Effective July 1, 2024, Puerto Rico’s minimum wage will increase to $10.50 per hour. Additionally, employers now have until August 15, 2024 to file their annual payroll statement to maintain their insurance coverage through the State Insurance Fund Corporation.
Employers in Puerto Rico will have a busy summer following two significant changes.
MINIMUM WAGE INCREASE TO $10.50
Effective July 1, 2024, the Puerto Rico minimum wage will increase to $10.50 per hour. The increase, approved by the recently established Minimum Wage Review Board, is the final increase effectuated by Act No. 47-2021. The act established three automatic annual minimum wage increases for nonexempt employees ($8.50 in 2022, $9.50 in 2023, and finally $10.50 in 2024). The increases do not apply to employees covered by a collective bargaining agreement that already provides for a higher wage.
Act No. 47-2021 did not establish any further minimum wage increases beyond 2024, and it is currently unknown if or when Puerto Rico will raise the minimum wage again.
DEADLINE TO SUBMIT ANNUAL PAYROLL STATEMENT EXTENDED TO AUGUST 15
Puerto Rico employers now have until August 15, 2024 to file their annual Payroll Statement to remain eligible for insurance coverage with the State Insurance Fund Corporation following the January 17, 2024 enactment of Act No. 21-2024. Employers requiring additional time may seek a 15-day extension upon request and a showing of just cause through the administrator’s website.
As a reminder, Act No. 45-1935, also known as the Puerto Rico Workers’ Accident Compensation Act, sets various requirements for an employer to be eligible for insurance coverage through the State Insurance Fund Corporation (the local workers’ compensation fund). Among other requirements, employers must submit an annual Payroll Statement to the administrator of the State Insurance Fund Corporation, which must detail (1) the number of workers employed, (2) the occupation or industry of those workers, and (3) the total wages paid to such workers or industries during the prior fiscal year.
IMPLICATIONS FOR EMPLOYERS
While a minimum wage increase is straightforward on its own, employers must be mindful of broader consequences, including accounting for higher overtime and other premium rates. Employers that violate the minimum wage may receive fines ranging between $500 and $5,000.
Employers should immediately review their compensation plans to ensure that employees are compensated at least the new minimum wage of $10.50 per hour and be prepared to address any ripple effects on the pay of higher earners. Employers who use third-party payroll processing services should also confer with their providers to ensure that they have adjusted accordingly.
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