Puerto Rico’s New Post-Hurricane Guidance: A How-To on Paying Exempt and Non-Exempt Workers

On October 17, 2017, the Secretary of the Puerto Rico Department of Labor and Human Resources (Secretary of Labor) published Opinion No. 2017-001, providing further guidance to private-sector employers on how they should compensate their non-exempt and exempt employees in Puerto Rico in light of the prolonged interruption in business activities brought about by Hurricanes Irma and Maria. The Opinion is consistent with the Fair Labor Standards Act (FLSA) and Puerto Rico wage and hour law. Employers should observe the rules discussed below unless an employment contract, applicable collective bargaining agreement (CBA), or company policy or practice provides for more generous benefits.

Non-Exempt Employees

Non-exempt employees must be paid only for time in which they actually perform work or make themselves available to work (i.e., engaged to wait) for the employer. Additionally, any time during which an employee is allowed to carry out work for the benefit of the employer, even if not required by the employer, constitutes compensable time and should be treated and remunerated as such. Therefore, if a non-exempt employee does not perform any work or is not engaged to wait to perform work, then he or she does not need to be paid unless there is an individual employment contract, an applicable CBA, or a company policy or practice providing otherwise.

While there is no statutory obligation to pay a non-exempt employee if he or she does not perform work or make himself or herself available to work, Puerto Rico’s Secretary of Labor encourages employers—for obvious humanitarian reasons—to continue paying non-exempt employees throughout the interruption of business activities resulting from the hurricane’s devastation. However, if an employer cannot pay non-exempt employees outright, the Secretary of Labor recommends that, upon a non-exempt employee’s request, the employer allow that employee to offset any time off from work, due to the hurricanes, with any accrued but unused statutory vacation leave or sick leave or with any other paid leave to which the employee may be entitled under his or her contract of employment, a CBA, or the employer’s policies or practices.

Exempt Employees

With regard to exempt employees, the Opinion restates the FLSA rule, which is that an exempt employee is entitled to his or her full weekly salary, with limited exceptions, for any week in which the exempt employee performed any work, regardless of the amount of time actually worked. For example, an employer must pay an exempt employee who performs any work remotely during a week in which the workplace remained partially or fully closed because of the natural disaster.

Conversely, an exempt employee who does not carry out any work during a given week would not be entitled to receive any of his or her weekly salary. For instance, an employer that is open for business is not required to pay an exempt employee if the employee is able but refuses to report for work and performs no work remotely. In addressing whether to pay an exempt employee his or her salary, in full or in part, an employer should keep in mind that the FLSA does not permit deductions from an exempt employee’s pay for less than a full day’s absence. Therefore, if an exempt employee is absent for one-and-a-half days due to a personal reason (e.g., transportation difficulties due to adverse weather conditions), the employer may deduct only for the one full-day absence, and is required to pay the exempt employee a full day’s pay for the partial day he or she worked.

The Secretary of Labor also encourages employers to continue paying exempt employees during the hurricane-related stoppage of business activities or instead allow them to offset time off with paid leave provided under individual employment contracts, CBAs, or company policies or practices.