonable standards required by the employer, and repeated customer complaints; (iii) there are repeated violations of reasonable rules set forth for the establishment’s operations and the employee has timely received a written copy of them; (iv) there is a full, temporary, or partial closing of an establishment’s operations. In the cases where an employer has more than one office, factory, branch or plant, the total or partial closing of any of these establishments where the employee works will constitute just cause for the termination; (v) technological or reorganisational changes occur, as well as changes in style, design or the nature of the product made or handled by the establishment and in the services rendered to the public; and (vi) reductions in headcount are necessary due to a reduction in the volume of production, sales or profits, anticipated or prevalent at the time of discharge, which threaten the stability and economic solvency of the business, or to increase the competitiveness or productivity of the employer. This is not an exhaustive list of reasons which would constitute “just cause” for terminating an indefinite term employee without severance pay. For employees hired before 26 January 2017, the amount of severance pay is based on the employee’s seniority:

    • for employees with more than one but less than five years of service, severance pay is equivalent to two months’ salary plus one week of pay for each full year of service;
    • for employees with between five and 15 years of service, severance pay is equivalent to three months’ salary plus two weeks of pay for each full year of service; and
    • for employees with over 15 years of service, severance pay is equivalent to six months’ salary plus three weeks of pay for each full year of service.

    For employees hired on or after 26 January 2017, severance pay is three months’ salary plus two weeks of salary for each full year of service. Severance pay for these employees is capped at nine months’ salary.

    In addition to the benefits discussed above, non-exempt employees are generally entitled to daily and weekly overtime, a daily meal break of one hour (which may be reduced by written agreement), a meal period premium for work performed during the meal break, a weekly rest day, paid vacation leave (the amount of which varies pursuant to the employee’s date of hire), paid sick leave and paid care-giver leave. Outside salespersons (also known in Puerto Rico as “traveling agents”) are exempt from overtime and meal period premium requirements, but they are entitled to a weekly rest day and the accrual of vacation and sick leave.

  15. 8.

    What is the role of the unions in the relationship with foreign employers and employees?

  16. Employees in both the private and public sectors have the right to organise, bargain collectively with their employers through representatives of their own choosing and to engage in other protected concerted activities with or without a union, or to refrain from all such activity. The primary law governing relations between unions and employers in the private sector is the federal National Labor Relations Act (NLRA) of 1935, as amended by the Taft-Harley Labor Act of 1947 (Labor-Management Relations Act). The National Labor Relations Board (NLRB) was created by the NLRA as the statute’s administering body and has jurisdiction over cases involving businesses engaged in interstate commerce. Private employers not covered by the NLRA are under the exclusive jurisdiction of the Puerto Rico Labour Relations Board (PRLRB), the local counterpart to the federal NLRB. The PRLRB, which was created by Act No. 130 of 7 March 1946, may exercise jurisdiction over private employers engaged in interstate commerce on matters outside the scope of the NLRA.

    Once a union has been certified by the NLRB or the PRLRB as the exclusive bargaining representative for employees in a bargaining unit, the employer, and the union must meet to bargain in good faith about wages, work hours, vacation leave, safety practices, grievances and other conditions of employment, among other mandatory subjects.

    Unions are allowed in the public sector under the Public Service Labor Relations Act of 1998.

  17. 9.

    Do employees have the right to form unions? Is it mandatory for employers to honour this?

  18. Yes, employees have the right to unionise. An employer may voluntarily recognise a union; however, it must recognise and bargain with a union once it has been certified by the NLRB or the PRLRB.

  19. 10.

    May unions be an independent party to a labour controversy in your jurisdiction? What are their rights and duties towards the employer and unionised employees?

  20. Yes, unions may be an independent party to a labour controversy. Both unions and employers have a duty not to restrain nor coerce employees who are exercising their rights relating to organising, forming, joining or assisting a labour organisation for collective bargaining purposes, or from working together to improve terms and conditions of employment or refraining from any such activity. Furthermore, unions and employers are allowed to enter into agreements that require all employees in a bargaining unit to pay union dues to support the union’s operating costs.

  21. 11.

    May a union request, bring about or cause a stoppage? If so, in what cases and what remedies would be available to the employer?

  22. Yes, strikes are included among the concerted activities protected for employees under federal and local law. There are, however, limitations and qualifications on the exercise of the right to strike. The lawfulness of a strike may depend on its purpose, on its timing and on the conduct of the strikers. Injunctive relief, monetary damages, criminal sanctions, unfair labour practice charges and disciplinary action are among the remedies available to an employer in the event of an illegal strike.

  23. 12.

    Which legislation governs the enforcement of international relationships or labour agreements provided for in international business contracts, and in international commercial proceedings, to be performed within your jurisdiction?

  24. Absent a valid and enforceable choice-of-law clause, any contract law or employment law-related disputes will generally be governed by Puerto Rico law.

    In certain situations the employment relationship of an employee from another jurisdiction, who is temporarily assigned to work in Puerto Rico for a term not to exceed three consecutive years, will continue to be subject to the governing law of his or her employment agreement. This means that a properly drafted contract or assignment letter, as applicable, with a clear choice-of-law provision, will exempt an employee from another jurisdiction, who is temporarily assigned to render services in Puerto Rico for a company other than his or her employer, from most of the local labour and employment law requirements. Such an employee, however, will still be subject to Puerto Rico laws regarding local income tax, discrimination in the workplace and work-related injuries or accidents.

  25. 13.

    Which international treaties or conventions are applicable to labour or employment relations in your jurisdiction? Has your country made any reservations to or denounced any treaties of the International Labour Organization?

  26. As mentioned above, Puerto Rico is a territory of the US. As such, all self-executing treaties or conventions that are entered into or ratified by the US are binding upon Puerto Rico, including any reservations or denunciations made by the US government.

  27. 14.

    Are arbitration agreements to resolve labour or employment disputes valid and enforceable in your jurisdiction? Is there any legislation in your jurisdiction governing the private arbitrability of labour or employment disputes? May controversies in labour or employment matters in your jurisdiction be resolved through private arbitration (in your jurisdiction or abroad), or in foreign courts?

  28. Yes, arbitration agreements to resolve employment disputes are generally valid and enforceable in our jurisdiction. Puerto Rico has a strong policy favoring arbitration, and any doubts about the arbitrability of a dispute are to be resolved in favour of arbitration. The Puerto Rico Supreme Court has ruled that arbitration agreements do not apply automatically to employment discrimination claims arising under local Act No. 100 of 30 June 1959. An employee may voluntarily submit to arbitration of an Act No. 100 claim, but cannot be compelled to do so.

  29. 15.

    Are mediation mechanisms available and legally enforceable in your jurisdiction? Do conciliation fora exist in your jurisdiction and is conciliation mandatory before litigation? Is conciliation conducted by labour boards or courts or by an independent body?

  30. Yes, mediation mechanisms are available and legally enforceable. There are conciliation fora such as the Equal Employment Opportunity Commission (EEOC), and the Office of Mediation and Adjudication and the Bureau of Conciliation and Arbitration of the Puerto Rico Department of Labor and Human Resources. The EEOC must engage in conciliation before it is allowed to bring a lawsuit against an employer on behalf of an employee. Under the LTFA, Puerto Rico courts must schedule and hold a settlement conference within 60 days from the date of filing of the answer to the complaint in Act No. 80 wrongful discharge cases. Otherwise, conciliation or mediation is not mandatory before a lawsuit can proceed, absent a contract or collective bargaining agreement to the contrary. Depending on whether conciliation is voluntary or statutorily or contractually required, it may be carried out by a court, an official of the competent government agency or a private mediator.

  31. 16.

    Does the law in your country require that labour or employment proceedings be held in a specific jurisdiction or place or require that proceedings be carried out in a specific language?

  32. Labour law disputes are adjudicated by either the NLRB or the PRLRB. Absent a valid choice-of-forum or arbitration clause, employment law-based claims may be decided by US federal courts (ie, the US District Court for the District of Puerto Rico, the First Circuit Court of Appeals and the US Supreme Court), Puerto Rico state courts and the Puerto Rico Office of Mediation and Adjudication.

    Spanish and English are the official languages in Puerto Rico. Proceedings in Puerto Rico state courts are generally conducted in Spanish, while proceedings in US federal courts are conducted in English. Court filings in other languages must be translated accordingly.

  33. 17.

    Is there a concept in your jurisdiction providing for class-lawsuit in labour or employment matters? Does your law allow the consolidation of multiple labour or employment proceedings? Are human rights related grievances admissible in labour and employment proceedings?

  34. Yes, class-action lawsuits and the consolidation of actions are allowed in both US federal courts and Puerto Rico state courts.

  35. 18.

    Can foreign lawyers serve as counsel in labour or employment proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel? Are their fees subject to local taxation?

  36. State Court System

    Rule 12(f) of the Rules of the Puerto Rico Supreme Court (Court) provides that any attorney admitted to the practice of law in a state or territory of the United States, or the District of Columbia may be authorised, as a matter of courtesy, to appear in special cases before Puerto Rico state courts. Among other requirements, both the petitioner and the attorney who endorses the petition must state that the petitioner has a good command of Spanish. Otherwise, the authorisation issued by the Court must require that the petitioner practise law in the company of an attorney from the Puerto Rican Bar who has a good command of both Spanish and English.

    Federal Court System

    Similarly, pursuant to Rule 83A(f) of the Local Rules for the United States District Court (USDC) for the District of Puerto Rico, an attorney who does not reside in Puerto Rico and is authorised to practise law before the bar of any United States court or of the highest court of any state, the District of Columbia, the Commonwealth of Puerto Rico, the Territory of Guam, the Commonwealth of Northern Mariana Islands or the Virgin Islands of the United States, may apply for permission to appear pro hac vice in a case or proceeding before the USDC for the District of Puerto Rico. Among other requirements, the non-resident attorney must file a pro hac vice application, pay a pro hac vice appearance fee of US$150 per appearance, and designate a member of the bar of the USDC for the District of Puerto Rico as local counsel.

    Non-taxability of legal fees

    Generally, fees paid to attorneys authorised to practise law in Puerto Rico for counselling and litigation services before Puerto Rico state courts and administrative agencies, the USDC for the District of Puerto Rico, the US Court of Appeals for the First Circuit and the US Supreme Court are exempt from the local sales and use tax. 

  37. 19.

    Are labour or employment awards issued by foreign courts or arbitration courts recognised and enforced in your jurisdiction?

  38. Yes, both domestic and foreign court and arbitration awards may be recognised and enforced in Puerto Rico courts. Judgments entered by foreign courts are enforced through exequatur proceedings.

  39. 20.

    May labour courts or boards grant interim relief? If so, how is that relief enforced? Does it apply to assets located abroad? Are these valid against unions?

  40. Yes, interim relief, generally in the form of a preliminary injunction or temporary restraining order, may be granted by both federal and state courts. The party seeking interim relief will need to show that: (i) there is likelihood that, without interim relief, it will suffer irreparable harm; (ii) the nature of the harm; (iii) the moving party’s likelihood of prevailing on the merits; and (iv) public interest favours the injunction. A party who does not abide by an interim relief order may face civil or criminal penalties. Generally, local courts lack the authority to attach assets located abroad; however, they may issue orders permitting the attachment of assets within Puerto Rico.

    Preliminary injunctions or temporary restraining orders are valid and enforceable against unions.

  41. 21.

    Can labour courts or boards issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court of law lend its aid in enforcing such an order against a recalcitrant third party?

  42. Yes, courts and certain administrative agencies may issue subpoenas compelling a third party to testify, appear for a deposition or produce documents. A court may hold, in civil or criminal contempt, a third party who refuses to comply with a subpoena.

  43. 22.

    Can a party to a labour proceeding seek relief from the court or board? What is the scope of such relief?

  44. Yes, generally, a party may seek an award of monetary damages or the grant of injunctive relief. The type, amount and scope of the relief will depend on the type of claim filed.

  45. 23.

    Are the resolutions issued by a labour court or board final? What are the remedies available for the parties?

  46. State courts

    Judgments from courts of first instance are appealable to the Puerto Rico Court of Appeals. Decisions from the Court of Appeals may be reviewed by the Puerto Rico Supreme Court on writ of certiorari. Under 28 USC § 1258, a final judgment rendered by the Puerto Rico Supreme Court may be reviewed by the US Supreme Court by writ of certiorari under certain limited circumstances.

    Federal courts 

    Decisions from the United States District Court for the District of Puerto Rico may be appealed to the US Court of Appeals for the First Circuit. The losing party may seek discretionary review of a decision from the First Circuit by the US Supreme Court by filing a writ of certiorari. The US Supreme Court, however, does not have to grant review.

  47. 24.

    What are the grounds for challenging an award and what is the period of time a party has to challenge that award?

  48. State court jurisdiction

    A judgment entered in a civil case by a court of first instance may be appealed on substantive (eg, errors in interpretation of law) or procedural (eg, error in the trial’s procedure) grounds. Generally, an appeal in a civil case must be filed with the Puerto Rico Court of Appeals within 30 days from the date on which the notice of entry of judgment is filed into the court record. This period is extended to 60 days when the Commonwealth of Puerto Rico, any of its officials, a government agency (excluding public corporations), a municipality or any official thereof is a party to the lawsuit. If the date of filing of the notice of entry of judgment into the court record is different from that of the deposit of the notice of entry of judgment in the mail, the period to file an appeal will be calculated from the date of deposit in the mail.

    Federal court jurisdiction

    Similarly, a judgment entered by the United States District Court for the District of Puerto Rico in a civil case may be challenged by the losing party on substantive or procedural grounds, or both. The time limit for filing a notice of appeal in the US Court of Appeals for the First Circuit is 30 days after entry of the judgment or within 60 days when the United States is a party. Contrary to courts of first instance in the Puerto Rico state judiciary system, a district court may, within the 30-day term after the time for appeal has expired, grant an extension for “excusable neglect” or good cause.

  49. 25.

    If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the labour courts or boards in normal circumstances or is the right to sue not waivable? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?

  50. Generally, a court will remit a case to arbitration if a valid arbitration clause exists except for cases involving discrimination claims arising under Act No. 100, which are excluded from compulsory arbitration. A petition to enforce an arbitration agreement is treated as a threshold matter.

  51. 26.

    Does the law provide that post-award interest accrues on an unpaid award?

  52. Yes, Puerto Rico law allows for the accrual of post-judgment interest on an unpaid judgment at a current interest rate of 4.5 per cent. The local Office of the Commissioner of Financial Institutions periodically reviews and fixes the applicable interest rate.

  53. 27.

    Can a foreign award be enforced if the award has been set aside by the courts?

  54. No, the award must be valid for it to be enforced by Puerto Rico courts.

  55. 28.

    Are employment agreements for definite periods or seasonal jobs valid?

  56. Bona fide fixed-term or temporary employment agreements are allowed under Puerto Rico law. For such an agreement to be valid, it must be for a specific time or a particular project. A fixed-term contract will be presumed valid and bona fide if its term does not exceed three years in its initial or aggregate (after renewals) duration. In addition, in the cases of administrators, executives and professionals, as these terms are defined by the regulations of the Secretary of the Puerto Rico Department of Labor and Human Resources, the fixed-term employment contract will be governed by the will of the parties, as expressed in the terms and conditions of the agreement and, thus, not necessarily subject to the three-year limit.

  57. 29.

    Does the law allow probationary or initial training periods? If so, how long may they last?

  58. Yes, local law provides for an automatic probationary period of nine months for newly hired non-exempt employees and 12 months for executives, administrators, and professionals.  Fixed-term or temporary employees cannot be subject to a probationary period.

  59. 30.

    Are employees hired under any of the foregoing modalities entitled to all labour benefits and social security?

  60. Employees working under a probationary period are excluded from protection against a termination without cause under Act No. 80. That is, an employer may terminate an employee within the probationary period without just cuase without incurring severance liability under Act No. 80. The probationary period, however, does not limit an employee’s right to accrue vacation time as vacation time will commence accruing once the employee completes six months of work and the accumulation will be retroactive to the employee’s start date. Other than these limitations, employees on a probationary period are generally entitled to the same benefits as employees hired for an indefinite term.

    Like employees on a probationary period, bona fide fixed-term employees are not protected by Act No. 80. However, they may invoke breach-of-contract remedies in certain situations, such as an early termination of the fixed-term agreement without cause. Throughout the term of the agreement, fixed-term or temporary employees generally have the same benefits as indefinite-term employees, except for Act No. 80 protection.

  61. 31.

    Is outsourcing lawful? Are there special rules or penalties associated with it?

  62. Yes, in Puerto Rico a company may engage the service of workers through outsourcing, subject to compliance with Act No. 26 of 22 July 1992, as amended. Outsourcing, however, may not be used to avoid compliance with other local labor and employment laws.

  63. 32.

    Are restrictive covenants, such as non-compete and non-solicitation undertakings lawful and enforceable?

  64. A post-termination non-compete covenant is valid and enforceable, as long as the following, conditions are met:

    • it must be in writing;
    • the employer must have a legitimate interest in the restriction;
    • the non-compete period must be limited to 12 months;
    • the prohibition must specify the geographic boundaries or the clients involved;
    • the prohibition must by proportionate to the interest being protected;
    • the prohibition must be limited to similar business activities;
    • there must be adequate consideration; and
    • it must be entered into freely and voluntarily.

    Non-solicitation agreements are allowed under local law.

  65. 33.

    Outline any provisions in your jurisdiction’s law for the gig economy.

  66. Other than the rights of and requirements for bona fide fixed-term temporary or seasonal employees, as opposed to indefinite-term employees, which have been discussed throught this chaper, Puerto Rico labour and employment law makes no explicit distinction between gig economy and non-gig economy emplyees or contractors.

  67. 34.

    In brief, what advice do you have with respect to labour or employment relationships and agreements for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction? What are the red flags?

  68. Historically, both Puerto Rico labour and employment laws, and the labour courts charged with construing these laws, have heavily favoured employees over employers. Additionally, because of Puerto Rico’s political status as an unincorporated territory of the US, federal employment statutes coexist with local employment laws. Many of these local laws provide for an expanded scope of protection and/or provide greater benefits than their federal counterparts. This has created a highly regulated and sometimes complex business environment that is friendlier to employees, imposes high compliance costs on employers, and leads to significant liability exposure when local requirements are not met.

Interested in contributing to Latin Lawyer Reference?


Questions

  1. 1.

    May foreign employers hire employees directly in your jurisdiction or is it necessary to act through a local subsidiary? Are secondments or loans of personnel lawful?


  2. 2.

    Is there a limit to the number (or ratio) of foreign employees an employer may have in your jurisdiction?


  3. 3.

    May labour or employment agreements, and the termination of those agreements, be subject to any legislation other than that of your jurisdiction?


  4. 4.

    What are the requirements for an enforceable agreement? Are there any formalities that labour or employment agreements must adopt to be enforceable in your jurisdiction? Are fees, duties or taxes generated by any of them?


  5. 5.

    What are the implications of hiring personnel without a clear, written, employment agreement in place? May this have any effect in the event of litigation?


  6. 6.

    What are the employers’ obligations (social security and related benefits) regarding employees after contracting? Are any social benefits tax deductible? Are these applicable to foreign employees?


  7. 7.

    What benefits, other than cash remuneration are employees in your jurisdiction entitled to? What severance entitlements may employees claim?


  8. 8.

    What is the role of the unions in the relationship with foreign employers and employees?


  9. 9.

    Do employees have the right to form unions? Is it mandatory for employers to honour this?


  10. 10.

    May unions be an independent party to a labour controversy in your jurisdiction? What are their rights and duties towards the employer and unionised employees?


  11. 11.

    May a union request, bring about or cause a stoppage? If so, in what cases and what remedies would be available to the employer?


  12. 12.

    Which legislation governs the enforcement of international relationships or labour agreements provided for in international business contracts, and in international commercial proceedings, to be performed within your jurisdiction?


  13. 13.

    Which international treaties or conventions are applicable to labour or employment relations in your jurisdiction? Has your country made any reservations to or denounced any treaties of the International Labour Organization?


  14. 14.

    Are arbitration agreements to resolve labour or employment disputes valid and enforceable in your jurisdiction? Is there any legislation in your jurisdiction governing the private arbitrability of labour or employment disputes? May controversies in labour or employment matters in your jurisdiction be resolved through private arbitration (in your jurisdiction or abroad), or in foreign courts?


  15. 15.

    Are mediation mechanisms available and legally enforceable in your jurisdiction? Do conciliation fora exist in your jurisdiction and is conciliation mandatory before litigation? Is conciliation conducted by labour boards or courts or by an independent body?


  16. 16.

    Does the law in your country require that labour or employment proceedings be held in a specific jurisdiction or place or require that proceedings be carried out in a specific language?


  17. 17.

    Is there a concept in your jurisdiction providing for class-lawsuit in labour or employment matters? Does your law allow the consolidation of multiple labour or employment proceedings? Are human rights related grievances admissible in labour and employment proceedings?


  18. 18.

    Can foreign lawyers serve as counsel in labour or employment proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel? Are their fees subject to local taxation?


  19. 19.

    Are labour or employment awards issued by foreign courts or arbitration courts recognised and enforced in your jurisdiction?


  20. 20.

    May labour courts or boards grant interim relief? If so, how is that relief enforced? Does it apply to assets located abroad? Are these valid against unions?


  21. 21.

    Can labour courts or boards issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court of law lend its aid in enforcing such an order against a recalcitrant third party?


  22. 22.

    Can a party to a labour proceeding seek relief from the court or board? What is the scope of such relief?


  23. 23.

    Are the resolutions issued by a labour court or board final? What are the remedies available for the parties?


  24. 24.

    What are the grounds for challenging an award and what is the period of time a party has to challenge that award?


  25. 25.

    If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the labour courts or boards in normal circumstances or is the right to sue not waivable? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?


  26. 26.

    Does the law provide that post-award interest accrues on an unpaid award?


  27. 27.

    Can a foreign award be enforced if the award has been set aside by the courts?


  28. 28.

    Are employment agreements for definite periods or seasonal jobs valid?


  29. 29.

    Does the law allow probationary or initial training periods? If so, how long may they last?


  30. 30.

    Are employees hired under any of the foregoing modalities entitled to all labour benefits and social security?


  31. 31.

    Is outsourcing lawful? Are there special rules or penalties associated with it?


  32. 32.

    Are restrictive covenants, such as non-compete and non-solicitation undertakings lawful and enforceable?


  33. 33.

    Outline any provisions in your jurisdiction’s law for the gig economy.


  34. 34.

    In brief, what advice do you have with respect to labour or employment relationships and agreements for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction? What are the red flags?


Other chapters in Labour & Employment