How many employees count for the bonus

It is DTRH’s official reading of how a company’s employee count is determined in order to set the percentage of the annual bonus required by Act No. 148 of 30 June 1969, developed by Regulation No. 9003 of 18 September 2017. It is signed by the Office of the Labor Prosecutor and answers an employer with employees of both regimes on the same payroll.

It matters to private-sector employers who must pay the annual bonus and to employees wanting to know why a colleague got a different percentage. The computation looks at the coverage period, running from 1 October of one year to 30 September of the next.

• Counting the employees who worked more than twenty-six (26) weeks within the coverage period: that is the universe that sets the percentage.Verified against the official source
• Not splitting the count by hire date: to measure company size, the employees’ hire date is not relevant.Verified against the official source

Information pending verification.

1. 1

   Step 1: The four brackets

   The consulta reproduces them from Article VI of the Regulation. An employer with sixteen (16) or more employees within the coverage period grants a bonus equal to six per cent (6%) of the total salary the employee earned in that period, computed up to a $10,000 salary maximum. An employer with fifteen (15) or fewer grants three per cent (3%) on that same base. For employees hired from Act 4-2017’s effective date: if the employer has twenty-one (21) or more employees for more than twenty-six (26) weeks within the coverage period, the bonus is two per cent (2%) of salary earned up to a $600 maximum bonus; with twenty (20) or fewer for more than twenty-six weeks, it is two per cent (2%) up to a $300 maximum bonus.

2. 2

   Step 2: One single universe of employees

   The question put to the Office was practical: if I have 14 employees under the old law and hire 3 under the new one, how do I determine the count? The answer: you must evaluate the universe of workers within the coverage period, and it is an analysis of company size for which the hire date is not relevant. Fourteen plus three is seventeen employees. With seventeen, those hired before Act 4-2017 are entitled to 6% of salary earned up to a $10,000 salary maximum, and those hired after are entitled to 2% up to a $300 maximum bonus.

3. 3

   Step 3: The 26 weeks, and the test left behind

   The Office states plainly what it used to hold. For Act 148-1969 purposes, a company was understood to have more than fifteen employees when sixteen or more worked at least seven months of the coverage period, or when at payment time sixteen or more qualified to receive the bonus; so said Consultas Nos. 15,494, 15,484, 15,500 and 15,679. But the Act 4-2017 amendments provide that, for the bonus of employees hired from its effective date, only the number of employees who worked more than twenty-six weeks within the coverage period is considered. The Office concludes it is not reasonable to require an employer to use two parallel schemes to count its employees, because that runs against the labour-flexibility and cost-reduction scheme permeating Act 4-2017. Hence: where employees hired before and from the effective date coincide, or where only post-effective-date hires are involved, the employer must evaluate the total number of employees who worked more than twenty-six weeks within the coverage period.

4. 4

   Step 4: The employee who lasted a week

   The second question was whether an employee hired for one week who then resigns affects the computation for paying the rest at 6%. The Office’s answer is direct: the employee who worked only one week will not affect the computation to determine the percentage due to the rest of the employees. So it is a fifteen-employee company. The reason is the same twenty-six-week rule.

5. 5

   Step 5: The first year is worth half

   The consulta records it in a footnote, citing Article 1 of Act 148-1969: for employees hired from the effective date of the Labor Transformation and Flexibility Act, the required bonus shall be fifty per cent (50%) of what is provided, during the first year of their employment.

6. 6

   Step 6: How far this answer goes

   The Office itself warns in closing: the answer rests solely and exclusively on the data presented in the query, and any omission or variation in the details could change the answer. It is guidance on how to count, not a certification about a particular payroll.

The computation is done by the employer when preparing the bonus, paid between 15 November and 15 December. If you believe the wrong percentage was applied to you, a bonus claim goes to DTRH’s Bureau of Labor Standards or to court.

• Counting employees hired before and after Act 4-2017 separately: company size is one single universe.
• Using the old seven-month test or who qualifies at payment time, which the Office abandoned in this consulta.
• Counting someone who worked a few weeks: only those who worked more than twenty-six weeks of the coverage period count.
• Confusing the $10,000 salary cap with a bonus cap: in the 6% and 3% brackets the cap is on the salary computed.
• Forgetting that in the first year of employment the bonus for those hired from Act 4-2017 is fifty per cent.
• Looking at the calendar year: the coverage period runs from 1 October to 30 September.

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