Hiring abroad is notoriously difficult: New labor laws, entities, a lot of words you’d rather not hear again. But we’ve got good news—it doesn’t need to be that way. Below, we’ll break down your two main options for hiring in Puerto Rico (and the one we prefer).
If you want to successfully hire in
Puerto Rico
, you have two options:
Laws about hiring contractors are significantly more simple in
Puerto Rico
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Puerto Rico
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Puerto Rico
.
Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Puerto Rico
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and generally puts you at a bigger risk for legal fees. When you hire contractors overseas, your biggest risk is misclassification—but even then, misclassification penalties are often minimal and just require you to pay off any compensation that the person would have been owed as an employee.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Puerto Rico
, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Puerto Rico than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Puerto Rico.
The annual leave entitlement in Puerto Rico is dependent on the seniority of the employee as follows:
Puerto Rico celebrates 19 holidays; all American national holidays as well as its own holidays.
Following 12 months of consecutive service at a company an employee is entitled to six days of paid leave for severe diseases.
Employees receive 12 days of paid sick leave which is accrued at the rate of one day per month following the commencement of at least 130 hours in that month.
An employee in Puerto Rico is entitled to a maternity leave of eight weeks, four weeks of which is generally taken before the birth and four weeks after. An employee can start maternity leave as late as one week before their predicted due date and can return just two weeks after the child’s birth, providing the employee can present a medical certificate.
Maternity leave can be extended to 20 weeks following a pregnancy-related complication; however, the additional 12 weeks will be unpaid.
Adoptive mothers are entitled to the same maternity benefits as those of a mother who gives birth, providing the adoptive child is below the age of 6.
Private sector employees can choose to take six months of job-protected unpaid leave.
Employers with a workforce of 50 employees or more can provide their employees with 12 weeks of unpaid leave for the birth of a new-born child, the placement of an adoptive/foster child, to care for an immediate family member, or to take medical leave when an employee is unable to work, under the US Federal Family and Medical Leave Act (FMLA).
Special paid leave of up to 6 months for an employee with one of the Serious Diseases of Catastrophic Character listed by the Special Coverage of the Health Insurance Administration of Puerto Rico.
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Employers must have “just cause” to terminate an employee based on the employee’s job performance or behavior. If there is no just cause for dismissal, the employee receives severance pay.
There is no notice period.
There is no severance pay if there is “just cause” for termination.
If there is no just cause, the employee receives two months’ pay if the termination occurs within the first five years; three months pay if 5-15 years, and three months pay after 15 years.
The employer must also pay an additional two weeks’ salary for each year of service, with a maximum of 9 months total severance.
The probationary period is 9 months; 12 months for employees classified as “executives”, “administrators” and “professionals”.
A standard working week is 40 hours and a workday is 8 hours.
Employees in Puerto Rico are entitled to be paid at least 1.5 times their normal rate for all hours worked over the overtime limit for any hours worked over a total of 40 in a single workweek.
Non-exempt employees under the Fair Labor Standards Act (FLSA) receive 150% for hours worked in excess of 40 hours a week or 8 hours a day.
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