Department Of Labor And Human Resources Clarifies Application Of New Minimum Hours Threshold To Accrued Vacation And Sick Leave Per The Labor Transformation And Flexibility Act of 2017, Act No. 4-2017

On January 26, 2017, the Governor of Puerto Rico approved Act No. 4-2017, known as the Labor Transformation and Flexibility Act (“the Act”).

Key aspects and provisions of the Act were outlined in our Client Newsletter dated January 26, 2017. As an attempt to strike a balance in keeping with the legislative intent, while protecting some rights accrued by current workforce, some of the rights and entitlements of employees under the various statutes were grandfathered for individuals employed prior to the Act’s effective date of January 26, 2017. However, other provisions and amendments were intended to apply to all employees.

One of the gray areas that created some confusion –– both for employees and seasoned employers alike –– was the amendment to the minimum monthly hours-worked thresholds for vacation and sick leave accrual. Specifically, Section 6(a) of the Act provides that “[e]very employee shall be entitled to a minimum vacation and sick leave accrual after working at least one hundred and thirty (130) hours a month.” Prior to the Act, this minimum-hour threshold was one hundred and fifteen (115) hours per month.

Given the fact that the Act did not specify if this increased threshold applied to all employees, regardless of hire date, some in the conservative sector interpreted that the amendments to vacation and sick leave (including the minimum threshold) only applied to new hires, while others interpreted that, though accumulation rates applied to new employees, the augmented threshold applied to all employees, regardless of hire date.

To dispel any confusion, and avoid potential fines to our clients, we submitted a consult to the Department of Labor (“DOL”) and recently received confirmation from the DOL that the 130-hour threshold applies to all employees, regardless of hire date, while the new accumulation rates set forth in the Act apply to employees hired after the Act’s effective date of January 26, 2017.

If you have any questions or comments regarding the Act or if you’d 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:

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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