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North America

Puerto Rico

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Employer of Record (EOR) in Puerto Rico

What you'll learn

  • Country Introduction
  • Tax Breakdown for Employers
  • Statutory Leave Laws
  • Minimum Wage and Working Hours
  • Termination Process
  • Additional Information
Puerto Rico Introduction

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.

Paid Leave and Statutory Leave

Parental Leave

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.

Sick Leave

Employees in Puerto Rico are entitled to sick leave, accrued at 1 day per month for 12 days per year.

Paid Leave

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:

  • 0-1 years = 0.5 days of PTO accrued per month
  • 2-5 years = 0.75 days of PTO accrued per month
  • 6-15 years = 1 days of PTO accrued per month
  • 15+ years = 1.25 days of PTO accrued per month

Wage Requirements and Working Hours

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.

Termination Process

Process

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 Period

Notice periods are not mandatory in Puerto Rico.

Severance Pay

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:

  • If the termination occurs within the first five years; two months’ pay is required
  • Within 5-15 years of employment; three months’ pay is required
  • After 15 years of employment; three months’ pay is required

Additional Information

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.

OVERVIEW
Language(s):
Spanish, English
Currency:
United States Dollar (USD)
Capital City:
San Juan
Population:
3.2 Million
Cost of Living Rank:
24th
VAT (Valued Added Tax):
11.5%
Employer TaxES
12.55%-22.85%
(estimated)

★  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

Simplified Global HR and Payroll.
Let’s work on it together.

We've made the process really simple
with only 3 steps.

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
Best Pricing
Available in 150+ countries
How Remofirst employs in Puerto Rico

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.

How employees in Puerto Rico get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Puerto Rico are paid on time in United States Dollar (USD). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

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.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Puerto Rico, they can use our platform's chat function to get answers from our team of experts. Every client of Remofirst also receives a dedicated account manager that will serve as a point of contact for global HR support.