Establish your presence globally with Neeyamo – Global Payroll services and EOR services as we help you go beyond borders to manage your international global payroll and hire new talent in Puerto Rico.
Overview
Puerto Rico, though not a part of the US, is part of US territory with commonwealth status. The American federal government has jurisdiction over Puerto Rico, but the country has no representative in the Senate. Puerto Rico also has separate teams and participates in the Olympics and the Miss Universe Pageants, but when it comes to measurement systems, visitors usually face a conundrum. Puerto Rico uses both the imperial system as well as the metric system based on what is being measured.
Puerto Rican citizens have adapted to using both these systems based on the circumstance; employees in the country are known for their ability to adapt and make the best of what's available. Does your organization's expansion plans require hiring employees in a country with a dedicated workforce? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo – one of the top Global payroll providers, assists organizations worldwide with onboarding and managing employees in Puerto Rico- processing payroll, managing local compliance requirements, benefits, and more.
Facts And Stats
Capital
San Juan
Currency
United States Dollar (USD)
Official Language
Malay
Fiscal Year
1 July - 30 June
Date Format
DD/MM/YYYY
Country Calling Code
+1
Other Languages
Spanish, English
Time Zone
Atlantic Standard Time (UTC - 04:00)
Global Payroll
Overview
What is Global Payroll?
Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity. The solution to this is global payroll outsourcing.
What is a global payroll system?
Over the years, Neeyamo – Global Payroll Services, being one of the top payroll providers, has observed these complexities and strived to provide global payroll solutions through a single technology platform – Neeyamo Payroll. Neeyamo's global payroll systems ease the process for companies looking to outsource their global payroll requirements and aid them in maneuvering the tricky payroll system in Puerto Rico. Neeyamo's payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.
How is payroll calculated?
Neeyamo acts as your personalized Payroll Calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.
Payroll Taxes
Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.
Employee Taxes
Employee Payroll Contributions
- 6.20% - FICA Social Security (federal) (maximum 160,200 USD)
- 1.45% - FICA Medicare (federal)
- 0.90% - FICA Medicare (federal- additional for excess of 250,000USD (for a married couple filing a joint return), 125,000 USD (for a married individual filing a separate return), and 200,000 USD (for all other employees)
- 6.00% - FUTA (Federal Unemployment Tax)
- 13.65% – 14.55% Total Employee Cost
The following is the employee income tax bracket:
| 0.00% | Upto 9,000 USD |
| 7.00% | 9,000-25,000 USD |
| 1,120 USD + 14% of the excess over 25,000 USD | 25,000-41,500 USD |
| 3,430 USD + 25% of the excess over 41,500 USD | 41,500-61,500 USD |
| 8,430 USD + 33% of the excess over 61,500 USD | Over 61,500 USD |
Employer Taxes
- 6.2% - FICA Social Security (federal) (maximum taxable wages is 160,200 USD)
- 1.45% - FICA Medicare (federal)
- 0.90% - FICA Medicare (federal- additional for excess of 250,000USD (for a married couple filing a joint return), 125,000 USD (for a married individual filing a separate return)
- 0.60% – 6.00% - FUTA (Federal Unemployment Tax Act) The FUTA tax rate is 6.0% with a taxable wage base of 7,000 USD. However, if states operate their unemployment insurance programs in compliance with federal law, then the FUTA tax is reduced (credit) by 5.4% to 0.6%. (Maximum taxable wages is 7,000 USD)
- 1.40% – 5.40% - SUTA (State Unemployment Tax)
- 2.90% - SUTA New Employer Tax
- 17.95% – 22.85% Total Employment Cost
Payroll Cycle
Overview
Undoubtedly, payroll is a critical process for any organization. The pay cycle in Peurto Rico refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.
Frequency
The payroll frequency in Puerto Rico can be bi-weekly, monthly, or semi-monthly.
13th Month Cycle
The 13th pay or Christmas bonus is mandatory in Puerto Rico.
Global Work
Overview
What is Employer of Record?
An Employer of Record services / EOR services provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account prior to making a job offer to an international hire.
An Employer of Record services / EOR services provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.
This allows organizations to focus on collaborating with the employees in Puerto Rico for operational tasks, with the knowledge that they have a cost-effective solution, such as Neeyamos – one of the best employer of record companies, to support their global payroll management & HR requirements as they continue their global expansion.
HR Mandates and Practices
Minimum Wage
As of January 1, 2023, the minimum wage in Puerto Rico is $8.50 per hour.
Overtime
In Puerto Rico, employees are entitled to overtime pay of at least 1.5 times their normal rate for all hours worked over the overtime limit, which is any hours worked over a total of 40 in a single workweek.
Data Retention Policy
There is currently no comprehensive data privacy legislation in Puerto Rico.
Hiring and Onboarding Requirements
Hiring
Private employers in Puerto Rico can perform background checks, including criminal background checks, on potential employees. Temporary employment contracts are required to be valid. Employers must furnish certain information to ASUME, including the name, address, and social security number of the employee.
Onboarding
Onboarding in Puerto Rico may require ID verifications, tax, and other contractual paperwork.
Employers in Puerto Rico are required to report new hires to the state, including the employee's date of birth, date of hire, state of hire, and salary. Employees in Puerto Rico receive 15 days of annual leave after completing a minimum of 130 hours of work each month.
Probation
The probationary period is now nine months for exempt employees and one year for non-exempt employees.
Leave
Public Holidays
- January 1: New Year's Day
- January 6: Epiphany
- January 16: Martin Luther King Jr. Birthday
- February 20: President's Day
- March 22: Emancipation Day
- April 7: Good Friday
- April 9: Easter Sunday
- May 14: Mother's Day
- May 29: Memorial Day
- June 18: Father's Day
- July 4: Independence Day
- July 25: Constitution Day
- September 4: Labour Day
- October 9: Day of the Race
- November 11: Veterans Day
- November 19: Discovery Day
- November 23: Thanksgiving Day
- December 25: Christmas Day
Voting Leave
All public- and private-sector employees who are registered voters and are scheduled to work on a voting date, and the schedules overlap with the opening hours of the polling places, have a right to request the opportunity to vote by mail or in a voting center that allows individuals to vote in advance. Employees who cannot know their work schedule in advance on a voting day will be entitled to a 2-hour paid leave during the workday to vote.
Adoption Leave
Working mothers with children aged five or younger who were not yet enrolled in school shall be entitled to the same 8-week paid maternity leave benefit granted to birth mothers. Working mothers who adopt a child six years of age or older shall be entitled to up to 5 weeks of paid maternity leave.
Caregiver Leave
Puerto Rico allows employees to use up to 5 days of medical leave in connection with the illness or medical treatment of a child, parent, spouse, person of advanced age or with a disability, or under the employee’s custody or tutelage.
Catastrophic Illness Leave
An employee who has worked with the same employer for more than 12 months and must have worked for an average of at least 130 hours per month during such period will be eligible for this Special Leave with pay of up to a maximum of six (6) working days per year, in addition to those to which the employee is already entitled to by law. The leave may be used through split, flexible, or intermittent schedules. Before requesting the leave, the employee must exhaust his/her sick leave. The leave may not be transferred or rolled over to the following year, and it will not be cashed out upon an employee’s termination of employment.
Military Leave
Employees are entitled to unpaid leave for employees of the private sector who are members of Puerto Rico’s Military Forces to be absent and serve as part of their annual training or to comply with any call to serve. Members of Puerto Rico’s State Guard who are also employees in the private sector, upon honorable completion of their services or training, have a right to reemployment subject to the conditions provided by the Act.
Jury Service Leave
Any person hired by a private employer who has been summoned for jury duty in a court shall have the right to enjoy paid leave from his employer for up to a maximum of 15 working days.
Leave for victims of Domestic Violence
Employees in Puerto Rico may take up to 15 days of unpaid leave each calendar year to address situations related to domestic or gender-based violence, child abuse, sexual harassment in employment, sexual assault, lewd acts, or felony stalking under a new law.
Special Paid Leave
On April 9, 2020, Puerto Rico signed into law House Bill No. 2428 (“Bill No. 2428”), now Act No. 37-2020, to amend the Puerto Rico Minimum Salary, Vacation, and Sick Leave Act, otherwise known as Act 180-1998. The purpose of Bill No. 2428 is to establish a special paid leave for non-exempt employees infected (or are suspected of being infected) by the illness or epidemic that triggers a state of emergency declared by either the Governor of Puerto Rico or the Secretary of the Puerto Rico Health Department.
The amendment has added a subsection (p) to provide an employee infected or suspected of being infected with the disease or illness that caused the state of emergency the right to a special paid leave of 5 working days. Importantly, to use the special paid leave, the employee must first exhaust all available accrued sick leave, as well as any other available accrued leave to which the employee is entitled. Employees cannot use this special paid leave for any other reason than those specifically established in the law.
Sports Leave
Athletes, trainers, and other sports participants certified by the PR Olympics Committee are entitled to 30 days of unpaid leave annually to participate in training or competition (if participation is certified by the PR Olympic Committee). Employees may use available paid vacation to receive paid leave. An additional 15 days of leave may be taken if the employee has accumulated additional leave.
Termination
Notice Period
There is no minimum notice period required for termination of employment in Puerto Rico. Neither federal nor local law requires employers to give employees advance notice of termination or payment in lieu of notice, except in certain cases. However, employers must provide written notice of the program to employees 60 days in advance.
Severance Pay
The statutory severance formula for employees hired before January 26, 2017, is as follows:
-
Less than 15 years of service – two months of salary plus one week for each completed year of service.
-
Fifteen years of service or more but less than 20 years of service – four months of salary plus two weeks for each completed year of service.
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Twenty years of service or more but less than 25 years of service – five months of salary plus two and a half weeks for each completed year of service.
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Twenty-five years of service or more – six months of salary plus three weeks for each completed year of service.
The statutory severance formula for employees hired on or after January 26, 2017, regardless of years of service, is as follows:
-
Three months of salary plus two weeks for each completed year of service.
The statutory severance is capped at nine months for employees hired on or after January 26, 2017.
Visa
Overview
The Puerto Rico Visa is a multiple-entry travel document that allows you to enter Puerto Rico, and it is a combination of a tourist and business visa.
The business visa (B1 Category) is for travelers who want to do business in the country or for people who want to participate in business meetings, events, congresses, fairs, or scientific, educational, or professional conventions.
The tourist (B2 Category) is for people who want to travel for tourism, pleasure, or also because they want to have medical treatment.
The Puerto Rico Visa is valid for ten years after being issued. With this type of visa, you can stay in Puerto Rico for periods of up to 180 days per entry during a temporary stay and for a specific purpose.
Citizens of the United States do not need a visa to travel to Puerto Rico.
Citizens of other countries who are eligible for the US Visa Waiver Program must have an approved ESTA (Electronic System for Travel Authorization) visa waiver to travel to Puerto Rico. An approved ESTA for Puerto Rico allows a stay of 90 days with each entry for tourism, transit, or business purposes and is valid for a total of 2 years from issue.
Employee Background Checks
Legal and Background Checks
Employers in Puerto Rico are allowed to perform criminal background checks and credit checks on people applying for jobs and current employees.
Background checks in Puerto Rico are administered by the Puerto Rico Police Department, and criminal records checks are name-based checks.
Last updated on September 15, 2023
If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com
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