August 2024 | Client Alert
On August 21, 2024, the Puerto Rico Secretary of Labor issued a general Opinion Letter to clarify the tip credit applicable under Puerto Rico Minimum Wage Act (Act 47-2021). In sum, the Puerto Rico Secretary of Labor explained that the hourly wage for tipped employees in Puerto Rico is $2.13, with a maximum hourly tip credit of $8.37 per hour. Given Puerto Rico’s current minimum wage of $10.50, effective as of July 1, 2024, the maximum tip credit is calculated as the difference between this rate and the tipped minimum wage, amounting to $8.37.
This determination came to fruition following a review of Act 47-2021, which had not explicitly addressed tip credits for employers since its approval. For this reason, the Fair Labor Standards Act (FLSA) tipped minimum wage of $2.13 applies. In addition, the Opinion Letter notes that if Puerto Rico’s minimum wage were to increase in the future, the maximum tip credit would adjust accordingly, unless otherwise provided for by law or in a special mandatory decree.
Regarding overtime, the Opinion Letter explains that tipped employees must receive a minimum of $15.75 per hour, or 1.5 times the standard minimum wage. However, the maximum tip credit for overtime hours will be also $8.37. This results in a tipped minimum wage for employers of $7.38 per each overtime hour.
Employers must adhere to these standards to remain compliant with both state and federal regulations. Employers should be observant of any future administrative determination from the Act 47-2021 Minimum Wage Evaluation Commission increasing the minimum wage for tipped employees or any other determination.
At O’Neill & Borges we will continue monitoring the development of this ruling. We are available to assist you with any questions you may have regarding this new standard.
Because of the general nature of this newsletter, nothing herein should be considered as legal advice or a legal opinion. For further information about the contents of this newsletter, or should you need further assistance in connection with this matter, please contact the firm’s Labor and Employment Department.
For any questions or inquiries regarding this topic do not hesitate to contact us at info@oneillborges.com or your prime contact attorney at O’Neill & Borges LLC. Please refer to www.oneillborges.com.
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This O’Neill & Borges Client Alert is prepared for general information purposes only. It does not constitute legal advice or a legal opinion; nor does it establish an attorney-client relation with the recipient. For further information or to establish an attorney-client relation please contact us at info@oneillborges.com or your prime contact attorney at O&B.