Puerto Rico s Labor Transforma4on and Flexibility Act of 2017

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1 Puerto Rico s Labor Transforma4on and Flexibility Act of 2017 June 7, 2017 Presented by Goldman Antonetti & Córdova, LLC

2 Moderator Peter Walts Chief Opera4ng Officer Employment Law Alliance

5 Audio Ques4ons and Tech Support

6 Speakers Luis Antonetti Member Angel Berberena Member Javier Vazquez Limited Member

7 LTFL Approved on January 26, 2017 Intended to: Restore economic growth Improve competitiveness Liberalize labor market Reduce operational costs and inefficiencies 7

8 LTFL Impacts the following areas: Employment Contracts & Relationships (Art. II) Workplace and Flexible Benefits (Art. III) Flexisecurity (Art. IV) Employment Reserve (Art. V) Employment Discrimination (Art. VI) 8

9 Employment Contracts & Relationships (Article II) 9

10 Employment Contract (Arts. 2.1 & 2.2) Defines the relationship between employee and employer in a more traditional way. Excludes: Independent contractors Government employees Personal services mandatory in criminal proceedings Volunteer work (friendship or benevolence) 10

11 Contractor Presumption (Art. 2.3) Creates an irrefutable presumption that a person is an independent contractor if: Has or requested an employer security number Has filed income tax returns claiming to own a business Relationship established by written contract Contractually required to have licenses or permits to operate business 11

12 Contractor Presumption (Art. 2.3) Meets three (3) or more of the following: Control and discretion on how to perform the work Control over time to get the job done Does not work exclusively Ability to hire/contract others Business investment (equipment, license, property) 12

13 General Contracts (Arts. 2.4, 2.5 & 2.6) Verbal or written Any language (understanding of the language is presumed) Electronic signatures and receipts are allowed 13

14 Statute of Limitations for Termination Claims (Art. 2.18) 1 year instead of 3 Does not include causes of action arising prior to the Act 14

15 Religious Accommodation (Art. 2.19) Employer must accommodate Except when the accommodation would result in undue burden Fines of $1,000 to $5,000 for violation 15

16 Workplace and Flexible Benefits (Article III) 16

17 Overtime (Art. 3.1) More than 8 hours on a calendar day More than 40 hours a week Work while establishment must remain closed Work during the day of rest Work above the maximum allowed under collective bargain agreement 17

18 Overtime Pay Rate (Art. 3.3) Time and a half (1½), except employees hired before the Act that were entitled to double time 18

19 Overtime Pay Rate Exception (Art. 3.3) By agreement, no more than 10 hours per day or 40 per week Agreement will be voluntary and may be terminated unilaterally after 1 year Transferable to third parties Allows the replacement of lost hours for personal reasons up to 12 hours daily 19

20 Requests for Changes in Schedule, Hours or Place (Art. 3.5) Employee may submit a written request for change of schedule, hours or place of work Employer must respond within 20 days Response in writing if more than 15 employees 14 days to respond if there is a meeting 20

21 Requests for Changes in Schedule, Hours or Place (Art. 3.5) Include reasons for rejecting Priority given to heads of family with parental authority or sole custody Only applies to employees scheduled to work more than 30 hours a week and over 1 year of service Petition every 6 months Penalty for failure 21

22 Meal Period (Art. 3.9) Employer must notify in writing hours of work Prima facie evidence of work day No more than 5 hours without meal period Exception: If the day does not exceed 6 hours 22

23 Meal Period (Art. 3.9) Must begin not before the end of the second hour of work and not after the beginning of the sixth Second meal period after 10 hours Exception: If the day does not exceed 12 hours May be reduced to half-hour by agreement Agreement is binding for up to 1 year Fines for violation: 1.5 times for new employees and 2 times for prior employees 23

24 Meal Period Exceptions (Art. 3.11) Administrators, executives and professionals Travel agents, ambulant vendors, external vendors Union officers and organizers Drivers who work on a commission, fare or route basis Domestic employees Employees of the FLSA exempt industries 24

25 Meal Period Exceptions (Art. 3.11) Employees of the Government of the USA Employees of the Government of PR Employees of Municipalities, its agencies or instrumentalities Union members Those exempted by a special law 25

26 Rest Day (Arts & 3.16) Seventh consecutive day exempt employees are excluded New Employees: 1.5 times the base salary rate Previous Employees: 2 times the base salary rate 26

27 Closing Law (Art. 3.17) Elimination of restrictions to operating hours Elimination of restrictions of sales on Sundays Elimination of restrictions on who may work on Sundays Elimination of requirement of double pay or $11.50 payment on Sundays 27

28 Good Friday and Easter Sunday (Art (a)) Businesses established prior this Act which were required to close on Good Friday and Easter Sunday are still required to do so Only applies to retail industry Excludes businesses that were exempt (for example: food, tourist areas, family businesses, etc.) 28

29 Vacation and Sick Leaves (Art. 3.18) Employees hired before the approval of this Act keep current rates of accrual Illegal to terminate, rehire, or substitute current employees to obtain the benefits of the Act 29

30 Vacation and Sick Leaves (Art. 3.19) New employees have a requirement of 130 hours per month to accrue vacation leave at: ½ day per month during the first year ¾ days between years two and five 1 day after 5 and up to fifteen years 1¼ day after 15 years Sick leave continues at 1 day per month Employers with less than 12 employees may give ½ Excludes union members 30

31 Statute of Limitation for Wageand-Hour Claims (Art. 3.21) Reduced from 3 to 1 year Except: Claims made before this Act 31

32 Previous Christmas Bonus (Art. 3.23) Employees hired before the enactment of this Act keep the current benefit (700 hours between October 1 until September 30, up to $600 or 6% of $10,000 of income) Bonus of 3% for employers with less than 15 employees 32

33 Current Christmas Bonus (Art. 3.23) Hiring on or after January 26, ,350 hours worked between October 1 and September 30 Bonus is 2% of salary up to $600 Maximum of $300 for small businesses (20 employees or fewer) 33

34 Current Christmas Bonus Limitations (Art. 3.23) Cannot exceed 15% of employer net income 50% of the bonus the first year Employers may credit any other bonus subject to prior notification 34

35 Current Payment Date (Art. 3.24) Payment between November 15 and December 15 Penalty of 1.5 times in 6 months Penalty of 2 times after 6 months 35

36 Breastfeeding Act (Arts & 3.30) Full-time employee (7.5 hours) will have two periods of 30 minutes or 3 periods of 20 minutes Part-time employee (less than 7.5 hours) working more than 4 hours in a day will have 1 period of 30 minutes for each 4 hours Spaces for breastfeeding or expressing breast milk must guarantee the nursing mother privacy, security, and hygienic conditions 36

37 Breastfeeding Act (Arts & 3.30) Small businesses: 1 period of 30 minutes or 2 periods of 15 minutes. Part-time employees will have 1 period of 30 minutes every 4 hours Triple penalty and a fine of up to $3,000 37

38 Flexisecurity (Article IV) 38

39 Severance and Act 80 (Art. 4.3) Severance for employees hired before this Act remains the same Severance for new employees: 3 months and 2 weeks for each year Cannot exceed 9 months 39

40 Severance and Act 80 (Art. 4.3) Severance payments are exempt for contributions Previous payment by reason of separation shall be credited against judicial orders and opinions Excludes temporary and partial employees 40

41 Just Cause (Art. 4.4) Pattern of conduct Pattern of performance that is deficient, inefficient, unsatisfactory, poor, tardy or negligent Not complying with employer s norms 41

42 Just Cause (Art. 4.4) Complete, partial or temporary closure Technological changes and reorganization Necessary reductions due to reduction in volume of production, sales, profits, or with the purpose of increasing competitiveness or productivity 42

43 Order of Retention (Art. 4.5) Seniority within their occupational classification With the exception of reasonable, clear and evident differences in favor of: Capacity Productivity Performance Competence Efficiency History of conduct Preference to laid-off employees within 6 months 43

44 Multiple Business Locations (Art. 4.6) Applies only within each physical location impacted, unless: Frequent transfers Common and direct supervision 44

45 Higher Salary (Art. 4.8) For the purpose of computing the severance indemnity use: Most regular hours of work During any period of 30 consecutive calendar days Within 1 year immediately prior to the dismissal 45

46 Probationary Period (Art. 4.9) Executives, administrators, and professional employees: 12 months All other employees: 9 months A shorter period may be agreed Vacations will be accrued once 6 months in employment and will be retroactive to the date of commencement of employment 46

47 Probationary Period (Art. 4.9) Automatic interruption during mandatory leaves Credit of up to 6 months for any type of employee contracted temporarily 47

48 Waiver and Transaction (Art. 4.10) Terminated employees may settle claims once discharged or notified of such intention Voluntary payments made by the employer shall be credited to the compensation of Act 80 48

49 Statute of Limitations for Act 80 (Art. 4.13) Reduced from 3 years to 1 year 49

50 Employment Reserve (Article V) 50

51 Employment Reserve (Arts. 5.1 & 5.2) Reduces employment reserve period for workmen s accidents or disability from 12 to 6 months for employers with 15 employees or less. 51

52 Employment Discrimination (Article VI) 52

53 Remedies for Discrimination and Retaliation (Art. 6.1) Back pay Accrued benefits Future salaries and benefits Double damages 53

54 Damages Caps (Art. 6.1) Damages for mental anguish, compensatory or punitive damages are limited to: 100 employees : $50, a 200 employees : $100, a 500 employees : $200, employees : $300,000 54

55 Questions & Answers

56 Conclusions and Wrap Up

57 Please Complete our Survey Please complete the survey that should appear on your computer screen when you disconnect from the webinar. To listen to this webinar again or to any past ELA webinars, please visit our website at: A Certificate of Attendance and supporting materials are posted on the ELA website (click this webinar s title; the link to the Certificate is on the landing page). Attendees seeking continuing education credit should submit these materials directly to the appropriate organization.

58 For More Information If you have any ques/ons, or need further informa/on please contact: Mary Anne Creighton, Director Member Rela/ons

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