Doing Business in Puerto Rico Blog: Business Coaching, News & Developments

Understanding Overtime in Puerto Rico

To avoid running into serious legal liability, an employer needs to thoroughly understand how overtime operates in Puerto Rico. Let´s examine how extra hours occur during a regular workday. Unlike most jurisdictions in the United   States, overtime can be accrued many more ways than working over forty hours a week.

Actually, when companies in the U.S think about overtime they only talk about the maximum number of hours an employee can work in a week without incurring in overtime. In Puerto Rico however overtime includes: 

• Work in excess of forty 40 hours during any week;
• Working over 8 hours in any 24 hour period;
• The hours that an employee works for his employer during the day of  rest;
• Not taking the mandatory meal period within the allotted time frame;
• Hours that an employee works for his employer during the days or  hours when the establishment in which he-she renders services should  remain closed to the pubic by legal provision.

Daily Overtime

An  individual can incur in daily overtime by working more than 8 consecutive hours or by working more than 8 hours during any period of 24 consecutive hours. 

To determine whether  a particular hour is considered overtime, we must look back 24 hours. Visualize that each hour worked is the last hour of the 24 hour period that ends on such hour. If the hours exceed 8 within the previous 24 hour period, it is considered overtime.

So for example if an employee works from 9 am to 6 pm on Monday (with an hour of lunch) and on Tuesday the individual works from 8 am to 5 pm, there is one hour of overtime for the 24 hour period that ended at 8 am.  By beginning work an hour earlier 9 hours of work were incurred within the 24 hour cycle that ended at 8 am; regardless of whether the hours were worked on two separate days- 8 hours on Monday and 1 hour on Tuesday (8-9 am). Another way overtime can occur is if the meal period is delayed with respect to the previous day. For example an individual enjoys a meal period from 11 a.m. to 12 noon one day and from 12 noon to 1 p.m.
the next.

The reason behind this cumbersome way of calculating overtime is to avoid late shifts one day and early shifts the next- denying appropriate rest to the worker. Do not laugh at this notion. If you were the worker you would find this a neat feature in your employment package.

Every employer  who allows an employee to work during extra hours shall be obligated to pay  him-her for each extra hour a wage rate equal to the  rate agreed upon for regular hours, provided , however that every employer  covered by the Fair Labor Standards Act shall pay only time and a half.

5 STEPS TO AVOID LIABILITY FOR MISSCLASSIFYING AN EXEMPT EMPLOYEE

In Puerto Rico as in the United States, employees that are executive, administrative or professionals are exempt from wage & hour legislation. In Puerto Rico, this is of particular significance because non-exempt workers are entitled to vacation, sick leave, meal period breaks at specific times and extra pay for work beyond 8 hours a day. In addition, statutory penalties are assess for those that fail to comply (double damages).

Having  a person erroneously classified as  exempt can create considerable liability. A simple 4 step audit can help you asses if you have potential liability.

1.  If you have a person working for less than $455 a week that individual cannot be considered an exempt employee.  I t is specifically stated in the regulations.

2. Executives: The individual must supervise two or more employees.  He/her must be in charge of the company or a recognize division thereof and have the authority to hire and  fire.

3. Administrative: Must do non-manual work directly related to the administration of the business or its general operations.  This is the classification that creates the most  confusion.  The key here is that that the person must be involved in administration as opposed to production and must usually and regularly  exert independent judgment in matters of importance to the company.

4. Professionals:  To be classified as a professional, the individual's work must require advanced knowledge, predominantly  intellectual  and must include independent judgment and discretion.  Studies must have been specialized acquired through prolonged courses at  the university level.

Go through your classifications and run the test, if you have any doubts, check with a labor/employment attorney.

Using E-Mail Systems For Union Business

The National Labor Relations Board will hear oral arguments on March 27, 2007 as part of it process to determine whether employees have a right to use their employer's e-mail system to communicate with other employees about union or  concerted  activities.  There are other issues as stake:

• If employees do have a right, what restrictions if any may the employer place on those communications?
• If not,  does an employer violates the National Labor Relations Act if it permits non-job related e-mails but not those repeated to union or other concerted  activities?
• If employees have a right to use the e-mail system may an employer nevertheless prohibit e-mail access to their employees by non-employees?

Non-union businesses  assume that because there is not a union in their workplace, they can freely manage their workforce. However, the National Labor Relations Act (NLRA) which regulates union-management relations, also protects certain  employees' activities  despite the absence of a union. 

For example, under the  NLRA  employees have the right to engage in concerted activities for collective bargaining or other mutual aid or protection. Employers may not interfere with those concerted activities.

Determining what  is a concerted activity under the NLRA is  the subject of continuous controversy.  Basically, it must be undertaken by two or more employees working with the same employer or by one employee speaking  for other employees'; and  the purpose of the  activity must center around the employees' wages, hours, or other terms and conditions of employment.  Examples include employees acting as a group to complain about certain conditions at work; as opposed to one employee complaining about his particular problem.

The oral arguments for the 27th of March are in the case of The Guard Publishing Company, Cases 36-CA-8743-1, et al, the Board will decide to what extent (if any) employees may  communicate with other employeees about concerted and other protected activities.

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