Puerto Rico to raise minimum wage

On September 21, 2021, the Governor of Puerto Rico, Pedro Pierluisi, signed into law Act No. 47 which was recently approved by the Senate and House of Representatives to raise the state minimum wage in Puerto Rico from $7.25 per hour by gradual annual increases up to $10.50 per hour.

The $7.25 per hour minimum wage rate shall be increased as follows: to $8.50 per hour on January 1, 2022; to $9.50 per hour on July 1, 2023, and to $10.50 per hour on July 1, 2024.

A Minimum Wage Evaluation Commission (“Commission”) was also created by the Act to ensure that Puerto Rico’s working class receives a fair an adequate compensation. The minimum wage rates specified above will begin on the projected dates unless the Commission issues a mandatory decree changing such rates.

The minimum federal wage set by the Fair Labor Standards Act (“FLSA”) will apply automatically in Puerto Rico to the employees covered under such federal statute but the state minimum wage in Puerto Rico will prevail while it is higher than the federal minimum wage.

Moreover, exempt employees such as “Administrators”, “Executives” and “Professionals”, as those terms are defined by Regulation No. 13 of the Minimum Wage Board, are excluded from this Act. Puerto Rico government employees, federal government employees and employees covered by a collective bargaining agreement are also not covered by the wage increases.

On the other hand, employees who receive tips will be entitled to the federal minimum wage in effect for such employees if, added to the tips, the amount reaches at least the minimum wage established by this Act.

Employers who violate the Act shall be subject to a fine of between $500.00 and $5,000.00 and in cases of repeated violations, they shall be subject to a fine of between $5,000.00 and $10,000.00.
The statute of limitations to file a legal claim under this Act is five (5) years. The period for the salary claims will be limited to the last five (5) years worked by the employee.

We advise employers to assess their workforce and evaluate the impact that this projected changes in the minimum wage salary may have in their operations.

We are available to assist you should you have any questions or require assistance with the analysis of how this salary transition may affect your company.