On August 10, 2023, the U.S. Court of Appeals for the First Circuit affirmed the U.S. District Court for the District of Puerto Rico’s decision declaring Law 41-2022 null and void ab initio. Law 41-2022 sought to repeal some of the reductions in benefits enacted by the 2017 Labor Reform (Law 4-2017) for employees hired on or after January 26, 2017, including the reduction in the vacation accumulation rates, the increase in the number of hours worked to qualify for the Christmas bonus, the cap on the statutory severance, the extension of the automatic probationary period, and the shortening of the statute of limitations to file employment-related claims.

Quick Hits

• The First Circuit Court of Appeals affirmed a district court decision and held that Puerto Rico’s Law 41-2022, which had reduced some benefits enacted under the 2017 Labor Reform Law, was null and void.
• Employers must follow the employment regulations that were in force prior to July 20, 2022.

This means that Puerto Rico employers must continue to follow the employment regulations in force prior to July 20, 2022 (the effective date of Law 41-2022), which were incorporated by the 2017 Labor Reform.