The Puerto Rico Labor Department is going after companies and government agencies that have failed, for whatever reason, to make their unemployment insurance payments for the past five or six years and now owe a combined $378 million, agency Secretary-designate Vance Thomas confirmed.
To get the job done, the agency will have its employees — and possibly external temporary hires — either call or visit employers in default, he said.
“We’ve identified that we have about $378 million in outstanding unemployment insurance payments out there, which we’re looking to collect,” said Thomas, while explaining that the agency heavily relies on its own revenue sources to offer benefits, on top of the $130 million it gets from the General Fund and another $70 million in federal funding.
“We have to identify alternatives to collect, either through having our own employees try to get employers to pay or, if necessary, hiring external resources [collections agents], or as a last resort, granting an amnesty to get employers to pay,” he said. “The agency offered an amnesty once before, but the results fell short of expectations.”
“If we can achieve reasonable compliance of unemployment insurance payments, we’ll have more available to offer subsidies,” he said.
Edwin Cátala, director of the Labor Department’s collections division, said the outstanding debt is split between $78 million from central and municipal government agencies and $300 million from the private sector.Edwin Cátala, director of the Labor Department’s collections division. (Credit: © Mauricio Pascual)
“Many of the private sector employers are currently under bankruptcy protection, which represents about $60 million of the amount,” Cátala said. “We’re separating that from the regular collections process because we have to go about it differently.”
“Then you have many inactive businesses, and we have to find a way to establish payment plans with those which have closed,” he noted. “Payment plans are also available for companies that are operating, but owe the agency. We don’t want to weaken their finances, because that would likely result in employee lay-offs and that’s not the idea.”
The agency’s collections plan is already underway, with the goal of shoring up $11 million through December.
“We’re being conservative, because we believe we’ll be able to get more as more employers start to pay,” he said, predicting that the amount could double in the second year and thereafter as the agency works to bring employers current.
So far, the agency has restructured its collections department to take a more proactive stance as soon as an employer falls in arrears, Cátala said.
“We’re starting to call them so their debt doesn’t accumulate. We’ve also begun sending letters to municipalities and government agencies to let them know about their particular debt and advising them to give us a call,” Cátala noted.