Deforma Laboral: How Puerto Rico’s Labor Reforms Worsen Conditions for Young Workers

Photo: (Eric Rojas / EL VOCERO)

In late January, on the heels of news that Puerto Rico’s ongoing economic crisis has led to the exodus of nearly 61,000 people over the last decade, the island’s new governor Ricardo Roselló signed a controversial labor reform bill into law. The bill aims to boost hiring, but rather than relying on more conventional approaches – like deploying tax credits or deregulating existing policies to make hiring new workers more financially attractive – it takes an approach critics have decried as decidedly anti-worker.

New workers – especially young people – stand to be impacted the most by the new bill.

The changes under the Labor Transformation and Flexibility Act, known as La Reforma Laboral, are sweeping, affecting everything from vacation days to overtime pay to the probationary period for new employees. It is these new workers who stand to be impacted the most, as the bill makes it expressly illegal for businesses to replace employees grandfathered into the old law with new hires, whose contracts would fall under the new law. But even so, there have already been rumblings afoot that long-time employees are being targeted.

So says a long-time Domino’s employee named Nelson, who’s worked for the pizza company for 28 years. In an interview with a local news outlet, Nelson explained that after La Reforma Laboral was signed, Domino’s began re-interviewing existing employees to determine whether or not they’d stay on – a process he believed was designed to weed out grandfathered employees. When asked whether he feared repercussions for voicing his disagreement, he replied, “Well, if it happens, at least I’m fighting for my rights.”

Domino's Pizza worker in Puerto Rico fights for his rights as …

None of you will ever be as brave as this Domino's Pizza employee who has been working there for 28 years. A true patriot!

Posted by La Junta de Control Fiscal on Monday, January 30, 2017

The political satire page La Junta de Control Fiscal was quick to herald him a Puerto Rican hero with a viral-ready doctoring of the clip; naturally, #TodosSomosNelson began circulating. (Soon after, Domino’s publicly assured that the interviews were a result of ownership changes.)

With a persistently high unemployment rate, currently at 12.4 percent (compared to the mainland’s nationwide average of 4.8%), it’s obvious Puerto Rico desperately needs change. Drastic times, for sure, but the drastic measures of La Reforma Laboral aren’t going over well for many.

“Young people find ourselves in working conditions that are worse and worse than those of our parents.”

Young people can sigh in relief, at least, that at least their minimum wage wasn’t lowered. Under the PROMESA restructuring bill—the one that also imposes a federally-appointed Fiscal Control Board to oversee Puerto Rico’s government—it was suggested that workers 25 and under receive a drastically lower rate of $4.25. That’s one challenge avoided, but many young people are still wholeheartedly opposed to the changes that did make it through.

Nelson Pagan Butler, a 28-year-old graduate student at the University of Puerto Rico in Río Piedras, believes millennials will take a direct hit. “Young people find ourselves in working conditions that are worse and worse than those our parents had. This in terms of benefits and wages,” he explains.

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Workers rights on the island before La Reforma Laboral were pretty progressive, especially when compared to many US states. Paid sick leave and vacation days were earned at a rate of one day per month, a year-end bonus of three to six percent of salary was earned after 700 hours worked, and overtime pay was at double the regular rate.

Now, overtime pay is down to time-and-a-half, and it’s less likely to be applied: Holidays, during which many retailers were required to close are now limited to Good Friday and Easter Sunday only. Workers formerly had the potential to make higher rates on Sundays, under a Closing Law that shuttered retailers outside tourist zones from 5 a.m. to 11 a.m. every Sunday (and all day on holidays). That law has been effectively eliminated under La Reforma Laboral. Additionally, the law implements the Flexitime policy, under which employers and employees can come to an agreement about condensing a 40-hour work week into fewer days—for example, working four 10-hour shifts in a row—without triggering overtime pay.

Puerto Ricans continue to leave the island at a historic clip. Young people are a major part of that loss.

Vacation days are now capped at six in the first year of employment; workers aren’t eligible for the full 12 until they’ve hit five years working. Year-end bonuses were also affected: Employees will need to hit 1,350 hours, nearly double the previous requirement. The probationary period for new hires, during which they can be fired without just cause, is expanded to nine months from the previous three. Additionally, for cases of unlawful termination outside that period, the burden of proof no longer explicitly rests on the employer, as there’s no language guaranteeing it under the new law.

Of the most obvious results of La Reforma Laboral, the clear-cut decrease in the likelihood of overtime pay will affect some workers’ incomes. Coupled with the revocation of certain guaranteed days off, says 24-year-old Chloé Irizarry, a humanities student also at the University of Puerto Rico in Río Piedras, the changes will have an intensely negative impact on single working mothers.

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“With La Reforma Laboral, one person isn’t enough to support a family,” she says. Irizarry also points out that sick and vacation days are sometimes leveraged for child-care reasons—doctor’s visits, or sick kids, for example. The laws are anti-family, she says, whether it’s the traditionally structured or chosen kinds.

“La Reforma Laboral is increasing the number of kids who have to raise themselves,” she says.

Puerto Ricans continue to fight back; they continue to protest.

The extension of the probationary period is particularly troubling: what’s to stop employers from firing employees before the nine months are up? There’s nothing in La Reforma Laboral that expressly prohibits employers from minimizing benefits or avoiding them altogether by maintaining a staff of essentially temporary employees.
Puerto Ricans continue to leave the island at a historic clip; and three quarter’s of the population’s precipitous drop took place 2015. Young people are a major part of that loss. But, as Pagan Butler points out, not everyone can afford to leave—whether they want to or not. He’d like to get his PhD in the US, he says, but his earnings through work at the University’s Luquillo Long-Term Ecological Research Program wouldn’t stretch that far.

“I can’t save money,” he says. “The paycheck barely covers my rent and food…so buying a plane ticket isn’t an option either. At least, not for now.”

Anthropology student Sofía Feliciano, 20, agrees. “Lots of people don’t have an out, or the resources [to leave], so you get stuck. You have no choice. You have fewer options, less security, less help,” she says. Feliciano also expresses concerns for the health of workers under La Reforma Laboral. Overextending themselves by working multiple minimum-wage jobs with little time off, the looming fear of firing during a probationary period, the worry that finding a new job would be impossible—all of these stressors can take a toll.
“That stuff gets reflected in your emotional and psychological states,” she says. “We’re basically making Puerto Rico more unwell than it already is.”

As desperate as Puerto Rico is for a change, La Reforma Laboral will likely only further complicate its issues. There’s more PROMESA law fallout on the way, too: Budget cuts for the University of Puerto Rico (a proposed total of $300 million, in fact) and the possible privatization of beaches are on the immediate horizon. Puerto Ricans continue to fight back; they continue to protest.

If the labor laws were progressive by comparison, Feliciano points out, it’s because the people fought for them.

“We can never forget that,” she says. “We as a pueblo have power…as a mass movement. We are the masses, we are the majority. We can change things. The ability is there.”