Puerto Rico, officially known as the Commonwealth of Puerto Rico, is a self-governing Caribbean island operating as an unincorporated territory of the United States. It has a workforce of 1.21 million people (2023) and a GDP of 122.23 billion US dollars (2025).

Its economy was once reliant on agriculture (predominantly sugar cane) but is now propped up by the manufacturing and services industries, particularly since becoming part of the United States commonwealth in 1952. While there are extremes of both wealth and poverty in Puerto Rico, most people live a comfortable lifestyle and have access to a range of mandatory employee benefits.

This guide will provide you with a comprehensive overview of labor laws in Puerto Rico, focusing on mandatory employee benefits, supplementary employee benefits, and an insight into how Remote People can help simplify hiring in Puerto Rico.   

Puerto Rican Employment Laws

Employment law in Puerto Rico is covered by US labor law and the Puerto Rican Constitution. 

The creation of the Puerto Rico Labor Relations Act in 1945 provided employees with the right to choice of occupation, a minimum wage, regular working hours, and overtime pay.

Employers should always seek legal advice from professionals when doing business in Puerto Rico to make sure mandatory employee benefits are provided and Puerto Rican labor laws are adhered to.

Mandatory Employee Benefits in Puerto Rico

Puerto Rico provides employees with the following mandatory benefits:

Social Security Contributions

Puerto Rico is covered under the United States Social Security System. Social Security rates for employees are currently 7.65%, divided into 6.2% for social security and 1.45% for Medicare tax.  Employers must withhold 0.9% of additional Medicare tax from wages paid to an employee over 200,000 US dollars.

Annual Paid Leave

Employees in Puerto Rico are entitled to paid annual leave. This is accrued at a rate of 1 and a quarter days for each month worked, provided that the employee has worked no less than 115 hours in that month.

Annual leave cannot be claimed until an employee has accrued leave for 1 year. It can be taken consecutively or apportioned provided that the employee takes at least 5 consecutive days of annual leave per year.

Up to 2 years of vacation leave may be accrued if agreed with an employer. 

Working Hours

Working hours are established in the Working Day in Puerto Rico Act of 1948.

This act dictates that regular working hours are 8 hours per day over a maximum of 40 hours per week. Any work over this amount counts as overtime and should be paid accordingly.

National Minimum Wage

The national minimum wage in Puerto Rico was determined by the Minimum Wage, Vacation, and Sick Leave Act of Puerto Rico in 1988.

Currently, the average minimum wage in Puerto Rico is $10.50 per hour as of July 2024. 

Employees who are exempt from the Puerto Rico Minimum Wage Act, such as government employees, agricultural employees, and those covered by the federal Fair Labor Standards Act (FLSA)  must be paid the federal minimum wage of the United States which is $7.25 per hour. 

Overtime Pay

Overtime pay in Puerto Rico differs depending on whether employees are covered by the FLSA.

Employees covered by the FLSA are entitled to overtime pay at 150% of their regular wage.

Employees not covered by the FLSA are entitled to overtime pay at twice their regular compensation rate for each hour worked over 40 hours per week.

Christmas Bonus

Employees in Puerto Rico are entitled to a Christmas bonus, known as ‘el bono de Navidad’ in Spanish.

The mandatory Christmas bonus is 3% of an employee’s salary, capped at $600 for employees working over 1,350 hours that calendar year.

Employers with 15 employees or less are only obliged to pay a maximum of $300 per employee.

Paid Public Holidays

Public holidays are usually paid days off in Puerto Rico. The public holidays in Puerto Rico are:

  • New Year’s Day – (January 1)
  • Epiphany – (January 6)
  • Martin Luther King Jr. Day – (January 19) (movable date)
  • Presidents’ Day – (February 16) (movable date)
  • American Citizenship Day –  (March 2)
  • Day off for American Citizenship Day – (March 3) 
  • Emancipation Day – (March 22)
  • Good Friday – (April 3) (movable date)
  • Memorial Day – (May 25) (movable date)
  • Juneteenth National Independence Day – (June 19)
  • US Independence Day – (July 4)
  • Constitution Day – (July 25)
  • Labor Day – (September 7) (movable date)
  • Dia de la Raza – (October 12) (movable date)
  • Veterans’ Day – (November 11)
  • Discovery Day – (November 19)
  • Thanksgiving Day – (November 26) (movable date)
  • Christmas Day – (December 25)

Paid Sick Leave

Employees in Puerto Rico are entitled to a minimum level of sick leave at a rate of 1 day for every month worked, up to a maximum of 12 days per year.

This is only provided on the basis that employees have worked at least 130 hours for the relevant calendar month.

Employees may use up to 5 days per year of accrued sick leave, provided that they maintain a balance of 5 days to care for sick family members. 

Maternity Leave

Female employees in Puerto Rico are entitled to 8 weeks of paid maternity leave, of which 4 weeks should be taken before and after the birth of the child.

Full salary should be paid during this period, and women can choose to take their maternity leave as late as the week before birth, provided that a medical certificate has authorized employment up to this time.

Paternity Leave

Male employees are entitled to 5 days of paid paternity leave at full pay when their child is born. The employee must either be married to or be cohabiting with the mother of the child. 

Pensions

Puerto Rico follows three different pension systems:

  • The Employee Retirement System (ERS): The ERS provides a pension and other benefits to retired employees of the Commonwealth of Puerto Rico. This also applies to employees working for public corporations and municipalities of the Commonwealth.
  • US Social Security Pension: As a US territory, Puerto Ricans may claim an old-age pension from the US Social Security system, provided that they have paid contributions to Social Security.
  • Private Pension Schemes: Puerto Ricans can also contribute to private pension schemes, which may also be paid into via their employers.

Severance Pay

Employees in Puerto Rico are entitled to severance pay. The amount paid is determined by the employee’s years of service:

Years of Service Severance Pay
0 – 5 years 2 months’ salary plus 1 week for each year of completed service
Over 5 – 15 years 3 months’ salary plus 2 weeks for each year of completed service
Over 15 years 6 months’ salary plus 3 weeks for each year of completed service

Supplementary Employee Benefits in Puerto Rico

It’s recommended that employers consider offering supplementary benefits to employees in Puerto Rico. This is to extend staff retention and attract potential employees. Some supplementary benefits worth thinking about include:

  • Performance bonuses
  • Enhanced pension/healthcare packages
  • Expenses such as transport, food, or housing
  • Increased annual leave/parental leave allowances

Optimize Employee Benefits with Remote People

If you’re looking to simplify the hiring process in Puerto Rico, Remote People can help through our Employer of Record (EOR) services. We handle employment benefits, compliance, and other key HR tasks—giving you more time to focus on growing your business while ensuring everything is done in accordance with Puerto Rican labor laws.

We can also help recruit talented employees with our recruitment services in Puerto Rico. Our team is highly experienced in the recruitment industry in Puerto Rico and fully understands the intricacies of the talent market, helping to secure the most talented people for your business.