On January 17, 2024, Governor, Pedro R. Pierluisi Urrutia (“the Governor”), signed into effect Act 27-2024 (“Law 27-2024), known as the “Act to Facilitate the Implementation of Remote Work in Private Companies and Encouragement to Establish Airline Bases in Puerto Rico.” Law 27-2024 aims to encourage companies without business operations in Puerto Rico to recruit employees domiciled on the Island and allow them to work remotely from Puerto Rico. Law 27-2024 provides the legal framework that will be applicable to companies and their employees who decide to work remotely from Puerto Rico.
Law 27-2024 provides that the applicability of the laws pertaining to contracts and other employment conditions will be governed by it when the employment relationship complies with the following:
1. The employee is classified as an executive, administrative or professional under the Fair Labor Standards Act;
2. The employee is domiciled in Puerto Rico;
3. The employer is covered by Law 27-2024; and
4. The employee performs his/her duties remotely.
Unless otherwise expressed, local employment laws are not applicable, and the employee-employer relationship shall be governed solely by the employment contract. The applicability of Law 45-1935 known as the “State Insurance Fund Act”; Law 139-1968 known as the “Temporary Disability Benefits Act” and Law 428-1950 known as the “Insurance Act for Chauffeurs and Other Employees” shall be conditioned on the company providing coverage equal or greater than the established by said laws. The employer shall comply with Law 74-1956 also known as the “Employment Security Act,” except in those circumstances in which the employee may apply for unemployment benefits in another jurisdiction.
When a non-domiciled employee voluntarily decides to relocate to Puerto Rico to work remotely for a company covered by Law 27-2024, the employer will be exempt from complying with all local labor and employment laws and, thus, the employment relationship shall be governed solely by the employment contract signed by the parties.
Tax treatment for employees working remotely from Puerto Rico will be governed by Law 1-2011 known as “Internal Revenue Code for a New Puerto Rico” or its successor law, and any other tax related laws in Puerto Rico.
Lastly, employees who work for an airline company that establishes base operations in Puerto Rico and that are covered by a collective bargaining agreement, are excluded from the protections of local labor and employment laws. As such, the terms and conditions of employment of these unionized employees will be governed exclusively by the provisions of the applicable collective bargaining agreement.
Law 27-2024’s effectiveness is immediate upon the Governor’s signature.