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Puerto Rico: Anti-Harassment Bill Bullies Small Business

By: Frank Worley-Lopez - Jun 9, 2014, 3:40 pm

EspañolComplete and utter disconnect with reality. That is the only thing that comes to mind upon hearing about the latest bill that has made its way through both houses of the Puerto Rico legislature and is on its way to being signed by the governor.

The bill in question is intended to make workplace harassment illegal. On its surface, like so many interventionist laws, it sounds good. Who wants to be harassed at work? Yet, Puerto Rico already has sexual harassment laws in place, and those laws have been routinely abused. This new bill would redefine illegal “harassment” in such a broad sense that it’s a sure fire way to ensure no new businesses open up on the island. It guarantees Puerto Rico’s economy never recovers from its multi-year recession.

Senate Bill 501 defines “workplace bullying” as: “ill-intended, unwelcome, repetitive conduct, whether it be verbal, written or physical, on behalf of the employer, its supervisors or employees, distinct from the legitimate business interests of the company, that creates a hostile, intimidating, humiliating, and offensive atmosphere, impedes the healthy tenure of the employee in the workplace, that can bring scorn, belittle or professionally destroy the employee, and that threatens his/her constitutionally protected rights, including his/her dignity.”

Among the highlights of the bill, it includes making a host of behaviors illegal including, but not limited, to: “slanderous and harmful expressions about a person, using foul language; hostile and humiliating comments of professional incompetence in the presence of co-workers; unjustified threats of termination stated in the presence of co-workers; frivolous disciplinary actions; and humiliating rejection of work proposals or opinions.”

In other words, if an employee makes an insane suggestion, and the boss rejects it outright in front of other employees, the employer can be sued. For major corporations who spend millions on special training programs for managers and whose pockets may be deep enough to handle such suits, this law might not prevent them from investing or expanding in Puerto Rico. However, for the small business operator and those major companies that are not prepared to handle such liability claims, it is the end of the road.

Small businesses move the economy, although they never get the press that the big players do. Every remaining small business in Puerto Rico will be at risk of bankruptcy if this law is passed. Every single disgruntled employee, who is marginalized at work because they are a bad employee, will take advantage of this law and destroy what little is left of the island’s economy.

This new bill actually makes sense when one considers a report by MuniNet Guide. The website’s report, “Puerto Rico: A View from the Ground,” is well worth a read. The website had a team visit the island and interview business leaders, reporters, government officials, bankers, and others to get a better feel for what is really happening.

Among the highlights of the report is this gem:

Theme #2: There is still no great sense of fiscal urgency on the part of the administration. As surprising as that may sound, most of our sources complained that the Padilla team still doesn’t grasp the full severity of the current situation. The governor has already backed himself into a corner with his promise of “no layoffs.” In Puerto Rico, politicians can’t get themselves re-elected if they pursue massive layoffs, as the former Governor Luis Fortuño found out in the last election. At least for now, the current administration seems content to fiddle within the current system with changes in work rules and department consolidations, etc…

Interestingly, although the General Fund’s operating expenditures were presumably “cut” by about US$762 million between FY2014 and FY2015, the cut only amounts to $185 million if you compare FY2015 with FY2013. In other words, the FY2015 spending “cuts” may be viewed as just a reversal of the large expenditure increase built into the FY2014 budget.

Raising revenues through taxes, not cutting spending, remains the preferred solution, despite its negative effect on the economy.

Where will the administration get tax revenue funds if thousands of small business owners go out of business due to fear of liability, or the cost of specialized insurance that is bound to crop up after this kind of law takes effect? Running on populist notions and fears may help people get elected, but at some point the demons released by populist pandering come home to roost, and a new demon must be blamed for the inevitable economic collapse.

One could hope the current administration will refuse to sign this bill, but that hope would be a waste of time. As they say, “Hope is not a plan.” I often wonder, could these political leaders possibly be that stupid? Time and time again, however, they prove that yes — yes, they can.

I cannot help but think that these actions, designed to destroy business and the free market, must be intentional. To what end, however, is yet to be revealed. The bottom line is, if you are currently planning to open or expand a business in Puerto Rico, don’t; especially if this bill is signed into law.