The Court of Appeals for the First Circuit confirms the nullity of Puerto Rico Law 41-2022

In June 2022, Puerto Rico Governor, Pedro R. Pierluisi Urrutia (“the Governor”), signed into effect Puerto Rico Act 41-2022 (“Law 41-2022”), known as the 2022 Labor Reform, which amended the Employment Transformation and Flexibility Act of January 26, 2017 (“Law 4-2017”), known as the 2017 Labor Reform. The result of Law 41-2022 was to revert certain legal provisions that were abolished or modified by Law 4-2017 applicable to private sector employers.

The Financial Oversight & Management Board for Puerto Rico (the “Oversight Board”) sued the Governor before the United States District Court for the District of Puerto Rico (the “District Court”) to block the implementation of Law 41-2022 arguing that he failed to submit the necessary documentation to demonstrate that such law complied with the Oversight Board’s fiscal plan as required under the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”). On March 3, 2023, District Judge Laura Taylor Swain rendered the District Court’s decision granting the Oversight Board’s motion for summary judgment and declared Law 41-2022 null and void ab initio.

Subsequently, the Governor and the Speaker of the House, Rafael Hernández Montañez (“the Speaker of the House”) appealed before the Court of Appeals for the First Circuit (the “First Circuit”). After considering the arguments raised in the appeals, the First Circuit rendered an Opinion and issued Judgment yesterday confirming the District Court’s Opinion and Order nullifying Law 41-2022. Consequently, the applicable law today is Law 4-2017 regarding the employment statutes addressed therein.

Please be advised that yesterday’s Judgment is not final and binding since the Governor and/or the Speaker of the House may move the First Circuit for an en banc procedure and/or file a writ of certiorari before the Supreme Court of the United States. We will keep you informed as to any development on this matter.

If you need further support regarding this decision, we are available to assist you.