Employer of Record (EOR) in Puerto Rico

Hire in Puerto Rico in days, with no entity and no exposure to getting Hacienda’s territorial tax withholding or Law 4-2017 compliance wrong. We place you with the right vetted EOR partner, at pricing you will not get going direct, and stay on your side for the life of the relationship.

  • Independent advice
  • Vetted partners
  • Operational in days

What an Employer of Record does for you in Puerto Rico

An Employer of Record is a company that legally employs your Puerto Rico staff on your behalf. You choose the person and direct their work day to day. The EOR is the legal employer on paper, which is what lets you build a team in Puerto Rico without forming your own company.

In practice the EOR partner takes on everything that needs a Puerto Rico legal presence and dual-system tax expertise: a compliant employment contract meeting both federal law and Law 4-2017, monthly payroll withholding covering federal FICA and FUTA plus Hacienda’s own territorial income tax, employer contributions to Puerto Rico’s unemployment insurance, non-occupational disability insurance (SINOT), and the state-run workers’ compensation fund (CFSE), statutory benefits including the mandatory Christmas bonus and leave accrual, and compliant onboarding and lawful exits under Law 80’s just-cause standard, since Puerto Rico is not at-will. You get a working team in days. The EOR carries the legal and compliance weight; you carry the commercial relationship. The only question worth spending time on is which partner is genuinely strong in Puerto Rico’s dual federal/territorial system, and that is the question we answer for you.

01

Legal employer, on paper

A compliant Puerto Rico employment contract meeting federal law and Law 4-2017, with all statutory terms correct from day one.

02

Compliant from day one

Monthly payroll, Hacienda income tax withholding, and federal FICA/FUTA contributions, with statutory filings made to Hacienda, the Departamento del Trabajo y Recursos Humanos, and the IRS.

03

No entity required

Statutory benefits, the mandatory Christmas bonus, notice-free but just-cause-only dismissal under Law 80, and lawful onboarding and exits. You get a working team in days; the EOR carries the legal weight.

How it works: four steps to a compliant hire

From first call to a compliant Puerto Rico hire at work, usually in days.

01 — Scope & quote

We map the role, salary, and start date, and come back with a clear all-in monthly cost. No guesswork, no hidden extras.

02 — Compliant contract

Your employment contract is drafted to Puerto Rico standards by the partner, and we sanity-check the terms and pricing before you sign. Compliant from day one.

03 — Onboard in days

A correct Puerto Rico contract is issued under Law 4-2017 and federal law, with all statutory terms from day one. Your hire can start in days.

04 — Payroll & compliance run

Federal FICA/FUTA and Hacienda income tax calculated and withheld, payslips issued, statutory filings made to Hacienda, the Departamento del Trabajo y Recursos Humanos, and the IRS. You direct the work; the compliance just runs.

What EOR in Puerto Rico costs

Two parts: the statutory cost of employing someone, and the EOR partner fee. In Puerto Rico the statutory employer cost runs through federal FICA/FUTA and a separate stack of territorial contributions, not one combined tax. We make both transparent before you commit, so there are no surprises.

Employer statutory cost

7.65% FICA (Social Security and Medicare, no PR-specific reduction) plus 0.6% FUTA on the first USD 7,000 of wages, both federal. On top, Puerto Rico’s own unemployment insurance (1.2% to 5.4% for established employers, 2.8% for new employers, also capped at USD 7,000), non-occupational disability insurance (up to 0.3%, capped at USD 9,000), and mandatory workers’ compensation through the state-run CFSE fund at a classification-rated premium, not a flat percentage. Predictable and fully costed before you commit.

Minimum wage (2026)

USD 10.50 per hour, in force since 1 July 2024, one flat territory-wide rate with no regional variation.

Income tax (employee)

Five-band progressive rate from 0% up to 33%, administered by Hacienda under Puerto Rico’s own Internal Revenue Code, not the mainland IRS brackets. Withheld monthly at source from the employee’s pay, reconciled at annual filing. Borne by the employee, not added to your cost.

EOR partner fee

A transparent per-employee monthly fee. We benchmark across our vetted network, typically 15 to 25% below going direct, and renegotiate for you at renewal.

Why run it through Bradford Jacobs

We know which EOR partners are genuinely strong in Puerto Rico, across both the federal and territorial sides of the system. We place you with the right one, at pricing you will not get going direct, and stay on your side for the life of the relationship.

Independent, not a single provider

We are independent: we assess what you actually need, place you with the right vetted partner, secure pricing you will not get going direct, and stay on your side to escalate or renegotiate. You get advice, not a product pitch.

  • Independent advice
  • Vetted partners only
  • On your side at renewal

Pricing you can’t get direct

Puerto Rico’s employer cost splits across a federal layer (FICA, FUTA) and a territorial layer (PR unemployment insurance, disability insurance, CFSE), which makes it easy to under- or over-quote a monthly fee up front. We benchmark across our partner network for rates typically 15 to 25% below going direct, and renegotiate on your behalf at renewal. Most companies do not know how much room there is to negotiate. We do.

  • 15-25% below direct
  • Network benchmarking
  • Renegotiated for you

Straight to the top when it matters

When something needs resolving, and in global employment it sometimes does, you come to us. We escalate directly, past the helpdesk, to people who can actually move it.

  • Direct escalation
  • No support queues
  • Named account contact

Two decades across markets

Two decades placing and managing EOR arrangements across global markets, with the local knowledge of Law 4-2017’s daily-overtime rule, Law 80’s just-cause standard, and Hacienda’s separate withholding tables that keeps you compliant.

  • EOR specialists
  • Law 4-2017 & Law 80
  • Risk removed

Built for conversion to your own entity

Most companies use EOR for 12 to 24 months, then move to their own Puerto Rico corporation or LLC. We plan that crossover and manage the transition when the economics, or an Act 60 incentive decree, justify it.

  • EOR to entity path
  • Transition managed
  • Crossover planning

Why an EOR is the fastest compliant way into Puerto Rico

Two things slow foreign employers down in Puerto Rico: the assumption that mainland US payroll rules apply unchanged, and the risk of getting Law 80’s just-cause dismissal standard or the mandatory Christmas bonus wrong. An EOR removes both.

Working time, leave & contracts

Compliance handled across both the federal and territorial layers. Puerto Rico employment law requires the same daily-overtime rule (after 8 hours, not just 40 a week), the same mandatory Christmas bonus, and dismissal that is only lawful for statutory just cause, on top of standard federal obligations. An EOR carries all of it correctly from day one, so a wrong assumption about ‘it’s basically a US state’ never becomes a liability.

Operational in days, not weeks

Incorporating in Puerto Rico typically takes one to three weeks once documents and a registered agent are in place, and you cannot legally employ anyone until the Department of State registration completes. An EOR removes that wait entirely: a compliant Puerto Rico contract is issued and your hire starts in days. You prove the market first, then incorporate later, potentially under an Act 60 decree, only if the headcount justifies it. This is the real value of EOR in Puerto Rico: speed into a dual federal/territorial system, with the compliance carried by an expert.

Everything your Puerto Rico EOR covers

One transparent monthly fee per employee covers all of this. No hidden extras.

Compliant Puerto Rico contract

A compliant Puerto Rico employment contract meeting federal law and Law 4-2017, issued and maintained for you.

Payroll, FICA/FUTA & Hacienda withholding

Monthly payroll run, with federal FICA/FUTA and Hacienda territorial income tax calculated, withheld, and filed correctly each month.

Statutory benefits

All statutory benefits administered: paid vacation (1.25 days per month worked) and sick leave (1 day per month worked), the mandatory Christmas bonus (bono de navidad, paid 15 November to 15 December), and statutory just-cause protection on exit, since Puerto Rico is not at-will. Employees themselves owe 7.65% under FICA (6.2% Social Security plus 1.45% Medicare) straight out of pay, plus Hacienda income tax withholding, deducted from salary and never billed to you. Employees pay nothing toward CFSE workers’ compensation, that fund is funded from the other side of the relationship only.

Compliance & support

Ongoing HR compliance and a single point of contact, for the life of the engagement.

Your questions answered

Straight answers on how Employer of Record works in Puerto Rico.

Is my hire employed by Bradford Jacobs or by me?

Legally, your hire is employed by the Puerto Rico EOR partner we place you with, which is what keeps you compliant without an entity. Day to day they work for you: you set the work, the goals, the relationship. You get the team; the partner carries the legal weight.

Usually within days once the role and salary are agreed, with a compliant Puerto Rico contract from day one. Compare that to the one to three weeks a Department of State incorporation can take, during which you cannot legally employ anyone.

7.65% FICA plus 0.6% FUTA (both federal, FUTA capped at the first USD 7,000), plus Puerto Rico’s own unemployment insurance (1.2% to 5.4%, capped at USD 7,000) and disability insurance (up to 0.3%, capped at USD 9,000), plus a classification-rated CFSE workers’ compensation premium. Add the transparent EOR partner fee and you have your all-in cost.

Yes, when done properly. The EOR is a real Puerto Rico legal employer meeting federal, Hacienda, and Law 4-2017 obligations. The risk is using an under-resourced partner, which is exactly why we place you with vetted partners and stay on your side for the life of the relationship.

The compliant contract, monthly payroll (FICA/FUTA and Hacienda income tax withholding), employer contributions, statutory benefits including the mandatory Christmas bonus, and ongoing HR compliance. We give you one all-in monthly figure up front, with nothing added later.

Yes, and most companies do once the headcount and permanence justify it, or once an Act 60 incentive decree makes owning the entity worthwhile. We manage the transition from EOR to your own Puerto Rico corporation or LLC, and can support the incorporation itself. Most use EOR for 12 to 24 months first.

Ready to hire in Puerto Rico?

Tell us the role and we will come back with a compliant, all-in monthly cost and the right partner, usually within a day. No entity, no lock-in, no pitch, just the fastest compliant way to get your person working in Puerto Rico.

Tax and labour data verified July 2026 (Departamento de Hacienda, Departamento del Trabajo y Recursos Humanos, IRS, PwC). Figures change; we confirm the current position when we scope your hire.