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  • The San Juan Daily Star

Business groups seek to file friend of the court brief in lawsuit over labor reform


The petitioners said they are concerned that Act 41 imposes new costs, requirements, operational burdens and monetary exposures upon island employers.

By The Star Staff


The Puerto Rico Retailers Association and nine other organizations have asked the U.S. District Court for permission to file a friend of the court brief in support of the Financial Oversight and Management Board lawsuit to nullify Act 41-2022, the new labor reform.


The Puerto Rico Hotel & Tourism Association (PRHTA); the Puerto Rico Manufacturers Association (PRMA); the Puerto Rico Builders Association (PRBA); the Puerto Rico Automobile Distributors and Dealers Association (PRADA); the Restaurants Association of Puerto Rico (ASORE by its Spanish acronym); the Puerto Rico Food Marketing, Industry and Distribution Chamber (MIDA); the Asociación Hecho en Puerto Rico Inc.; the Puerto Rico Chamber of Commerce; and the Puerto Rico Hospital Association (AHPR by its Spanish initials) are joining the retailers’ group in the friend of the court brief.


In a petition last week, the organizations said they have a strong interest in the case.


They said they are concerned that Act 41 imposes new costs, requirements, operational burdens, and monetary exposures upon employers.


The new law discourages hiring new employees; increases total labor costs by granting vacation and sick leave benefits to part-time employees, who, before Act 41, were not entitled to such compensation while being absent from work; potentially increases unscheduled absenteeism of part-time employees who under the Act 41 will now have available sick leave day accruals from the first month of employment; and increases labor costs by eliminating phase-in periods, they argued.


The groups also said the new labor reform increases labor costs associated with new employees by granting them vacation leave entitlements from the first month of employment and not, as previously required, after six months of work, and reduces the probationary period utilized to evaluate a new employee’s performance.


Act 41 lowers the yearly hours-worked threshold required to trigger the obligation to pay a yearly Christmas bonus for employees; has a chilling effect on management’s ability to supervise and evaluate its employees; and establishes a presumption that all job terminations are unjustified, they said.


“The analysis to be presented will provide important context for the invalidation of Act 41 and justify an expedited injunction against the enforcement of the same,” the groups said. “Moreover, the brief will shed light on the practical adverse effects of Act 41 on businesses operating in Puerto Rico. Such an analysis will provide unique information or perspective that can help the court beyond the Oversight Board’s discussion.”


Last month, the oversight board sued to nullify labor reform, which repeals portions of the Puerto Rico Labor Transformation and Flexibility Act of 2017 and other labor laws, arguing that it goes against the fiscal plan.

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