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Employment law

As Puerto Rico is subject to US federal law, to qualify as an executive, an employee must meet the requirements of the Fair Labour Standards Act (i.e., the employee must earn a minimum salary of US$455 per week, or US$23,660 a year).¹³ The employee's compensation must not be subject to reduction because of variations in the quality or quantity of work performed. In addition, all of the following requirements must be met:

1. the employee's primary duty must relate to managing the business or one of its recognised departments or subdivisions;
2. the employee must customarily and regularly direct the work of at least two full-time employees (or their equivalent in part-time employees); and
3. the employee must have the authority to hire or fire employees, or the employee's recommendations as to hiring, firing, promotion or demotion must carry particular weight.

If an employee qualifies as an executive, the terms and conditions of compensation are typically governed by contractual agreement between employer and employee, rather than being statutorily established, as in the case of rank and file employees. The Labour Transformation and Flexibility Act of 2017 (otherwise known as the Puerto Rico Labour Reform Act) provides that an employment contract is one in which a natural person (the 'employee') is retained to perform services of a voluntary nature for the benefit of the employer or a third party in exchange for compensation for the services rendered...

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