What is PROMESA?
The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) is legislation intended to help address the fiscal crisis in Puerto Rico.
How does PROMESA affect the minimum wage requirements in Puerto Rico?
Section 403 of PROMESA modified section 6(g) of the Fair Labor Standards Act (FLSA) to allow employers to pay employees in Puerto Rico who are under the age of 25 years a subminimum wage of not less than $4.25 per hour for the first 90 consecutive calendar days after initial employment by their employer. This change became effective on June 30, 2016, the effective date of PROMESA. This extension of the youth minimum wage to employees who are under the age of 25 years only applies to employees in Puerto Rico.1
How long will the new youth minimum wage requirement in Puerto Rico be in effect?
The Governor of Puerto Rico, subject to the approval of the Financial Oversight and Management Board established by PROMESA, may designate the duration of this expansion of the section 6(g) subminimum wage for employees who are under 25 years of age; however, this time period may not exceed four years.
How will the Final Rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act, be enforced in Puerto Rico beginning December 1, 2016?
Section 404 of PROMESA precludes the application in Puerto Rico of the Department of Labor’s Final Rule, which would have (among other things) entitled most salaried white collar workers earning less than $913* a week ($47,476 a year) to overtime pay beginning December 1, 2016, the Final Rule’s effective date. Under section 404 of PROMESA, the Final Rule may not take effect in Puerto Rico until the Comptroller General completes a report that examines the economic conditions in Puerto Rico, and the Secretary of Labor indicates in a written determination to Congress that the application of the Final Rule in Puerto Rico would not have a negative impact on its economy.
1 Employers elsewhere may pay a youth minimum wage of not less than $4.25 per hour to employees who are under 20 years old during the first 90 consecutive calendar days after initial employment. See Fact Sheet #32: Youth Minimum Wage – Fair Labor Standards Act.
*Note: The Department of Labor revised the regulations located at 29 C.F.R. part 541 with an effective date of January 1, 2020. WHD will continue to enforce the 2004 part 541 regulations through December 31, 2019, including the $455 per week standard salary level and $100,000 annual compensation level for Highly Compensated Employees. The final rule is available at: https://www.federalregister.gov/documents/2019/09/27/2019-20353/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and.