Search form

Employment-at-Will Comes to Puerto Rico?

By Juan Felipe Santos and Maralyssa Álvarez-Sánchez
  • June 7, 2018

Puerto Rico’s Financial Oversight and Management Board and Governor Ricardo Rosselló have sent bills to the Puerto Rico legislature to repeal the Unjust Dismissal Act, Act No. 80 of May 30, 1976 (Act 80). If either bill is enacted, employers in Puerto Rico will no longer be required to have “just cause” to dismiss employees hired for an indefinite term.

Puerto Rico’s Unjust Dismissal Act

Puerto Rico is one of the few U.S. jurisdictions that does not recognize employment-at-will. Employers in Puerto Rico must have “just cause” for dismissal of any employee. Employers who are found in violation of Act 80 must pay a statutory severance for terminations without “just cause.”

Act 80 establishes six general categories of just cause dismissals. They relate to employee performance and conduct, as well as employer reorganizations and layoffs. For reductions in force, with some exceptions, Act 80 generally requires seniority as the selection criteria. Act 80 also provides for severance in transfers of ongoing businesses and establishes statutory probationary periods during which an employer is exempted from the just cause requirement, among others things.

To address Puerto Rico’s fiscal crisis, in 2016, President Barack Obama enacted the “Puerto Rico Oversight, Management, and Economic Stability Act” (known as “PROMESA”). PROMESA established the Oversight Board to assist the Government of Puerto Rico in managing its public finances. (For more on PROMESA, see our article, Puerto Rico Does Not Have to Comply with DOL’s Final Rule Amending ‘White Collar’ Overtime Regulations, For Now.) The Oversight Board has long-believed that Act 80 hinders economic development in Puerto Rico and recommended its repeal, among other austerity measures.

Senate Bill 919

On May 9, 2018, the Oversight Board presented Senate Bill 919 (SB 919) to establish a Puerto Rico minimum wage of $7.50 an hour (conditioned upon the repeal of the local Christmas bonus law) and to reduce the accrual vacation (up to 15 days) and sick leave (12 days) to seven days each. (For more on the Christmas bonus law, see our article, Puerto Rico Labor Department Updates Regulations on Payment of Annual (Christmas) Bonus.) Staggered increases of the minimum wage are dependent on an increase in the local labor participation rate.

SB 919 is pending before the Puerto Rico Senate’s Federal Relations Committee for public hearings, but it does not have the general support of the Legislature or Governor Rosselló.

Senate Bill 1101

After conferring with the Oversight Board, Governor Rosselló presented Senate Bill 1101 (SB 1101) on May 29, 2018. In its original form, SB 1101 would repeal Act 80 for all employees effective January 1, 2019, but would not eliminate the Christmas bonus or reduce statutory vacation and sick leave benefits for eligible employees.

The Senate approved SB 1101, but with amendments to provide that it would apply only to employees recruited after its enactment. That is, Act 80’s just cause requirement would continue to apply to dismissal of employees hired before the enactment of SB 1101. The bill is before the House of Representatives, which is holding public hearings. The Oversight Board has stated publicly that it opposes prospective application of the Act 80 repeal.

***

The San Juan office of Jackson Lewis will continue to monitor SB 919 and SB 1101 and will provide updates on any developments. Please contact us if you have any questions.

©2018 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

Reproduction of this material in whole or in part is prohibited without the express prior written consent of Jackson Lewis P.C., a law firm with more than 900 attorneys in major cities nationwide serving clients across a wide range of practices and industries. Having built its reputation on providing premier workplace law representation to management, the firm has grown to include leading practices in the areas of government relations, healthcare and sports law. For more information, visit www.jacksonlewis.com.

See AllRelated Articles You May Like

April 16, 2019

Indiana Court Declines to Expand At-Will Employment Exception

April 16, 2019

Reaffirming Indiana’s “strong” presumption of at-will employment, the Indiana Court of Appeals has declined to expand the public policy exception to the at-will employment doctrine to include an employee’s mistaken belief that he was subpoenaed to testify at an unemployment hearing. Perkins v. Memorial Hosp. of South Bend, No. 18A-CT-... Read More

April 2, 2019

Eleventh Circuit Clarifies Its ‘Similarly Situated’ Standard for Workplace Discrimination Claims

April 2, 2019

The proper standard for comparator evidence in cases alleging intentional discrimination is “similarly situated in all material aspects,” the U.S. Court of Appeals for the Eleventh Circuit has clarified in an en banc ruling. Lewis v. City of Union City, Ga., No. 15-11362, 2019 U.S. App. LEXIS 8450 (11th Cir. Mar. 21, 2019). The... Read More

March 28, 2019

U.S. Supreme Court Hears Oral Argument on Agency-Deference Doctrine

March 28, 2019

Should courts defer to agency interpretations of their own regulations so long as the interpretations are reasonable, even if a court believes another reasonable reading of a regulation is the better reading? In Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), the U.S. Supreme Court... Read More

Related Practices