Governor Of Puerto Rico Orders Secretary Of The Department Of Labor And Human Resources To Abstain From Charging Employers For The Unemployment Benefits Paid As A Result Of Covid-19

On September 11, 2020, Governor Vázquez signed Administrative Bulletin No. OE-2020-068 to order the Secretary of the Puerto Rico Department of Labor and Human Resources (PRDOL) to disregard and abstain from charging employers’ Unemployment Insurance (“UI”) reserve account for the benefits paid for unemployment claims as a result of the COVID-19 pandemic beginning on March 15th through December 26, 2020 (OE-2020-068).

The unemployment benefits administered by the PRDOL come, mostly, from employers’ annual UI tax contributions – which are maintained in the employers’ UI reserve account. The annual UI tax rate is determined by “the employers’ experience rating,” which essentially considers the taxable payroll, the amount paid into its UI reserve account, and unemployment claims filed against the employers’ UI reserve account. Accordingly, an employers’ UI annual tax rate can decrease or increase over time depending on its taxable payroll and/or the amount of unemployment claims filed against its UI reserve account.

Under normal circumstances, a surge in unemployment claims may impact an employer’s UI tax rate. However, considering that Puerto Rico remains under a state of emergency since March 12th due to the pandemic caused by COVID-19, and that an unprecedented increase in UI benefits claims have resulted, mostly, from employers that have been forced to close or reduce their operations as a result of multiple mandatory lockdown Executive Orders, the Administrative Bulletin No. OE-2020-068 seeks to avoid impacting employers’ UI tax rate for circumstances beyond their control.

To that end, OE-2020-068 considers that most unemployment claims charged to employers’ UI reserve accounts respond to compliance with the COVID-19 Executive Orders and are not attributable to employers. Also, in order to comply and access certain funds available by virtue of Section D, Emergency Unemployment Insurance Stabilization and Access Act of 2020, included in the First Coronavirus Response Act, Pub. L. 116-127, the Governor of Puerto Rico ordered the PRDOL to disregard and abstain from charging employers for unemployment benefits requested and paid to employees during the pandemic, for the workweek beginning on March 15th, 2020 up to the workweek ending December 26th, 2020 or another date established by the Federal Government. This action will allow employers to maintain an UI tax rate similar to what they paid prior to the pandemic, which will translate to a relief during the economic recovery process.

If you have any questions or concerns regarding the application of this new paid leave to your workforce or operations, please contact any of the following attorneys from our Labor & Employment Practice Group at your convenience:

Juan J. Casillas Ayala	787 523-3439	jcasillas@cstlawpr.com
Luis F. Llach-Zúñiga	787 523-3498	lllach@cstlawpr.com
Israel Fernández Rodríguez	787-523-3437	ifernandez@cstlawpr.com
Luis R. Ramos Cartagena	787-523-3483	lramos@cstlawpr.com

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