Legal Update November 2017

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Puerto Rico: A Month After Hurricane María

On Tuesday September 19, 2017, we thought we had done everything within our control to prepare for Hurricane María.  After September 20, 2017, we realized that nothing could have prepared us for the devastation and sheer horror that Hurricane María left in our island.  Besides leaving us with no power and water, for most of Puerto Rico still to date, Hurricane María took away thousands of homes, left many with no food, and took away years of developments and improvements at the Island.  At Navas Rodríguez & Hernández, we were fortunate that our office suffered no physical damage and are doing our part to bring Puerto Rico back.

On October 20, 2017, the Island underwent its first 30 days following Hurricane María. To date, a significant amount of municipalities in the Island continue to be without power and with limited access to the internet.  Moreover, most land line phone service is down as well.  While running water is available at most municipalities, some of the remote areas continue to lack any utility services. While the U.S. Postal Service has been in operation since early October, it is significantly delayed. Express courier service such as UPS and Fed Ex are overwhelmed with the amount of packages to distribute and are experiencing significant delays as well.  Most businesses as well as government agencies that are open are working on reduced schedules to offset costs associated with operating on power generators, deal with heavy traffic and to ensure safety. Courts will resume hearings on civil matters after starting operations on criminal and family matters in October.

At NRH, we have been operating from a temporary location since early October and should be ready to move back to our office as soon as power is restored. Published reports state that tests are underway for the main power generating plant in the San Juan metropolitan area to start serving customers this week. Shortly before and following the hurricane, we attended the Annual Meeting of the National Association of Minority and Women Owned Law Firms (NAMWOLF) in New York and rolled out our upgraded website and social media sites in Linked In and Facebook.  We are indeed open for business and determined to do our part in building back our Island.

Following the passing of Hurricane María. most developments of legal relevance have been related to consumer protection orders by the Department of Consumer Affairs (DACO) to further keep its freeze on prices of goods of need during the emergency, actions by the Puerto Rico Department of Treasury to allow exempt status to aid received by individuals from third parties, including disaster aid payments from employers.  Also, an opinion was issued by the Secretary of Labor on the payment of wages to exempt and non-exempt employees during hurricanes.


DACO Issues Order Extending Price Freeze Over Goods of Need

On September 3, 2017, the Department of Consumer Affairs issued Order 2017-004, which set forth a price freeze over goods of need    (i.e. canned and fresh food, water, medication, power generators, etc.) due to the imminent passage of Hurricane Irma. Following several extensions of said order to respond to the emergency caused by Hurricane María, including one which set forth an approval process for price increases for goods of need by wholesalers and retailers, on October 18, 2017, DACO issued Order 2017-018, to automatically approve price increases over goods of need as long as the business notifies DACO of the price increase by a supplier and it maintains the same or lower profit margin it had prior to the increase. Said order also sets forth the applicable mechanism for pricing and profit margins of new goods brought in to substitute goods of need previously sold by a merchant or for a merchant who sells goods of need for the first time.  For additional information and details over this Order please contact attorney Fred Gautier Lugo (fgautier@nrhlawpr.com)


PR Treasury Department Issues Administrative Determination on Disaster Aid Payments to Employees by Employers

In order to adequately offer guidance to employers and other entities on the tax treatment of disaster aid payments, the Puerto Rico Department of Treasury issued on October 5, 2017, Administrative Determination DA-17-21, which sets forth the rules for exempt disaster aid payments to employees.  In essence, employers are authorized to make tax exempt payments to employees for up to $1,000 per month to assist them with damages sustained from Hurricane María.  This payment must be in addition to the compensation ordinarily received by the employee and cannot be attributed or related to the employee’s position or salary.  Moreover, employers are also allowed to provide interest free loans to employees for up to the total amount of $20,000.  Aid payments are to be made between September 21, 2017 to December 31, 2017.  Please contact us if you are interested in learning of all requirements set forth by PR Treasury in order to comply with the law. For additional information please contact attorney Carmen Lucía Rodríguez Vélez (clrodriguez@nrhlawpr.com) and/or Gerardo Hernández (ghernandez@nrhlawpr.com).


PR Secretary of Labor Issues Opinion on Payment of Wages to Employees due to Days Not Worked as Result of the Passage of a Hurricane

In order to offer guidance to employers on the payment of salaries to employees stemming from days not worked due to the passage of  a hurricane, on October 17, 2017, the Puerto Rico Secretary of Labor issued an opinion (2017-001) which, in essence, confirms the long-standing interpretation that an employer has no legal obligation to pay a non-exempt employee for time not worked as the result of a natural disaster.  Nonetheless, the Secretary urged employers to be sensitive of the situation and allow employees to be paid from accrued vacation time so that they can adequately respond to needs stemming from the state of emergency caused by the passage of hurricanes Irma and María.

On the other hand, the Secretary is of the opinion that employers are legally obligated to pay exempt employees for time lost due to a business closing that is less than a full week of work.  However, no such obligation exists when no work whatsoever is performed during a full week.

However, regardless of the Secretary’s opinion, those employers who have a policy in place that allows for payment in the event of business closures caused by a natural disaster, will be legally bound to comply with their own policies.  We remain at your disposal should you need any assistance in complying with said opinion.  For additional information please contact attorney Carmen Lucía Rodríguez Vélez (clrodriguez@nrhlawpr.com) and/or Gerardo Hernández (ghernandez@nrhlawpr.com).


PR Department of Labor issues new regulation to manage PR Law No.148 of 1969 on Christmas Bonus for Private Employers

On September 18, 2017, the PR Department of Labor and Human Resources issued an updated regulation for private employers to manage the payment of the Christmas bonus.  The new regulation essentially updated the prior regulation to include rules applicable to the changes made to the bonus payment to employees hired after the labor reform contained in PR Law 4 of 2017 which reduced the amount of the bonus payable to new hires, among a series of other changes, including an increase to the amount of hours worked needed to be eligible to the bonus.

If you need further assistance with this new regulation, please contact attorney Carmen Lucía Rodríguez Vélez (clrodriguez@nrhlawpr.com) and/or Gerardo Hernández (ghernandez@nrhlawpr.com).

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