On June 20, 2022, Puerto Rico’s governor signed into law Act No. 41-2022 (“the Act”). The Act rolls back certain changes brought about by the Labor Transformation and Flexibility Act (“LTFA”). The LTFA was enacted in 2017 in an effort to reenergize the island’s economy following its effective bankruptcy.

As described in more detail below, the changes made by the Act relate to accrual of sick and vacation leave and Christmas bonus eligibility, presumptions related to just cause and discrimination, the formula for calculating severance pay, probationary periods, the statute of limitations for various causes of action, the interpretation of employment contracts, and meal breaks.

• Increased Rate for Accrual of Sick and Vacation Leave: Under the Act, the number of hours non-exempt employees must work in order to accrue sick and vacation leave has again been lowered to 115 hours per month. Employees who work at least 115 hours per month will accrue 1- vacation days per month and 1 sick day per month. Accrual is capped at 15 days of vacation leave and 12 days of sick leave per year. These accrual rates apply only to employers with more than 15 employees over 26 weeks in a consecutive two-year period. Further, the Act removes the requirement that employees have 10 days of accrued unused vacation in order to cash out leave.
• Changes to Eligibility Requirements for Christmas Bonuses: The Act lessens the number of hours employees must work in order to be eligible for receipt of...

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