Act 402: when the employer pays the lawyer

It is DTRH’s official reading of the reach of Act No. 402 of 12 May 1950, the law governing the award of attorney’s fees in workers’ claims against their employers. The opinion is signed by the Labor Prosecutor and answers a lawyer who asked whether he could agree fees with a career employee challenging a transfer and seeking a salary adjustment before his agency.

It matters to any worker about to claim against their employer who wants to know who will pay the lawyer, and very particularly to someone working in a central-government agency claiming under a personnel regulation and the merit principle rather than under a protective labour statute. The Office itself clarifies that its power to intervene covers the private labour sector and public corporations doing business as private entities.

• That an employee make a claim against their employer: the first of the four conditions.Verified against the official source
• That the claim arise under labour legislation: the second condition, and the one that fails in public personnel-administration disputes.Verified against the official source
• That the employer be an "employer" under Act No. 402, which for those purposes includes the Government’s public authorities and corporations and their representatives.Verified against the official source
• That the claim be granted, in whole or in part: the fourth condition.Verified against the official source

Information pending verification.

1. 1

   Step 1: What the Act commands when it does apply

   The Office quotes Article 2: in every case filed before the courts of Puerto Rico by a worker claiming any right or sum of money against their employer, under federal or local labour legislation or an individual or collective agreement, and in which the claim is granted in whole or in part, the employer shall be ordered to pay attorney’s fees. The counterpart is in the same article: when judgment is entered for the respondent employer, the complaining worker shall not be ordered to pay fees.

2. 2

   Step 2: The four conditions

   The Supreme Court set them in Ortiz y otros v. Municipio de Lajas, 153 D.P.R. 744 (2001), and the Office repeats them in closing: for fees to be imposed, four conditions must concur: (1) an employee makes a claim against their employer, (2) the claim arises under labour legislation, (3) the employer is an "employer" under Act No. 402, and (4) the claim is granted. If one is missing, there is no fee award.

3. 3

   Step 3: Why a personnel regulation is not "labour legislation"

   In Ortiz the Supreme Court had to decide whether the Autonomous Municipalities Act could count as labour legislation. It concluded it could not. Its reasoning, quoted in the opinion: local labour legislation springs mainly from sections 16, 17 and 18 of the Constitution’s Bill of Rights, source of protection against risks to health and personal integrity, the ordinary working day not exceeding eight hours, time-and-a-half for the excess, the right to organise and bargain collectively, and the right to strike. From there come the two areas of social labour legislation: the one setting working conditions — minimum wages, overtime — and the one creating tools to preserve them. A public personnel system, with its merit principle and its rules on classification, promotions and transfers, is of an essentially different character.

4. 4

   Step 4: What the Office did not decide

   The consulting lawyer asked whether the State Elections Commission is or is not an "employer" under Act 402. The Office did not answer. It explained that although the query arises in part under Act No. 402, it also entails interpreting Article 3.1 of Act 58-2020, the Electoral Code of Puerto Rico, legislation outside the reach of its jurisdiction, because the Electoral Code is not a labour statute it administers. Instead of resolving it, it recommended the lawyer bear in mind the four Ortiz conditions.

5. 5

   Step 5: How far the Office goes

   The opinion says it head-on, and it is worth knowing before writing to them: DTRH’s intervention covers the private labour sector and public corporations doing business as private entities. The Office abstains from opining on queries that may be investigated by the Department’s own offices, or that are or may be before an administrative body or judicial scrutiny; it does not intervene in matters involving the validity of contract clauses; and it does not opine on laws outside DTRH’s jurisdiction. With the public it does not handle individual situations beyond general written guidance, on request.

6. 6

   Step 6: And the prohibition that still stands

   When the claim is a labour one, Article 3 declares null and against public policy all contracts in which workers bind themselves, directly or indirectly, to pay fees to their lawyers in judicial or extrajudicial claims against their employers. Article 4 puts a price on breaking it: a lawyer who receives compensation from a worker in violation of the Act must refund the amount paid plus an equal sum as liquidated damages, and the Secretary of Labor is authorised to appear on the workers’ behalf to enforce those sums.

The fee award is made by the court hearing the labour claim. If the claim is settled out of court and the parties do not agree on the fees the employer will pay the worker’s lawyer, they submit the determination to the court that would have had jurisdiction, and the costs of that proceeding are borne officially. Written queries on the reading of labour legislation go to DTRH’s Office of the Labor Prosecutor.

• Assuming any suit against a boss triggers a fee award: the four conditions must concur.
• Confusing a public personnel regulation with protective labour legislation, which is exactly what the Supreme Court separated in Ortiz.
• Signing a fee agreement with your lawyer in a labour claim, when Article 3 declares them null.
• Believing that if you lose you will be ordered to pay the employer’s fees: the Act expressly says otherwise.
• Writing to the Labor Prosecutor expecting it to resolve your individual case or interpret laws DTRH does not administer.
• Assuming the opinion decided whether the State Elections Commission is an "employer" under Act 402: it did not.

These are the government pages this guide is based on.

• Departamento del Trabajo y Recursos Humanos (DTRH)

  Departamento del Trabajo

  www.trabajo.pr.gov

• Department of Labor and Human Resources — Labor Prosecutor opinions

  dtrh

  www.trabajo.pr.gov