Thinking of relocating your business to Puerto Rico? Here’s what U.S. business owners need to know about hiring, payroll, and employment regulations under Act 60.

Act 60 provides significant tax incentives for U.S. citizens who relocate their businesses to Puerto Rico. Once your business is up and running on the island, you’ll want to start thinking about hiring and paying employees. While Puerto Rico uses the same currency and shares many similarities with the mainland, it has its own labor laws and employment requirements. In this article, we’ll walk through what you need to know to hire and compensate employees in Puerto Rico while staying fully compliant.

Who Needs to Hire Employees?

Under Act 60, if your business earns $3 million or more in total annual revenue, you’re required to hire at least one full-time employee who is a resident of Puerto Rico.

If your business brings in less than $3 million annually, this hiring requirement does not apply. However, hiring locally still offers several advantages, no matter your revenue:

• Cultural insight: Puerto Rican employees can offer valuable knowledge of the local culture and consumer behavior.
• Language skills: Hiring bilingual team members improves communication with both clients and partners.
• Community trust: Building a local team helps establish stronger ties with the surrounding community.

Recruiting Talent in Puerto Rico

When you’re recruiting talent in Puerto Rico, there are plenty of ways to find strong candidates. You can post your job openings on local job boards, browse relevant Facebook groups, or use LinkedIn to connect with professionals in your industry. These platforms can help you tap into the local community and reach people who are actively looking for opportunities.

Be clear and specific in your job descriptions—mention whether the role requires bilingual skills or allows for remote work. You can also set up a referral program within your business, offering incentives to current employees who recommend reliable candidates. This approach often leads to better hires and strengthens your team culture.

Employment Eligibility Requirements

As an employer, you’re required to complete Form I-9 for every new hire to verify their legal right to work in the U.S., which includes Puerto Rico, since it is a U.S. territory. You must keep these I-9 records for a minimum of three years after the employee’s hire date or one year after they leave the company, whichever date is later. In addition, all employees must present documents establishing both their identity and their authorization to work in the United States. A U.S. passport satisfies both on its own; otherwise, employees provide one identity document and one work authorization document from the lists on Form I-9.

Key Labor Laws and Employment Terms

Here are some key employment requirements to keep in mind when hiring in Puerto Rico:

Probationary Period

The standard probationary period is 9 months. However, for certain roles classified as professional, administrative, or executive, this can extend to 12 months.

Minimum Wage

Puerto Rico follows its own wage system, separate from the mainland U.S. As of 2026, the local minimum wage is $10.50 USD per hour.

Benefits and Leave

Vacation accrues monthly for employees who work at least 130 hours in that month, at a rate that rises with years of service: 0.5 days per month in the first year, 0.75 days from years one through five, 1 day from years five through fifteen, and 1.25 days thereafter. Employers with twelve or fewer employees accrue 0.5 days per month across the board. Sick leave accrues at 1 day per month on the same 130-hour condition, up to 12 days a year, and begins accruing on the first day of the probationary period.

Managing Payroll and Taxes

There are several payroll tools and platforms you can use in Puerto Rico, such as QuickBooks or ADP, to help manage payroll tasks and stay compliant with local laws. When processing payroll, you’ll need to withhold the correct taxes from employee paychecks and file the appropriate reports each quarter.

You must withhold the following:

• Federal taxes (Social Security and Medicare)
• Puerto Rico income tax

In addition, having a Puerto Rico business bank account may be necessary to process payroll under local regulations.

Final Notes for Act 60 Business Owners

Hiring employees in Puerto Rico under Act 60 is part of maintaining a tax-compliant operation. It’s important to follow local labor laws and avoid penalties to keep your Act 60 status in good standing. Beyond that, hiring locally is a great way to involve the community, immerse yourself in the culture, and support the island’s workforce. If you’re interested in moving your business operations to Puerto Rico, schedule a quick call with us and we’ll walk you through each step.