Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
USD $ (US Dollar)
Employer contributions
~7.65% FICA (federal) + ~1.3% SINOT + ~0.6% FUTA
Minimum wage
USD 8.50/hour (Puerto Rico minimum wage 2024)
Payment frequency
Bi-weekly
Calendar year (Jan 1 - Dec 31)
Capital
San Juan
Timezone
AST (GMT-4)
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~USD 4,612 total
/month
For a gross salary of
USD 4,000 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~7.65% FICA (federal) + ~1.3% SINOT + ~0.6% FUTA
Mandatory extras
Christmas Bonus
Monthly admin
Bi-weekly payroll - FICA monthly - quarterly 941-PR - annual W-2 by Jan 31
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
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A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~USD 4,612 total
Example gross salary
USD 4,000 gross/month
~USD 2,900 net
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~USD 612 FICA + SINOT
Employer contributions on that salary
Employer contributions
~7.65% FICA (federal) + ~1.3% SINOT + ~0.6% FUTA
Employee contributions
~7.65% FICA + Puerto Rico income tax
Total cost above gross
~7.65% FICA + ~8% SINOT (state SS)
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~USD 3,000
Per month
San Juan
USD 3,500 - 10,000
~35%
Guaynabo
USD 3,000 - 9,000
~15%
Monthly gross. National average salary per year:
~USD 36,000
Minimum wage
USD 8.50/hour (Puerto Rico minimum wage 2024)
Paid:
Hourly
Extra pay
Christmas Bonus
Mandatory: 2-6% of wages up to USD 600 max
December
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
Puerto Rico progressive rates separate from US federal (0% / 7% / 14% / 25%)
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Quarterly Form 941-PR + monthly deposits
Social security payments
April 15 (federal Form 1040-PR); April 30 (PR Form 480)
Income tax
By January 31
Employee tax certificate
W-2 / 499R-2 (Puerto Rico wage statement)
April 30
Annual return
Puerto Rico Form 480.7
Late payment penalties
Late FICA: 2-15% depending on days; late PR withholding: 5-25% penalty
Who collects what
Puerto Rico Treasury (Hacienda)
PR income tax and withholding
SSA / IRS
Federal FICA and federal income tax
Puerto Rico Department of Labor
PR labour law (Law 80 severance)
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Vacation Pay / Annual Leave
Accrual-based (law: 1 day/month after 1 year)
Public holidays
~17 public holidays (federal + Commonwealth)
Sick leave
Sick Leave
1 day/month accrual after 1 year (mandatory)
Maternity leave
8 weeks (standard) + additional via SINOT
SINOT disability benefit for maternity
The contracts you can use, and what ending an employment relationship costs.
Permanent
Regular Employment Contract
Fixed term
Fixed-Term Contract
Independent contractor
Independent Contractor (1099-NEC)
Collective agreements
Collective Bargaining Agreement
Ending employment
Mesada (Severance)
How it is calculated
2 months base + 1 week/year (Law 80) if without just cause
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
Dual Federal-Commonwealth Tax Filing
Risk Level: HIGH
Puerto Rico employees file both federal (Form 1040-PR) and Commonwealth (Form 482) income tax returns. Employers must withhold for both systems and issue both W-2 and 499R-2 forms. Many mainland US employers operating in Puerto Rico apply only federal rules.
Law 80 Unjust Dismissal Mesada
Risk Level: HIGH
Puerto Rico's Law 80 requires employers to pay mesada (severance) for terminations without just cause: 2 months base salary plus 1 week per year of service. Unlike US at-will employment, Puerto Rico has strong dismissal protections. Failing to pay mesada or improperly claiming just cause triggers court claims with double damages.
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Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.