On March 23, 2020, the Secretary of the Puerto Rico Department of Labor and Human Resources issued Opinion No. 2020-02 (Opinion 2020-02) discussing provisions applicable to both exempt and non-exempt private-sector employees impacted by the COVID-19-related lockdown imposed by Executive Order No. 2020-023. Opinion 2020-02 addresses permitted wage deductions, restates the employer’s duty to comply with occupational health and safety requirements, and briefly discusses the new paid leaves available to employees pursuant to the Families First Coronavirus Response Act, Pub. L. 116-127. The following highlights the most noteworthy aspects of Opinion 2020-02.  

Non-exempt employee’s compensation during COVID-19 lockdown

Non-exempt employees are those who are compensated for each hour worked, and as stipulated by the federal Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., are only entitled to be compensated for hours actually worked. Therefore, employers are not required to pay non-exempt employees who could not work due to a temporary closing of operations. If, however, non-exempt employees work outside of their regular place of employment, including pursuant to a work-from-home arrangement, the hours worked are compensable.

While the Secretary urges employers to voluntarily provide either salary continuation to employees on furlough or special compensation considering the circumstances, the guidance specifically states that employers may charge the non-worked hours to the employees’ vacation leave, but only with the employees’ prior consent. In other words, the employer cannot force the employee to charge the time off to the employee’s vacation leave. Likewise, employers may allow their employees, upon their request, to charge the non-worked hours to other accrued and available leaves, such as sick leave.  

Generally, non-exempt employees in a probationary period accrue vacation leave retroactively once they complete six months of employment, but may not avail themselves of such leave until one year following their recruitment. According to Opinion 2020-02, however, the employer, in its discretion, may allow the employee to use the vacation leave once they hit this six-month mark, even if the probationary period has not concluded. On the other hand, employees subject to a probationary period accrue sick leave from the beginning of their employment, and the use of said leave is not subject to restrictions relative to the time they have been employed. Importantly, should an employee in a probationary period use any authorized statutory leaves, such as vacation, sick or any other special leave, the probationary period will be automatically interrupted and will continue once the employee returns to work.

The Secretary further advises employers that, pursuant to the recommendations of the Centers for Disease and Control Prevention (CDC), employers should adopt flexible sick leave policies consistent with the public health guidance relevant to the pandemic.  

Exempt employee’s compensation during COVID-19 lockdown

Exempt employees—those classified as executives, administrators and professionals under the FLSA—are compensated on a pre-determined salary basis that is not subject to deductions due to variations in the quantity or quality of work performed. These employees are also exempt from statutory benefits such as vacation and sick leave accrual. An exempt employee’s rights, therefore, are those arising from the employment contract, agreements reached with the employer or the company’s manuals and policies.

Exempt employees must be compensated for each work week in which they perform any task regardless of the hours worked. Employers may nonetheless, upon their discretion, charge the hours or days in which these employees did not perform work-related tasks to any available leaves that are voluntarily provided as part of their benefits, if no contrary agreement is in place and the employee will receive the same compensation as agreed for the weeks in which they perform any work. Notably, employers are not compelled under the law to provide exempt employees with vacation leave and, therefore, have discretion to establish the way in which it will be accrued and enjoyed.

Opinion 2020-02 recognizes, however, that if an exempt employee does not perform any work in a particular work week during the COVID-19-related lockdown, either in-person or remotely (such as through teleworking), they are not entitled to compensation for that week.  The Secretary further explains how to determine what a “work week” will be for purposes of this assessment. As previously mentioned, the employer has the discretion to charge the week in which the employee performs no work to any leave the exempt employee is entitled to or may voluntarily compensate the employee for that week without charging it to any benefit.

New applicable leaves of absence under the Families First Coronavirus Response Act

Secretary Opinion 2020-02 provides some detail on the new leaves available to certain employees under the federal Families First Coronavirus Response Act (FFCRA), which was enacted on March 18, 2020, and will take effect on April 2, 2020.

Loans to employees during the state of emergency

As an exception to the general rule that prohibits deductions from employee wages, the Payment of Wages Act, Act No. 17 of April 19, 1931 (Act 17), as amended, allows employers to provide their non-exempt employees salary advances or equipment, materials or goods that are directly related to a state of emergency, and deduct them periodically from the wages of those employees who consent to such, in writing.  In light of the state of emergency declared by the governor of Puerto Rico as well as the president of the United States, employers may currently offer their employees assistance such as salary advances, respiratory equipment or materials to prevent the contagion, or other goods related to the avoidance and treatment of COVID-19.

Opinion 2020-02 cautions, however, that repayment will not be subject to interest, and the employer may only charge an amount equal or less than the cost it incurred to acquire the equipment, material or good. The deductions from the employee’s wages to reimburse said salary advances or equipment, cannot exceed 20% of the employee’s net pay in each pay period following the application of all legal and voluntary deductions. Among the requirements that must be included in the written authorization is the breakdown of how the employee will repay the total amount owed.

Significantly, exempt employees are exempted from Act 17, thus they may enter into any voluntary agreements with their employers for the repayment of goods or services acquired by the employer for their benefit, subject to what was agreed to by the parties.

Employers and employees exempt from the application of the imposed lockdown

Moreover, the Opinion restates that those employees who are exempt from the curfew imposed by Executive Order 2020-023 (EO) can request adjustments to their work schedules, reductions in working hours, or changes in their place of work. The employers must evaluate these requests without retaliating against the employees who request them.

The Opinion provides an important reminder to employees who are working pursuant to an exception provided for in EO 2020-023, to wit, they should remember that their duties are necessary for the continuation of essential services. Accordingly, employers may continue to apply reasonable institutional policies and procedures. On the one hand, employers are advised to carefully evaluate the requests of employees interested in taking advantage of some of the leaves of absence to which they are entitled or unpaid leave.  Employees with a history of health conditions in particular, including compromised immune systems, may require reasonable accommodations to continue performing their duties.  The Opinion calls upon employers to be sensitive to the particular situation faced by employees.  On the other hand, Opinion 2020-02 recognizes that there are services that need to be provided. Hence, it recommends employers analyze whether particular functions are essential in order to limit the number of employees in the workplace, and to strengthen their security measures to enable workers who are working to do so with the greatest confidence and safety possible.

To the extent that it is their duty to protect the health and security of the employees, employers must have or implement a plan of action or policies to identify personnel or visitors that show symptoms of the virus. Likewise, employers must comply with the provisions applicable to their industries as well as with the Guidelines published by the Occupational Safety and Health Administration regarding COVID-19.

The Opinion concludes by recognizing that services provided by healthcare professionals are vitally needed at this time, and urging the employers in this industry to meet the established cleaning, disinfection, engineering and administrative controls. Similarly, it is imperative to provide the necessary protective equipment and train the personnel on the established protocols.