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PR Senate Bill 852

To create “The Law of Minimum Wage, Vacation and Sick Leave”

On March 5, 2018, senator Vargas Vidot introduced the above mentioned bill seeking to create a Minimum Wage Evaluating Board; to allow the minimum wage of Puerto Rico to prevail over the federal minimum wage, as long as it is higher; to provide protection to employees of local companies that are not covered by the Fair Labor Standards Act, amongst other. If enacted, this bill will repeal Act No. 180-1998, which as of today regulates the vacation and sick leave periods in the private sector. As of March 27, 2018, this bill is being considered by the Commission of Government of the Senate.

Chapter 2 of Senate Bill 852 aims to create the Minimum Wage Evaluating Board (“The Board”), composed of seven (7) members that will be in charge of adopting a mandatory decree to establish a minimum wage greater than the one established in the Fair Labor Standards Act. As currently drafted, the bill gives The Board authorization to establish different minimum wages per geographic area in order to incentivize the productivity of a specific zone or industry. Also, the proposed bill gives The Board all of the necessary faculties in order to carry out the purposes of the law, such as the capacity to sue and be sued, to adopt the necessary regulations and to conduct studies and investigations, amongst other. Every decree approved by The Board will have the full force of the law and if the effect of such decree is to establish a higher minimum wage it shall have retroactive and prospective effect; meaning that it will apply to employees that were recruited before the effective date of the decree.

Article 2.01 of S.B. 852 establishes that the minimum wage adopted by the Fair Labor Standards Act will automatically apply to all of the employees in Puerto Rico that are covered by federal law and that the minimum wage of Puerto Rico will prevail as long as it is above to the federal minimum wage. The dispositions regarding vacation and sick leave remain as they are currently stated in Act No. 180-1998.

Chapter 5 of this bill includes a disposition to declare illegal when an employer terminates or suspend indefinitely an employee that was hired before the approval of the Labor Transformation and Flexibility Act in order to hire such employee again or substitute with another employee to offer fewer benefits. The employer that violates this disposition will incur in a misdemeanor and will receive a penalty of no less than five hundred dollars ($500.00) and no greater than five thousand dollars ($5,000.00).

If you have any questions about Senate Bill 852 or the impact it may cause your company, feel free to contact us at your convenience at (787) 765-5656.