The Puerto Rico Supreme Court (PRSC) recently held that that a felony indictment constitutes just cause for termination under Puerto Rico’s Unjust Dismissal statute, Act No. 80 of May 30, 1976 (Act 80).1 In Edwin González Santiago v. Baxter Healthcare of Puerto Rico, 2019 TSPR 79, 202 D.P.R. ___ (April 25, 2019), the PRSC also established that the presumption of innocence that applies in the criminal context does not extend to the labor and employment context.

The plaintiff in this case was an employee with more than 15 years of service with the employer. On July 6, 2014, seven criminal charges were filed against him, six of them felony charges and one a misdemeanor due to lewd acts against a minor. On July 17, 2014, the employer met with the plaintiff and corroborated the information. That same day the employer suspended the plaintiff from employment without pay pursuant to the employer’s Employee Handbook.

The criminal procedure lasted more than a year. The plaintiff was ultimately found guilty of all six felony charges. Consequently, on June 25, 2015, the employer notified the plaintiff of his termination. The plaintiff then filed a complaint under Act 80 alleging, among other things, that the suspension of more than three months of employment without pay constituted a termination for legal purposes and that it was unjustified.

The Court of First Instance, in summary judgment, concluded that the employer unlawfully dismissed the plaintiff. Essentially, the court concluded that the employer was unable to meet its burden under Act 80 to show the suspension—which was an effective termination—was justified, as under criminal law, the plaintiff has a right to the presumption of innocence. The trial court therefore ordered the employer to pay the plaintiff severance plus attorney’s fees. The employer appealed.

The Court of Appeals affirmed the decision. The appellate court accorded weight to the plaintiff's assertions that he did not receive a copy of the latest version of the Employee Handbook, and that the employer could not prove it had in fact given plaintiff a copy.

The employer timely filed a writ of certiorari to the PRSC, which was granted. In reconsidering the case, the PRSC held that an employer can adopt rules and regulations for the good and normal functioning of the company and can also evaluate its employees based on the prevailing moral and public order values. The PRSC also held that not all potential violations that constitute just cause for termination must be included in the Employee Handbook and that a suspension for more than three months constitutes termination under Act 80. Additionally, the PRSC held that the presumption of innocence that applies in the criminal context does not extend to the labor and employment context. Therefore, the Court concluded that the indictment constituted conduct severe enough to impact the normal functioning of the workplace and therefore justified termination.

In a dissenting opinion, the Hon. Judge Estrella Martinez held that the mere indictment of a felony does not automatically constitute just cause for termination under Act 80 if the employer does not meet the burden of proof to establish that the indictment disrupts the good and normal functioning of the company.

Prior to this decision, some lower courts had applied by analogy the presumption of innocence in criminal law, and held that an indictment per se is not just cause for termination. This left employers with no viable choices, as criminal procedures usually take more than six months to reach to a conclusion, and under Act 80, a suspension of salary and employment for more than three months constitutes a termination. The PRSC’s conclusion in this case, therefore, provides greater certainty to employers when deciding the course of action to take when an employee receives a felony indictment. A case by case analysis, however, is still highly recommended.