Puerto Rico is a Caribbean island and unincorporated territory of the United States. Puerto Ricans have been considered U.S. citizens since 1917, and can move freely between the island and the US mainland. However, since they are residents of an unincorporated territory, American citizens of Puerto Rico do not vote for the president or vice president, and generally do not pay federal income tax. Puerto Rico is considered a developed jurisdiction with an advanced, high-income economy.
The minimum wage in Puerto Rico is USD 8.50 per hour in 2022, and will increase to USD 9.50 per hour in July 2023. A standard workweek is 40 hours at 8 hours per day. Overtime work is regulated by the employment contract or collective agreement.
Pregnant employees are entitled to 8 weeks of maternity leave, usually split as 4 weeks before the birth and 4 weeks after. Fathers who work in the private sector can choose to take 6 months of unpaid paternity leave. Adoptive parents are entitled to maternity leave as well.
Employees in Puerto Rico are entitled to sick leave, accrued at 1 day per month for 12 days per year.
Puerto Rico has 18 public holidays, and employees are entitled to annual paid time off (PTO). The amount of paid time off is accrued based on how long the employee has worked at the company:
The termination process varies based on the employment contract or collective agreement and the reason for termination. Employers must have just cause to terminate an employee based on their conduct or behavior.
Notice periods are not mandatory in Puerto Rico.
There is no severance pay if there is “just cause” for termination. If there is no “just cause” the severance pay is dependent on the seniority of the employee as follows:
It is mandatory to pay out 13th-month salary bonuses in Puerto Rico, equal to 2% of the employees’ wages (not more than USD 600) at the end of the year.
★ 6.2% - FICA Social Security
★ 1.45%-2.35% - FICA Medicare
★ 0.6%-6% - Federal Unemployment
★ 1.4%-5.4% - State Unemployment
★ 2.9% - New Employer Tax
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It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.