The main changes are a liberal interpretation of employment agreements in favour of employees, expanding meal and rest period requirements, expanding accrual benefits for vacation and sick leave, revising the statutory formula for severance and certain bonuses and re-establishing rebuttable presumptions of dismissal without just cause, as well as the assumption that unjust dismissals are motivated by discriminatory acts.

It took effect on 20 July for large businesses and 18 September for micro, small and medium businesses.

As it also provides for special treatment for employers that are deemed microenterprises, small or medium businesses, such as a special hours-worked requirement for employees hired after the effective date of the LFTA to be entitled to the Christmas bonus, the Puerto Rico Secretary of Labour and Human Resources issued Opinion No. 2022-02, that provides clarification on how to determine if an employer is a PYMES based on their gross income and number of employees.

However, the law’s implementation remains unclear because Puerto Rico’s Oversight Board affirms that Act No. 41 does not comply with the Fiscal Plan as required by law and, therefore, cannot take effect.

The Board first invited the Government of Puerto Rico to suspend the law’s effects. Then, on 1 September 2022, he filed suit against Governor Pedro Pierluisi, challenging Act 41-2022, which he signed earlier this summer.

Even in this situation of great uncertainty, employers should start implementing the provisions of Law No. 41, while waiting for a decision to clarify the new regulation’s validity.