The U.S. Court of Appeals for the First Circuit has affirmed a federal district court’s decision that declared null and void ab initio Puerto Rico Act 41-2022. Financial Oversight Board v. Hernandez Montañez et al., No. 23-1267 (1st Cir. Aug. 10, 2023).
Puerto Rico Act 41-2022, enacted in the summer of 2022, had reversed in part the 2017 Puerto Rico Employment Law Reform.
The First Circuit’s decision is the latest chapter in a legal saga the goes back more than a year. In June 2022, Puerto Rico Governor Pedro Pierluisi signed Act 41-2022, which introduced changes to the rules governing statutory probationary periods, vacation and sick leave accrual, and the way the annual Christmas Bonus is accumulated, among others. However, the Financial Oversight and Management Board for Puerto Rico (the entity created by Congress to supervise the finances of the Government of Puerto Rico) commenced litigation against the Government in September 2022, seeking to nullify Act 41-2022 because it violated the PROMESA Act. On March 3, 2023, the federal court overseeing the Puerto Rico bankruptcy-like procedures ruled Act 41-2022 violated federal law and, as such, declared it null and void ab initio. The court went as far as to permanently enjoin the Governor and any other individuals from taking any steps to help private parties enforce Act 41-2022.
However, the Puerto Rico Government appealed the decision to the First Circuit, arguing the Oversight Board’s powers under the PROMESA Act do...
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