Payroll and Benefits Guide - Puerto Rico

Puerto Rico
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Currency

United States Dollar (USD)
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Capital

San Juan
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Employer Taxes

17.95% – 22.85%
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Date Format

mm/dd/yyyy
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Fiscal Year

1 July – 30 June

Fun Facts

The coqui, a tiny tree frog native to Puerto Rico, is an iconic symbol of the island.

Puerto Rico is known as the “Island of Enchantment” or “Isla del Encanto” in Spanish.

Puerto Rico has produced many notable artists, including Ricky Martin, Daddy Yankee, and Rita Moreno.

The official languages of Puerto Rico are Spanish and English.

The island is famous for its coffee production.

The longest river in Puerto Rico is the Río Grande de Loíza.

Puerto-Rico

Contributions

Employee Payroll Tax

Contribution TypeRate
FICA Social Security6.20%
FICA Medicare1.45%
FICA Medicare0.90%
FUTA (Federal Unemployment Tax)6.00%

Employer Payroll Tax

Contribution TypeRate
FICA Social Security6.2%
FICA Medicare1.45%
FICA Medicare0.90%
FUTA (Federal Unemployment Tax)0.60% – 6.00%
SUTA (State Unemployment Tax)1.40% – 5.40%
SUTA New Employer Tax2.90%

Payroll

Payroll Cycle

The payroll cycles are bi-weekly, monthly or semi-monthly

13th Salary

13th-month payments are mandatory. Employers with a workforce in excess of 21 employees must by law pay a 13th-month salary in December equating to 2% of the employees’ wages or not more than 600 USD.

Work Hours and Week

The standard working week in Puerto Rico consists of 40 hours a week, 8 hours per day.

Overtime

The standard working week in Puerto Rico consists of 40 hours a week, 8 hours per day.ny amount over 2 hours per day is paid at a rate of 200% salary. Exemptions in place for certain workers/industries.
Puerto-Rico

Leave

Paid Time Off

The annual leave entitlement in Puerto Rico is dependent on the seniority of the employee.

Public Holidays

The annual leave entitlement in Puerto Rico is dependent on the seniority of the employee

Sick Days

Following 12 months of consecutive service at a company, an employee is entitled to six days of paid leave for severe diseases.

Maternity Leave

An employee in Puerto Rico is entitled to a maternity leave of eight weeks, four weeks of which is generally taken before the birth and four weeks after.

An employee can start maternity leave as late as one week before their predicted due date and can return just two weeks after the child’s birth provided the employee can present a medical certificate.

Maternity leave can be extended to 20 weeks following a pregnancy-related complication, however, the additional 12 weeks will be unpaid.

Paternity Leave

Private sector employees can choose to take six months of job-protected unpaid leave.

Parental Leave

Employers with a workforce of 50 employees or more can provide their employees with 12 weeks of unpaid leave for the birth of a new-born child, the placement of an adoptive/foster child, to care for an immediate family member, or to take medical leave when an employee is unable to work under the U.S. Federal Family and Medical Leave Act (FMLA).

Termination

Termination Process

The termination process varies according to the employment agreement or collective agreement in place and is based on the type of contract and reason for termination. Employers must have just cause to dismiss an employee based on the employee’s conduct or behavior.

Notice Period

In Puerto Rico, notice periods are not mandatory.

Severance Pay

Severance pay is only required if there is termination without just cause at an amount of 12 weeks’ salary + 2 weeks of salary for each full year of service, capped at 36 weeks of pay.

Probation Period

Probation Period

The probation period is only allowed for indefinite contracts and the period is dependent on the employee’s job role.

Immigration

Foreigners who wish to work in Puerto Rico must comply with Puerto Rico immigration requirements. According to U.S. visa law, citizens of approximately 40 countries worldwide must have an approved ESTA to visit the country for short stays.

The ESTA was introduced in 2009 for all nationalities included in the U.S. visa waiver program. It’s a travel authorization system that allows those who register multiple entries to Puerto Rico, mainland USA, and all incorporated territories of the United States, including the District of Columbia and the U.S. Virgin Islands during its validity.

For Work Permits

Employment authorization document (EAD)

from the U.S. Citizenship and Immigration Services (USCIS).

VAT

The standard rate of VAT in Puerto Rico is 11.50%.