Guide to employment, payroll and benefits in

Puerto Rico

Rivermate offers complete payroll, benefits and compliance services for

Puerto Rico

01. Overview

Last updated: 

August 19, 2021

Currency
United States Dollar
Capital
San Juan
Ease of doing business
70.1
Language
Spanish
Population
2860853
GDP growth

02. Grow your team in

Puerto Rico

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Puerto Rico

, particularly if you don't have established local relationships. You can hire employees in

Puerto Rico

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Puerto Rico is a Caribbean island and an unincorporated territory of the United States, officially known as the Commonwealth of Puerto Rico. It is roughly 1,000 miles southeast of Miami, Florida, in the northeast Caribbean Sea. The Commonwealth is an archipelago situated between the Dominican Republic and the United States of America in the Greater Antilles. It consists of the main island, as well as several smaller islands such as Mona, Culebra, and Vieques. San Juan is the country's capital and most populous city. Puerto Rico has a population of 3.2 million people, outnumbering over 20 states in the United States. The official languages of the executive branch of government are Spanish and English, though Spanish predominates. Originally inhabited by the indigenous Tano people, Puerto Rico was colonized by Spain following Christopher Columbus' arrival in 1493. Other European powers disputed it, but it remained a Spanish possession for the next four centuries. Spanish rule resulted in the expulsion and assimilation of indigenous peoples, the forced relocation of African slaves, and especially Canary Island and Andalusia settlement. In comparison to wealthier colonies like Peru and New Spain, Puerto Rico played a secondary yet strategic role within the Spanish Empire. By the late 1800s, a distinct Puerto Rican identity had emerged, based on a fusion of indigenous, African, and European influences. Following the Spanish–American War in 1898, the United States took possession of Puerto Rico. Puerto Ricans have been citizens of the United States since 1917, and can freely travel between the island and the mainland. As inhabitants of an unincorporated area, however, American citizens of Puerto Rico are disenfranchised at the state level, do not vote for president or vice president, and do not pay federal income tax in general. Puerto Rico does not have a vote in the United States because it is not a territory. The Puerto Rico Federal Relations Act of 1950 governs the territory. Puerto Rico is only served in Congress by a single non-voting member of the House of Representatives, known as a "Resident Commissioner." In 1952, Congress adopted a local constitution that allowed U.S. residents living on the island to elect a governor. Beginning in the mid-twentieth century, the United States government, in collaboration with the Puerto Rico Industrial Development Company, initiated a series of economic initiatives aimed at transforming Puerto Rico into an industrial high-income economy. It is listed as a developing jurisdiction with a high-income economy by the International Monetary Fund, and it ranks 40th on the Human Development Index. Manufacturing is the main engine of Puerto Rico's economy, followed by the service sector.

04. Public holidays

05. Types of leave

Paid time off

Minimum of 6 days for first-year; minimum of 9 days after the first year until the fifth year; minimum 12 days after the fifth year; minimum 15 days after the fifteenth year.

Public holidays

Puerto Rico celebrates 19 holidays, including all of the United States' national holidays as well as its own.

Sick days

Paid sick leave for the first six months; nine days after the first year until the fifth year; twelve days after the fifth year; and fifteen days after the fifteenth year.Puerto Rico has introduced 5 days of emergency sick leave for persons suffering from COVID-19 as of April 2020.

Maternity leave

8 weeks, divided into four weeks before and four weeks after the delivery, but can also be divided into one week before and seven weeks after the delivery.

Paternity leave

Employees in the private sector can take up to 6 months of unpaid leave.

Parental leave

There is no paid time off, but parents can take up to 12 weeks of unpaid, job-protected time off. Companies with fewer than 500 workers must give an extra 12 weeks, paid after the first 10 days, under the Families First Coronavirus Response Act (FFCRA), which runs from April 1 to December 31, 2020.

Other leave

Employees with one of the Serious Diseases of Catastrophic Character designated under the Special Coverage of the Health Insurance Administration of Puerto Rico are eligible for up to 6 months of special paid leave.

06. Employment termination

Termination process

Employers must have "just cause" to terminate an employee based on performance or behavior on the job. If there is no legitimate reason for firing, the employee is compensated with severance compensation.

Notice period

No notice period is required.

Severance pay

There is no severance pay if the termination is for "just cause." If there is no just cause for termination, the employee is entitled to two months' pay if the termination occurs within the first five years; three months' pay if the termination occurs between five and fifteen years; and three months' pay after fifteen years. Additionally, the employer must pay an additional two weeks' salary for each year of service, up to a total of nine months severance.

Probation period

In Puerto Rico, the probationary period is typically nine months for the majority of employees, but twelve months for those classified as "executives," "administrators," and "professionals."

07. Working hours

General

In Puerto Rico, the standard workweek is 40 hours, with eight-hour days.


Employees between the ages of 14 and 18 may be employed only with a special permit that allows for a 40-hour workweek. If the worker is enrolled in school, the total number of school and work hours per day cannot exceed eight. Between the hours of 8:00 a.m. and 6:00 a.m., workers between the ages of 14 and 16 may work. between 6 a.m. and 6 p.m., while workers aged 16 to 18 years may work between 6 a.m. and 6 p.m. and ten o'clock p.m.

Overtime

Employees who work more than 40 hours per week must be compensated for overtime. Each hour worked beyond the standard 40-hour workweek must be compensated at 1.5 times the employee's regular hourly wage.


Employers and employees can agree on a different work schedule in which the employee works no more than ten hours per day and no more than forty hours per week. In this case, overtime is compensated only for work exceeding ten hours per day. A written agreement must be entered into.

08. Minimum wage

General

For businesses subject to the Federal Fair Labor Standards Act, the minimum wage is $7.25 per hour (FLSA). For individuals not protected by the act, the minimum wage is $6.55 or 70% of the federal minimum wage, whichever is greater.


Employees under the age of 20 may be paid a "training" pay of $4.25 for the first 90 days of employment, but must be paid the federal minimum of $7.25 immediately after the conclusion of the 90-day period.

09. Employee benefits

General

Puerto Rico offers health insurance. There is also the option of purchasing private insurance on your own.

Mandatory benefits postulated by law include a probationary period, pay on annual leaves, public holidays, sick leaves, maternity leave, paternity leave, and overtime pay. Statutory benefits also include social security benefits

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Puerto Rico

to hire a team takes time, money, and effort. The labor law in

Puerto Rico

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Puerto Rico

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Puerto Rico

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Puerto Rico

via our Employer of Record / PEO solution.

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