Puerto Rico Heading Towards At-Will Employment

Author:Mr Yonatan Grossman-Boder and Erika C. Collins
Profession:Proskauer Rose LLP
 
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On May 30, 2018, the Puerto Rican Senate voted in favor of overturning an Act that provided significant protections to Puerto Rican employees. The repeal would roll back the current law, Act No. 80, which prohibits employees from being terminated without just cause, thus making it significantly easier for employers to terminate employees.

Currently, private and public sector employees in Puerto Rico who are hired for an indefinite period of time cannot be terminated without just cause. This means that under Act No. 80, an employee currently can be terminated only if the employer has legally justified reasons that are: 1) present; 2) can be proven, and; 3) tend to affect the wellbeing and normal course of the business. Under the current law, reasons that constitute just cause can include: improper behavior by the employee, poor job performance, lateness, negligence, inefficiency, failure to follow protocols and security measures, lack of productivity, lack of competence or ability to perform in a reasonable manner as expected by the employer, constant or repetitive complaints by clients, multiple violations of an employer's rules, defamatory comments, or divulging privileged information. If an employer violates the Act, the company is liable for up to two weeks of pay based on the employee's highest recent salary for each year of service completed, potentially leading to a large statutory award.

In order to attempt reforming the current state of the law, the Puerto Rican Governor announced on May 28th a proposal that would have permitted any employee to be terminated for any reason, other than an illegal reason, thereby potentially converting all employees into "at-will" employees. The repeal came about as a part of the restructuring of Puerto Rico's debt. As part of the restructuring, the Junta de Supervision Fiscal ("JSF"), the supervisory board for Puerto Rico's economy, wanted to eliminate Act No. 80 in order to make Puerto Rico more business friendly and increase the availability of jobs. Indeed, it seemed that this broad proposal was a compromise by the Governor and the JSF, as the JSF had...

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