On March 3, 2023, the Federal District Court of Puerto Rico ruled that Puerto Rico Act No. 41 of June 20, 2022 (Act No. 41) was approved in violation of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), and that the changes to local employment statutes instituted by the act are null and void ab initio. Both the Puerto Rico legislature and the government’s executive branch announced that they will appeal the decision.
As discussed in earlier client alerts on June 28, August 24 and October 18, 2022, Act No. 41 introduced several important changes to Puerto Rican employment law, in many cases reversing changes which were introduced by the 2017 Labor Reform. Act 41 states that the reform took effect on July 20, 2022 for large businesses and on September 18, 2022 for micro, small and medium businesses (SMEs).
However, the law’s implementation remained unclear until March 3, 2023, as Puerto Rico’s Fiscal Oversight and Management Board (FOMB) maintained that the government of Puerto Rico had not properly certified that Act No. 41 was consistent with the Puerto Rican Fiscal Plan, as required by law.
The government’s failure to comply with the FOMB’s instructions
