Deadline to request Christmas bonus exemption is Dec. 2

Puerto Rico Labor secretary reminds private sector of requirements

SAN JUAN – Puerto Rico Labor Secretary Briseida Torres Reyes announced Wednesday that the island private sector employers have until Dec. 2 to request an exemption from paying their workers the portion of the salary established by Act 148 of 1969, known as the Christmas Bonus Act.

This year, the deadline was moved to Dec. 2, because Nov. 30 falls on a Saturday.
The law requires paying an annual bonus before the year-end holidays to employees who worked 700 hours or more during the 12 months between Oct. 1 of the preceding year and Sept. 30 of the current year.

In a release issued by her office, Torres reminded employers that they must notify the Puerto Rico Labor and Human Resources Department if they intend to not pay the bonus “in full or in part” due to not having “obtained profits, or when these are insufficient to cover the entire bonus.”

“It is important that employers who are considering requesting the exemption do so in a timely manner so that cases can be evaluated in a responsible and fair manner for the parties involved. The [request] application alone does not exempt the employer from paying the bonus, and it is up to the Department of Labor and Human Resources to authorize the exemption from payment, based on the required documents,” the official said.

To qualify for the exemption, employers “must present the statement of situation and the profit and loss statement…revised or audited, signed and sealed…by a certified public accountant (CPA),” the release reads, adding that the secretary may request any other information pursuant to Act 148 to “properly consider the employer’s notification.”

The Labor Department stressed all employers must pay the bonus, unless they “suffered financial losses or not having generated sufficient profits during the period between September 30, 2018, and September 30, 2019.”

Torres also pointed out that the Labor Transformation and Flexibility Act established that the bonus must be paid between Nov. 15 and Dec. 15.
“If the payment is not made during this period, the employer will be obliged to pay, in addition to the corresponding bonus, an amount equal to half of the bonus as additional compensation when the payment is made within the first six (6) months of their noncompliance; or an amount equal to the entire bonus, as additional compensation, if the payment is issued six months after failing to comply,” according to the agency’s release.

For more information about the law and its regulations, as well as the exemption request, visit

Puerto Rican public workers to get this year’s ‘Christmas bonus’

The fiscal board’s chairman, José Carrión, and executive director Natalie Jaresko (Juan J. Rodríguez / CB)

Government, fiscal board negotiate and find required $60 million

SAN JUAN — Puerto Rico Gov. Wanda Vázquez Garced announced Tuesday that government workers will be receiving their so-called Christmas bonus after her administration identified the funds and reached an agreement with the federally established Financial Oversight & Management Board for Puerto Rico.

The Puerto Rico Christmas Bonus Act of 1969, as amended, requires employers to pay an annual bonus before the year-end holidays to employees who worked 700 hours or more during the 12 months between Oct. 1 of the preceding year and Sept. 30 of the current year.

In a statement issued by her office, La Fortaleza, Vázquez said that after speaking with board Executive Director Natalie Jaresko, it was agreed that the year-end portion of workers’ salaries—which is the first target when government spending cuts are sought—would be paid.

“Nevertheless, we recognize that the government will continue to work toward its saving’s goals for the next fiscal year,” Vázquez said about identifying the use of the funds needed to pay the bonus checks, which are estimated to total about $60 million. 

“We communicated with Jaresko and managed to finalize the details of the Christmas bonus, so that all public workers receive that compensation that they expect and that is necessary,” the governor added. “We know that public employees depend on that money to be able to buy their gifts and enjoy the holiday season. From the beginning, I said that I would fight to be able to make the adjustments necessary and identify the funds to be able to fulfill that commitment to our people.” 

Chairman José Carrión said that after working with the governor and her staff, the board identified the source of funds to pay this year’s bonus.

“The payment this year is not a permanent solution,” Carrión said in a statement. “We still have much to do. The government needs to meet its savings objectives next year and, as we move forward, identify recurring sources of funds within the personnel budget for this compensation to continue to align with the Certified Fiscal Plan.”

However, in a seeming change in position from when former Gov. Ricardo Rosselló was in office, Carrión said: Although this benefit is called a ‘bonus,’ it is not a gift. After significant review of compensation competitiveness, it is clear that this is part of the routine compensation package provided to public employees.

The governor and the board have recently negotiated the administration’s stance with regard to the restructuring support agreement for the Puerto Rico Electric Power Authority’s $9 billion debt, as well as the percentage of pensions the board wants cut to meet its goals. 

Despite reiterating that the government was opposed to cutting pensions, Vázquez and her chief financial adviser, Omar Marrero, endorsed a plan proposed by the board Sept. 27 to adjust central government debt. It includes an 8.5% cut to the pensions of retirees earning more than $1,200 a month, or 40% of retirees.

In a televised message that day, Vázquez said the decision came down to the following: “We respect the agreement reached by the Retiree Committee with the Financial Oversight and Management Board,” otherwise, “we risk facing greater cuts of up to 25% in pensions.”

The board also said Tuesday that the name of the bonus should “better reflect its true nature as part of the regular compensation package of public employees.”

The fiscal panel added that it will continue to work with Vázquez “on many important issues, while her administration will submit legislation regarding the true nature of this element of compensation early next year.”

Jaresko, said that “in order to pay the ‘Christmas Bonus’ this year, the government will submit a budget reapportionment request for central government agencies to the oversight board for review and approval.” 

Jaresko further noted that public corporations with their independent fiscal plans must find savings within their payroll budget and submit a reapportionment request to the board for its approval to pay the bonus.

Puerto Rico Public Safety Dept., oversight board spar over fiscal plan, budget

The governor’s representative to the fiscal board, Christian Sobrino, and Public Safety Director Héctor Pesquera (CyberNews photo)

Reporting, savings and Christmas bonus remain a matter of contention

SAN JUAN – The significant philosophical differences between Puerto Rico’s Financial Oversight and Management Board and the island’s government agencies were overtly displayed Thursday as officials from public safety agencies insisted on the need for higher operating budgets, while the congressionally established panel chided them for failing to submit reports and delaying required consolidations.

At a press conference following the fiscal oversight board’s public hearing to evaluate the status of fiscal plans and structural reforms for the Public Safety Department, which is led by Héctor Pesquera, the governor’s representative on the fiscal board, Christian Sobrino, who is also directs the island’s Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym), reiterated that the board-certified fiscal plan does not support requirements for police reform that are under evaluation by U.S. District Court Chief Judge Gustavo Gelpí.

Sobrino said a study by Vision to Action (V2A) found that the fiscal plan, which would cut funding by about $500 million to the seven public safety agencies, undermines staffing requirements that the Police Bureau must meet. The study, which was shared with the board in October at a meeting attended by its adviser, McKinsey & Co., finds that the fiscal plan will lead to a “deterioration” in public safety, Sobrino said.

The need for higher funding made by the Fire Department, the Institute of Forensic Sciences and the Police Bureau was overshadowed by criticisms from the fiscal board over the so-called Christmas bonus, which employers are legally required to pay; the lack of implementation plans; and the lack of agencies’ awareness about the degree of job absenteeism.

Pesquera said that while the Office of Management and Budget approved a restructuring of the seven entities in February, the consolidations will take time to be implemented and yield savings. Chief Financial Officer Raúl Maldonado said that when the transfer of the Human Resources Administration to his office is completed, the ability to transfer public workers among agencies will become easier, and employees of his office would be transferred to the Public Safety Department (PSD) to assist it in the process.

In response to questions from board member David Skeel, Pesquera said his department will have a timeline to complete the process but that it does not have enough time for the work involved, stressing, “It is not easy to absorb seven different bureaus.”

Maldonado, however, said the implementation plan for the PSD should be ready by April 30.

Tit for tat

The board’s executive director, Natalie Jaresko, noted several times during the hearing that her panel was in the dark as to the finances of PSD components. She insisted on receiving progress reports and information on its seven bureaus, while Pesquera said it was his understanding that she was focusing on the Police Bureau.

“It is for all bureaus. We need progress reports against that plan for each bureau. We have been in various meetings. We have written letters explaining this,” Jaresko said.

Sobrino defended Pesquera, noting that the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) only requires implementation plans when the governor accepts board recommendations for implementation.

In response to a question, Pesquera said the person in charge of the restructuring was Marla Canino.

Skeel also asked Pesquera about requirements to report employee attendance, questioning “how well you can manage without knowing who shows up.”

Puerto Rico fiscal board member David Skeel (CB file)

In turn, Pesquera asked Skeel where he got the idea for discussing absenteeism at the police force, to which chairman José Carrión said he was referring to the so-called blue flu. Pesquera said he did not know how many police officers had not shown up for work because each of the bureaus is tasked with logging that.

Jaresko added that Aafaf publishes monthly reporting on attendance but that “it does not come on a regular basis from all the bureaus.”

Regarding the lack of implementation plans, she said that based on her experience, “you need implementation plans, not for the board, but for yourself…. It is a tool for yourself.”

Sobrino then replied that his mother taught him about implementation plans by giving him a to-do list. “But to imply by this hearing or through the publication of letters that somehow Mr. Pesquera and the rest are not complying with the law or duties before the board, would be legally incorrect…. It is a tool, not something to hit them over the head with,” he said, adding that he does not keep track of the number of absent workers at his agency either.

CFO Maldonado then noted that the government was working on a new attendance model to keep track of absenteeism.

The payment of the Christmas bonus at a time when agencies lack resources came to the fore. Fire Chief Alberto Cruz Albarrán told the board that the agency is expected to end the year with a deficit, which the board members chided for having paid the Christmas bonus without sufficient funds.

“We paid it because our workers deserve the payment during the holidays,” Cruz Albarrán said. The Fire Department requested a $103 million budget for its operations.

Carrión mentioned that the board had proposed to the government making the Christmas bonus part of the employees’ salaries, to which Sobrino responded saying he had never heard about such a proposal.

In a press conference after the hearing, Sobrino said the board’s issue with the Christmas bonus has to do with what the payment is called. “If it were called the end-of-year bonus, they would not have complaints,” he said.

During the hearing, it came to light that the early retirement programs approved by the government have caused a shortage of staff. Pesquera said that from July 2018 to January 2019, his department, which has 16,153 employees, lost 733. About 400 workers have taken advantage of early retirement. While the DPS has tried to consolidate entities, it has not been able to achieve some $30 million in savings.

Skeel wondered that if the department needed additional staff but was promoting early retirement, which 400 workers took, “What are you going to do?”

Pesquera said that while the first phase of the early retirement program was implemented, it was decided the following ones would not be. However, he said that if an officer wanted to retire or quit, the department could do nothing about it. Sobrino said the first phase of the early retirement program did not allow the agency head to deny such requests.

Pesquera was asked about police officers joining Social Security instead of receiving a government pension. He said the initiative has been delayed because the department asked for a legal opinion to be able to justify excluding officers older than 40 years old from a referendum on joining Social Security.

The DPS expects to recruit 500 cadets, 125 this year and 375 next year.

At the hearing as well, Forensic Sciences Commissioner Beatriz Zayas informed that she had some 50 candidates awaiting jobs but did not specifically mention the known autopsy backlog issue.

Puerto Rico gov says he didn’t defy fiscal board by paying the Christmas bonus

NARANJITO, Puerto Rico – Gov. Ricardo Rosselló Nevares said Wednesday that he did not defy the island’s fiscal control board (JCF) for paying the Christmas bonus to public employees.

“It’s not us challenging the Board, it is the Board challenging the government of Puerto Rico. My criterion is I am going to do what, in my opinion, is best for the people of Puerto Rico,” the governor told the press.

“This stems from the Board thinking it’s a gift. It’s not. If you compare the salary of a Puerto Rican teacher, it is two to three times lower. The Christmas bonus is part of that commitment so that this inequality is not so great, and if they could understand that, they would be less resistant,” he added.

The governor said the payment of the year-end statutory bonus will be given despite the fiscal board warning the government on several occasions that it cannot pay it.

The secretary of Public Affairs and Public Policy, Ramón Rosario Cortés, said, “Today, a large part of our public employees saw reflected the direct deposit of their Christmas Bonus in their bank accounts. Others will see it reflected tomorrow (Thursday) as well as what they charge in checks. The governor has instructed public corporations to make adjustments to pay this right that is part of the salary of our workers.”

However, fiscal board Executive Director Natalie Jaresko issued the following statement:

“As referenced in a November 14, 2018 letter to Governor Rosselló, the certified Fiscal Plan for the Commonwealth calls for the elimination of the Christmas bonus as part of cost reductions in Payroll and Related costs as a measure to avoid more drastic measures, and the certified budget reflects that the Commonwealth would not pay a Christmas bonus. The certified budget for the Commonwealth requires that the Commonwealth not exceed the total amount budgeted for Payroll and Related concept of spend.

“As the Commonwealth proceeds to pay a Christmas bonus to its employees this year, each agency will have to achieve an equal amount of savings within the Payroll and Related allocation to offset such an expenditure. Failure to achieve the requisite savings in the Payroll and Related concept of spend may result in Commonwealth agencies exhausting their Payroll and Related allocation in the certified budget before the end of fiscal year 2019, imperiling the Commonwealth’s ability to make payroll for its employees. We will continue to monitor spending and will evaluate whether to take any corrective actions.

“Puerto Rico has accumulated debt beyond the Commonwealth’s ability to repay, and has suffered from decades of financial mismanagement and ineffective delivery of government services. PROMESA [Puerto Rico Oversight, Management, and Economic Stability Act] was adopted specifically to respond to this situation. The Board has been charged with bringing the Island back to fiscal balance and returning market access to the Island. These mandates require many policy changes and implementation of hundreds of measures and structural reforms. Success for Puerto Rico, the end of the Board’s mandate, and a return to economic growth and hope are only possible with the Government’s steadfast cooperation.”

Treasury Department Teresa Fuentes had said that “the disbursement of $85.3 million was due to the effort by government agencies in their fiscal adjustments and the efficiencies that reflect an increase in revenues. This, without affecting the budget and the Fiscal Plan. Also, it is a boost for the economy and society….”

-Caribbean Business contributed to this report.

Labor union urges Puerto Rico gov’t to stand firm against layoffs, salary cuts

SAN JUAN – Annette González, the president of the United Public Servants of Puerto Rico (SPU by its Spanish initials), on Wednesday urged the Government of Puerto Rico to stand firm in its position of not laying off public employees or eliminating their year-end pay known as the Christmas Bonus.

“This would be disastrous for working families and the country’s fragile economy,” González said in a statement in which she also proposed areas where spending and costs could be reduced.

“Affecting the working class and their families once again is not an option. The Government must stand firm in its position. As a union we are clear that affecting the rights and benefits of workers will not improve the economic situation of the country and will instead continue its contraction, further harming our country and the public service offered to our people.

“Although at the beginning of this year, the Executive’s vision was consistent with the rigid vision of the Fiscal Control Board, we understand its positive change in favor of the people of Puerto Rico and that is why we urge you to remain firm in this fight,” said the leader of the union of more than 20,000 workers in a dozen agencies.

González listed the government-budget items that could be cut or substantially reduced to achieve this objective. She focused on the salaries of politically appointed employees, “which in many cases exceed what is reasonable in a country with fiscal problems”; and spending on materials and equipment “that do not have a common public purpose but benefit private individuals.”

In addition, she highlighted the multimillion-dollar government contracts “to work with public images of the Executive and Government agencies such as the renewal of the contract to lobbyist Manny Ortiz’s company for $690,000.”

González said one of the developments that has surprised her most from the administration is that “despite living the worst fiscal crisis in our history, it has stood out for giving the highest salaries to heads of agencies in our country.” She pointed to the Education Secretary, “who earns $144,000 more than her predecessor, the Secretary of Justice, who earns almost $35,000 more than her predecessor, an amount that the Insurance Commissioner also makes in excess, the secretary of the DRNA [Department of Natural and Environmental Resources] who makes $21,696 more than her predecessor,” among others.

She also emphasized the “excessive cost of this government’s strategy of creating additional structures to put agencies under an umbrella with the excuse that this would generate great savings, an action that has not been productive, that has generated greater bureaucracy and greater waste.” She used the Public Safety Department as an example, “whose first excessive cost was the salary of the new agency head, of $248,000 per year; this without counting salaries, equipment, offices, etc., that come as a result of this new bureaucracy.”

“If savings are achieved by the agencies, these should be destined to serve the people and provide adequate resources to provide greater service, instead of spending them on luxury vehicles and contracts to friends. Austerity cannot continue in one direction, we all have to adjust to the economic reality of Puerto Rico and not only expect that the working class and Puerto Rican families of low and middle income are the only ones affected,” González stressed.

SPU is Council 95 is an affiliate of the American Federation of State, County and Municipal Employees (AFSCME), the largest trade union of public employees in the United States.

Judge Swain says Promesa provides awkward power-sharing structure

Puerto Rico Labor Dept. exempts hundreds of employers from paying Christmas bonus

SAN JUAN – Puerto Rico Labor Secretary Carlos Saavedra said Friday that, so far, 366 employers have had there applications requesting an exemption from having to pay the statutory, year-end bonus to employees, have been accepted.

Another 40 companies submitted applications to disburse 15% of what the employees were entitled to, he said in a written statement. Thursday was the last day for private sector employers who sustained losses or had decreased revenue in their business operations to request an exemption from paying the so-called Christmas bonus.

Puerto Rico public employees to receive Christmas bonus earlier

However, because employers can send applications by mail, it is possible the final number of exempt businesses is greater.

Puerto Rico Labor Secretary Carlos Saavedra (Juan J. Rodríguez/CB)

“Hurricanes Irma and María hit the Puerto Rican economy very hard, so we are going to carry out a conscientious, sensible and thorough evaluation to quantify the impact on the operations of each applicant employer,” Saavedra said.

So far, 33 applications have been denied after the agency’s evaluation process. The Labor Department approved exemptions for 791 employers last year.

Union defends Christmas bonus to reactivate Puerto Rico economy

Puerto Rico public employees to receive Christmas bonus earlier

SAN JUAN – Despite the difficult fiscal situation Puerto Rico is going through, in addition to the severe blows from hurricanes Irma and María on the island’s economy, Gov. Ricardo Rosselló Nevares announced that public employees will receive their statutory Christmas bonus shortly.

“Our public employees have done an admirable job for the recovery of the island. Without them, this work would be impossible and we must provide their Christmas bonus on time. These are difficult moments, but we have the commitment of our public service,” the governor said in a press release.

Puerto Rico’s fiscal board postpones furloughs following Hurricane María

It is unclear if the announcement implies that the island’s fiscal control board has withdrawn its request that the bonus be eliminated, an issue left on the table Aug. 4 during the ninth public meeting of the panel created by the Promesa federal law. That day, the implementation of a two-workday-cut a month for public employees was announced and Sept. 30 was set as the day when a final determination on the bonus would be made.

It was precisely on Sept. 30 when Chairman José Carrión stated in writing that “the Board is postponing any discussion of furloughs until next fiscal year and it is withdrawing its related lawsuit,” after the the devastation wrought by Hurricane María.

The law requires the Christmas bonus to be paid by Dec. 20. However, the governor said “it is important we advance this well-deserved payment to help our public employees and foster the economy, which faces great challenges.”

Puerto Rico Secretary of State assures Christmas bonus won’t be eliminated

Meanwhile, Treasury Secretary Raúl Maldonado said public workers will begin to receive the money owed to them from the Christmas bonus starting Nov. 24.

In the case of its payment to public corporation employees, the governor requested each entity evaluate its fiscal situation and make the disbursement as soon as possible.

As for private sector employees, Labor Secretary Carlos Saavedra informed on Nov. 3 that employers have until Thursday, Nov. 30, to request an exemption from payment of the bonus to their employees pursuant to Act 148 of 1969.

Saavedra explained that to qualify for the exemption, employers must have sustained financial losses or not obtained sufficient earnings from Oct. 1, 2016, to Sept. 30, 2017. Another element that takes effect this year is the bonus can be credited to other compensations received by the employee, as long as they occurred before Oct. 1.

Last year, 944 private sector employers requested exemption from paying the Christmas bonus, or 20 fewer than in 2015, when the Labor Standards Division received 964 applications.

Family Department Accused of “Assaulting” its Employees

With a holiday “asalto” (an impromptu arrival with holiday music) to represent what has been deemed as an “assault” to workers’ pockets, a group of union workers from the Family Department (FD) demanded the agency’s secretary, Idalia Colón Rondón, to pay public workers their full Christmas bonuses, as previously agreed upon by both parties in 2014.

The Monday morning protest, organized by the United Public Servers group (SPU by its Spanish acronym), reached the main entrance of the San Juan State Department, where the FD officials  were scheduled to testify during the government transition hearings.

SPU members protest against the Family Department for reducing their Christmas bonuses. (Agustín Criollo/AP)

SPU members protest against the Family Department for reducing their Christmas bonuses. (Agustín Criollo/AP)

“We are here today denouncing the outrage they have done with FD workers. In an unprecedented action, the agency took 20% from its employees’ Christmas bonus. Despite this, we fulfilled our part of the agreement that ties the Christmas bonus to the agency’s energy savings and achieved a cumulative energy savings of 19%,” said SPU President Annette González.

The public worker assured it was an “unjust and arbitrary” act on behalf of the FD, and urged Colón Rondón to assume responsibility and accept the alleged debt she has with the employees.

The union also explained that there is an agreement between unions and Fortaleza that establishes that the government will pay the Christmas bonus as negotiated, as long as there is a 10% reduction in the agency’s electric energy savings. If only a 5% savings was achieved, the quantity would have been adjusted proportionally. If it had been less than 5%, workers would receive the $600 established in Act 66. The base year to establish the comparison is fiscal year 2013-14, so the saving is cumulative.

Annette González, SPU President. (Agustín Criollo/AP)

Annette González, SPU President. (Agustín Criollo/AP)

“In August, the FD Energy Saving Committee certified us that it reached 19% in energy savings. In fact, both parts celebrated that we achieved our goal. And it wasn’t until Monday, Dec. 5 that they let us know their change of posture through a release. Now they understand the 10% saving is annual and not cumulative, which is why according to that interpretation we didn’t reach the 10% for this fiscal year. That wasn’t what we negotiated,” stated the union leader.

González indicated that under that interpretation, each agency would have had to fulfill 10% for 2015, 20% for 2016 and 30% for 2017, which she claims wasn’t stipulated in the agreement.

María Santiago, another union leader, deemed the action a ruse against the public entity’s working class.

“This unilateral and arbitrary action on behalf of the employer, after months of arduous labor and collaboration where there was an agreement, is a harsh blow to our enrollment. We fulfilled our part, we won’t accept apples for oranges. We are asking here what corresponds to us, not a gift. We have worked for this, we have produced savings to the public treasury and now they want to fool us,” insisted Santiago.

The group assured that they will continue demanding the debt payment and didn’t discard taking the matter to court.

Labor Releases List of Employers Not Paying Holiday Bonus

Puerto Rico Labor Secretary Vance Thomas

Puerto Rico Labor Secretary Vance Thomas

SAN JUAN—The Puerto Rico Labor Department revealed Friday that the agency received 944 requests from private employers for exemption in paying the holiday bonus, 20 less than those received in 2015. The requests were processed by the agency’s labor rules division

Look at the list of employers here

“Out of these, 788 requests have been accepted, which means that the employer is exonerated from paying the bonus. Meanwhile, 131 have been partially accepted, which means employers must pay no more than 15% of total profits, and 25 requests have been denied,” said Carlos Maldonado, assistant director of the agency division, via a written statement.

The official added that 108,270 workers will be affected by the exemption. These break down into 75,437 employees of companies receiving full exemption and 32,833 employees of companies receiving partial exemption. Employees from companies who were denied exemption total 951.

Out of the 964 requests sent to the Labor Department last year, 800 were accepted, 146 were partially accepted, and 18 were denied. The agency’s labor rules division also processed 653 complaints about unpaid Christmas bonuses in 2015, out of which the agency recovered $167,262 in bonus payments, benefiting 269 workers. An additional 285 complained were submitted to the agency’s legal division.

Employers who do not comply with holiday bonus payments, as established by Act 34 of 1969, could be fined an amount that is half of the bonus if it is paid within the first six months. If the payment takes longer than that, the employer must pay the same amount as the bonus as additional compensation.