As we have previously discussed, the Puerto Rico Department of Labor (PR DOL) recently published the first edition of its Guidelines on the Interpretation of Puerto Rico’s Employment Legislation (Guidelines), which includes the PR DOL’s official statutory interpretation of nearly all of Puerto Rico’s employment laws. The over 200-page Guidelines are divided into 15 chapters and cover a wide range of statutes. This Insight is the third in a series that will provide a chapter-by-chapter analysis of the most important topics addressed in the Guidelines, including an interpretation of key provisions of the Puerto Rico Labor Transformation and Flexibility Act, Act No. 4 of January 26, 2017 (“Act 4-2017” or “LTFA”), which made substantial changes to virtually all existing employment laws in Puerto Rico. This installment includes a discussion of Chapters 6 and 8, which provide guidance on vacation entitlement, sick leave, lactation breaks, and equal pay.

Chapter 6 – Vacation and Sick Leave

The PR DOL discusses LTFA’s amendments to the PR Minimum Wage, Vacation and Sick Leave Act, Act No. 180 of July 27, 1998 (“Act 180-1998”). Our focus is on those areas for which the Guidelines provide further interpretation or information beyond that provided in the statute itself.

For example, the Guidelines state that if the employer and the employee agree to a probationary period of six months or less, once this period is complete, he or she will accrue vacation leave retroactively. Further, the Guidelines indicate that if the employer allows the employee to take vacation leave during his or her probationary period, that period will be automatically paused and will resume once the employee returns from vacation.

Regarding sick leave, the Guidelines indicate the PR DOL determined that employees eligible to take leave under the Caregiver’s Leave Act, Act No. 251 of December 31, 2015, which allows employees to use accrued paid sick leave to care for qualified family members, are limited to taking five days of sick leave per year for this purpose.

Importantly, the Guidelines discuss Act No. 60 of January 27, 2018 (“Act 60-2018”), which amended Act 180-1998 to preclude employers from using sick-related absences as a criteria when evaluating employees’ efficiency. Likewise, the employer cannot consider absences "properly charged to sick leave" to justify disciplinary actions such as suspensions or dismissals. The Guidelines provide the following examples of instances that cannot be taken into consideration as part of salary increases, promotions or the disciplinary process: absences of two days or less charged to sick leave (assuming sick leave balance is available) even when no supporting evidence has been presented to confirm the employee’s illness; absences of more than two days when the employee complies with the requirement to submit a medical certificate, if requested or required; and those absences that comply with the punctuality, attendance, periodic reports on the medical condition, or any other valid employer policies. Conversely, an employer may take into consideration unjustified absences in making employment decisions. Unjustified absences include when the employee fails to notify the employer of a sick-related absence on the same day of the absence; when the employee does not submit a medical certificate when required; when the employee fails to comply with the reasonable rules that the employer may have established to avoid the improper use of sick leave; personal absences allowed by the employer to be charged to sick leave; voluntary leaves of absence provided by the employer for any reason, including for personal reasons, when they do not qualify for sick leave under Act 180-1998; or, when the sick-related absences occur after the sick leave has been exhausted.

The Guidelines also clarify that an employer may continue granting productivity bonuses or any type of voluntary compensation that depends on the employees’ not using their sick leave since these practices will not fall under the scope of Act 60’s prohibitions. Employers must be mindful, however, that there may be other applicable leaves of absence statutes that need to be considered when conducting an assessment of an employee’s entitlement to bonuses or voluntary compensation.

The Guidelines also discuss the PR DOL’s opinion on the statute of limitations applicable to causes of actions brought under Act 180-1998, as amended by LTFA. Article 12 of Act 180-1998 establishes that claims for wages that an employee may have under the statute, a contract or any other law, shall be subject to a statute of limitations of one year from the date the employee ceased his employment with the employer. However, claims for wages that arose and were made either extrajudicially or judicially prior to the passage of the LTFA (January 26, 2017), will be subject to the statute of limitations previously in force—i.e., three years. Importantly, the PR DOL is of the opinion that even those claims for wages that arose prior to Act 4-2017’s effective date, but were not claimed, either extrajudicially or judicially, are also subject to a statute of limitations of three years counted from the date the employee ceased working for the employer. Further, the Guidelines restate that Act 180’s statute of limitations applies to claims for minimum wage, sick or vacation leave, overtime, meal periods, work during the rest day, payment of the legal bonus in a private company, salaries owed, and other claims to which the employee may be entitled for work, subject to the remedies and specific provisions of the corresponding law.

Additionally, the Guidelines state that any claim based on the illegal practice of terminating, dismissing or indefinitely suspending an employee hired prior to Act 4-2017’s effective date, with the sole objective of hiring that employee again or replacing him with a new employee so that the accrual rate for vacation and sick leave is in accordance with the new accrual rates established by LTFA, can file a claim within one year of his or her termination from employment before the PR DOL, since it created an expedited process for these types of claims.

Finally, the Guidelines recognize that employees covered by a collective bargaining agreement (CBA) are excluded from the application of Act 180-1998. This means that Act 180-1998 provisions are the subject of collective bargaining. As such, according to the Guidelines, the parties that execute a CBA have the freedom to reach agreements that they deem convenient regarding leaves of absence entitlements and accrual rates, working hours, terms of enjoyment, payment and payout of the agreed leaves of absence, and the applicable statutes of limitations for claims arising from their non-compliance, among other employment-related guarantees Act 180-1998 had previously extended to employees covered by CBAs. This change constitutes new ground; it is therefore strongly recommended that employers consult with counsel regarding any business decisions based on these LTFA amendments to Act 180-1998. Further, the Guidelines interpret that, as an exception to Act 180-1998’s exemption of employees covered by CBAs, CBAs must, at a minimum, provide that any such employees who are owed wages, vacation, sick leave or any other economic benefit, are entitled to recoup through a civil action the total amount owed, plus an additional equal amount, as well as costs, expenses, interest and attorneys’ fees incurred in the proceeding. Thus, the Guidelines conclude that in case an employee requests through a civil action the payment of unpaid wages and benefits, said employee, represented by a labor union, will always have access to the remedy provided in Article 11(a).

Chapter 8 – Rights of the Nursing Mother and the Equal Pay Act

Breastfeeding Leave Act

Chapter 8 focuses primarily on women’s employment rights. First, it discusses Act No 427 of December 16, 2000, as amended, also known as the Act to Regulate the Period to Breastfeed or to Express Breast Milk (“Breastfeeding Leave Act”), which provides full-time and part-time employees who work more than four hours per day paid leave to nurse their infants or to express breastmilk. A covered employee can take a half hour or an hour of breastfeeding leave per working day depending on the size of the company and whether she is full-time or part-time. The Guidelines emphasize that this act promotes the professional development of women while protecting employers’ interest by creating a tax exemption equal to a month’s salary for each breastfeeding mother when the employer provides this leave.

The Guidelines further emphasize that the employee will be entitled to breastfeed only where the employer has a childcare center on the premises. If the employer does not have a childcare facility, it must provide a place for the employee to express breastmilk. This location must guarantee the nursing employee’s privacy, safety and hygiene, and must have electrical outlets and ventilation. The employer, however, is not required to construct or prepare a place exclusively for breastfeeding purposes. The designated space may be a multi-use room if the employer can still guarantee the space complies with the abovementioned requirements.

The Breastfeeding Leave Act includes certain requirements with which the employee must comply to qualify for this leave. The Guidelines emphasize that this leave is not automatically provided. The employee must request this leave after returning from work after childbirth. In addition, no later than five days after the infant’s fourth and eighth months, the employee must also provide to the employer a medical certificate indicating she is still nursing.

Employers that violate the Act could face a penalty equivalent to three times the employee’s daily salary for each day of violation, or a nominal amount not less than $3,000, whichever is greater. If the employee proves a causal nexus between the employer's failure to provide an adequate lactation space and the negative impact on her ability to express breast milk or breastfeed generally, the employer could be liable for damages under the Puerto Rico General Tort Law for violation of her constitutional right to privacy.

Puerto Rico Equal Pay Act

The second part of Chapter 8 discusses Act No. 16 of March 8, 2017, also known as the Puerto Rico Equal Pay Act ("PR Equal Pay Act").1 According to the Guidelines, this act’s intent is to eradicate the pay difference between men and women. To that end, the PR Equal Pay Act prohibits pay discrimination based on sex among employees performing comparable job functions or duties that require the same skill, effort or responsibilities under similar working conditions. Nevertheless, the act and the Guidelines contemplate some specific instances in which the salary difference may be justified.

The PR Equal Pay Act introduced prohibitions during the recruitment process and makes it illegal for employers to take adverse employment action against employees who address or discuss pay inequality. The act further prohibits employers from banning such discussions in the workplace with very limited exceptions. If pay discrimination is established, the PR Equal Pay Act provides specific pecuniary remedies, which may be doubled as a penalty. In addition, employees can seek from the employer their costs and attorneys’ fees.

As an incentive for employers’ voluntary self-assessment, the PR Equal Pay Act provides that an employer can avoid the double-back pay penalty if it demonstrates that, within the year preceding the filing of the complaint, it began or initiated a good-faith “self-evaluation” process of its payment practices and that it made reasonable progress in eliminating sex-based salary differences. The Guidelines further clarify that although this law was thought to eliminate salary differences due to discrimination based on sex against women, it protects men with the same rigor. Finally, if an employer intends to contract with the Government of Puerto Rico, it must demonstrate to the Puerto Rico General Services Administration that it developed and, at minimum, began the execution of an internal self-evaluation program to ensure it does not engage in unlawful pay practices based on sex.

Stay tuned for a discussion of Chapters 9 and 10, which will cover employment termination and discrimination.