Puerto Rico Equal Pay Act – Act 16 (the “Act”)

Background and Details of the Change:

Puerto Rico has enacted legislation prohibiting gender-based pay discrimination among employees in jobs that require equal skill, effort and responsibility and are performed under similar working conditions. Employers are not considered to be in violation of the Act if pay inequities exist when decisions regarding compensation are based on one of the following:

• A seniority system
• A merit system
• A system which measures earnings by quantity or quality of production, sales or profits
• Differing levels or education, training or experience related to a specific job
• A differential based on any other factor other than gender

The Act specifically requires that:

• Employers cannot ask applicants, current or former employees about their current or past compensation
• Employers cannot base employment decisions on an applicant or employee’s willingness to discuss his/her own or co-workers’ compensation

Here is a summary of the changes:

Employers may ask applicants to confirm current and past compensation after a job offer with a specific pay rate has been made. Employers found to in violation of the Act may be liable for back pay and penalties equal to double the back pay owed the employee(s). The employer may also be liable for the employee’s court costs and attorney fees. Employers may avoid penalties if they choose to conduct regular (at least annual) "self-evaluations" of their compensation practices

General Impact to Employers:

The Act is one of several significant changes Puerto Rico has recently made to its laws regarding employment.