On September 21, 2021, the Governor of Puerto Rico Pedro Pierluisi signed into law House Bill 338 which establishes the “Puerto Rico Minimum Wage Act” (hereinafter, Act No. 47). Said law declares as the public policy of the Commonwealth of Puerto Rico to adapt the minimum wage to the cost of living of Puerto Rican workers, based on the principle that no worker should live below poverty level. To enforce this public policy, Act No. 47 creates the Minimum Salary Evaluating Commission (hereinafter, “the Commission”), which is instructed to periodically review the Commonwealth’s minimum wage to adjust it to the increase in the cost of living of Puerto Rican workers. To this end, section 2.09 of Act No. 47 provides that the Commission will have the power to approve mandatory decrees dictating the adequate minimum wage, wage that, according to section 2.02 of Act No. 47, should never be lower than the federal minimum wage. Once approved, the minimum wage decrees shall be binding, and as such, per section 2.12 of Act No. 47, the Commission will not be able to reduce the minimum wage established through a previous decree approved under the provisions of Act No.47.

Thus, Act No. 47 promulgates a staggered increase in the state minimum wage, providing that the state minimum wage in Puerto Rico shall prevail as long as it is higher than the federal minimum wage. Pursuant to section 2.01 of Act No. 47, the provisions of the federal legislation and regulations regarding the payment of the minimum wage, what constitutes work hours, which employees and occupations are exempt from the minimum wage, and what constitutes hours or time of work will be recognized when applying the state minimum wage. According to section 2.02 of Act No. 47, the staggered increase in the minimum wage will begin on January 1, 2022, when the new state minimum wage will consist of $8.50/hr. Likewise, Act No. 47 provides that on July 1, 2023, the minimum wage will increase to $9.50/hr. and to $10.50 on July 1, 2024, subject to the Commission’s mandatory decree.

While the salary increases prescribed in Act No. 47 do not apply to the employees indicated in the
preceding paragraph, section 2.11 of Act No. 47 enables the Commission to establish special
mandatory decrees applicable to some of those employees, only in the following cases and under
the following terms:

• The Commission is authorized to establish a special mandatory decree for the so- called “Administrators,” “Executives,” and “Professionals” as such terms are defined in Regulation No. 13 of the Minimum Wage Board.
• The Commission is ordered to establish a special mandatory decree for agricultural workers, on or before July 1, 2022, including a decree for those excluded from the FLSA provisions.
• The Commission is ordered to establish a special mandatory decree for tipped employees, as such term is defined in the FLSA.

In general, section 3.01 of Act No. 47 precludes the application of this law’s dispositions to employees of the United States Government, employees of the government of the Commonwealth of Puerto Rico, municipal government employees, except for agencies or instrumentalities of the Commonwealth that operate as businesses or private companies. Similarly, the provisions of Act No. 47 will not apply to employees covered by a collective bargaining agreement between a labor organization and an employer, provided that their salary is equal to or greater than that established under the provisions of Act No. 47.

Section 3.04 of Act No. 47 recognizes a cause of action for employees who receive a compensation less than what they are entitled to under this law, a collective bargaining agreement or an employment contract. Employees may collect the difference owed through legal action, plus an amount equal to such difference owed as additional compensation, and the costs, expenses, interests, and legal fees. Section 3.05 of Act No. 47 states that a person that no longer has a working relationship with the employer may file a complaint during a term of five (5) years beginning on the date of termination. If the employee files a complaint while working for the employer, the claim will include the employee’s wages for the last five (5) years prior to filing the action.

If you have any questions or comments regarding these recent developments that impact the employment landscape, or if you would like assistance to revise or modify your practices and policies accordingly, please contact any of the following attorneys from our Labor & Employment Practice Group at your convenience:

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