Financial Oversight and Management Board Recommend Sigificant Changes to Puerto Rico Laws
February 6, 2018
In its February 5, 2018 letter to Governor Ricardo Rosselló the Financial Oversight and Management Board (FOMB) submitted to the government its recommendations regarding the reforms which should be implemented by the Government in order, according to the FOMB for Puerto Rico, to become a more attractive venue for business and economic growth. The Board’s proposals for reform in the labor area would result in significant changes to the Labor Transformation and Flexibility Act signed into law on January 26, 2017 as well as to other standing local labor legislation.
These recommendations for reform as proposed by the FOMB in its letter are as follows:
- Becoming an at-will employment jurisdiction, similar to 49 of 50 mainland states, in order to reduce the cost and risk of hiring new employees;
- Make employer provision of severance pay and a Christmas bonus optional, as under the Federal Fair Labor Standards Act. To the Board’s knowledge, no mainland state requires either severance pay or the payment of a Christmas bonus;
- Reducing requirements for vacation and sick leave to mainland levels. Current requirements for paid leave causes employers to reduce wages and hire fewer employees. No state requires that employers provide vacation pay. Only nine of the 50 mainland states require any paid sick leave, and none of the nine who do mandate paid sick leave require as much leave as does Puerto Rico.
It is evident that these modifications should they materialize undoubtedly would provide a drastic change to the present labor legislation landscape in Puerto Rico.
As always we will keep you informed of any forthcoming changes regarding this important development.
Goldman Antonetti & Cordóva, LLC stands ready to assist you and your business to adjust to changes in the law. If you need further assistance in this area, please feel free to contact the following members of our firm:
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