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Pharma and manufacturing companies are under pressure to stay competitive, build agile teams, streamline operations, and speed up delivery. In fact, many are moving toward cross-functional squads, continuous manufacturing, and more adaptive operating models to keep up with market and regulatory demands.
To support these changes, companies are looking for locations that offer speed, flexibility, and compliance—and United States territory Puerto Rico fits the bill.
As we discussed previously, Puerto Rico follows plenty of U.S. labour laws, uses the U.S. dollar, and doesn’t require work visas for mainland teams, removing many of the hurdles found in overseas hiring. At the same time, the region offers access to a specialised, cost-effective workforce.
However, successfully scaling a workforce in Puerto Rico comes with regulatory, legal, and operational challenges, especially for companies unfamiliar with the local landscape.
This article explores how pharmaceutical and manufacturing companies can scale their workforce in Puerto Rico without getting bogged down by legal, HR, or compliance hurdles. It also looks at how Employer of Record (EOR) services like CXC can offer a practical path to hiring quickly, reducing risk, and staying compliant.
Why Puerto Rico matters for pharma and manufacturing
Aside from being a U.S. territory, as mentioned above, Puerto Rico offers clear structural advantages for companies in highly regulated sectors.
A strategic location for U.S.-compliant operations
Compliance is non-negotiable for pharmaceutical and manufacturing firms. Puerto Rico follows U.S. federal laws, making it easier to meet the standards set by agencies like the U.S. Food and Drug Administration (FDA) and frameworks such as Good Manufacturing Practices (GMP). This alignment simplifies hiring, audits, and production.
In addition, Puerto Rico offers the following benefits:
- Skilled talent trained in biosciences, engineering, and manufacturing.The island has a strong history as a base for pharmaceutical, medical device, and advanced manufacturing. Many professionals are experienced in FDA-regulated environments, bringing years of sector-specific expertise.
- Proximity to the mainland U.S., enables faster logistics and supply chain coordination. Puerto Rico’s geographic location supports reduced transit times and reliable integration with U.S. supply chains, which are crucial for time-sensitive or regulated operations.
- Tax incentives are designed to attract manufacturers. Act 60, known as the Puerto Rico Incentives Code, offers a fixed 4% income tax rate on eligible manufacturing activities, exemptions on property and municipal taxes, and tax credits for job creation and research and development. Act 73, now folded into Act 60, previously focused on incentives for manufacturing, research, and development, and its benefits are still available under the new framework.
- Widespread English fluency helps ease communication and onboarding.English is widely spoken in business and education, making it easier for mainland U.S. teams to collaborate and integrate with local hires.
Workforce scaling in a complex regulatory environment
While Puerto Rico does follow many U.S. labour laws, businesses still need to know that it also has its own set of local labour codes, tax rules, and employment policies.
These additional layers can complicate hiring and compliance, especially for companies without a local presence or experience navigating the territory’s specific requirements.
Navigating U.S. and local labour law overlap
Employers must be careful when classifying workers, applying statutory benefits, and handling local taxes. Puerto Rico’s labour laws shape these and don’t always match U.S. federal norms.
For example, some of the most critical differences we talked about in our article about compliance in Puerto Rico include:
- Daily overtime: Puerto Rico requires overtime pay after 8 hours in a single day, not just after 40 hours a week.
- Paid leave: Employees accrue 1.25 days of vacation and 1 day of sick leave monthly (with a 115-hour work threshold), and are entitled to 18 public holidays.
- Christmas bonus: A mandatory annual bonus (the 13th-month pay) is required based on hours worked and salary.
- Probation periods: Extended to 9 months for non-exempt employees and 12 months for exempt roles under the 2017 Labour Reform.
- Severance: Employers must pay severance for unjustified terminations, calculated based on tenure.
- Employment contracts: Must comply with Puerto Rican standards and are often required in Spanish.
Missteps can lead to compliance issues, delays, or financial and/or legal penalties. An Employer of Record (EOR) can reduce that risk by handling classification, local payroll compliance, and benefits administration in line with both U.S. and Puerto Rican requirements.
The role of Employer of Record (EOR) services in workforce scaling
Aside from helping you stay compliant, here’s how an EOR gives businesses a faster, leaner way to scale in Puerto Rico.
How an EOR enables compliant hiring without a legal entity
An EOR is a third-party organisation that becomes the legal employer of your workforce in Puerto Rico. This means you can legally hire talent without setting up a local entity. While you will still manage day-to-day operations, the EOR handles all the legal, tax, and compliance formalities.
This setup is ideal for your company if you:
- Need to hire in Puerto Rico without setting up a legal entity
- Want to scale teams fast without worrying about misclassification or compliance errors
- Prefer to outsource HR admin so internal teams can focus on operations and growth (which will be discussed more below)
Accelerating onboarding in regulated environments
Pharmaceutical and manufacturing sectors often face extended hiring cycles due to background checks, credential verification, and safety training. While necessary, these delays can derail critical timelines, such as for important clinical trials. An EOR can help speed up onboarding by:
- Using pre-established local infrastructure: The EOR already has the systems, contracts, and legal setup in place to hire immediately, so that hiring can begin without delay.
- Conducting compliant pre-employment checks: EORs handle background screening, drug testing, credential verification, and local regulatory checks according to both Puerto Rican and industry standards.
- Facilitating rapid deployment of contract and permanent staff: With talent pools already identified and legal workflows ready, EORs can activate hires faster than internal teams starting from zero.
This makes EOR support especially valuable for companies facing urgent hiring needs in regulated environments.
Outsourcing the administrative burden to focus on innovation
Beyond onboarding, EORs take over the routine administrative work that often overwhelms lean HR teams. This includes:
- Monthly and annual payroll tax filings: The EOR prepares, files, and submits all required payroll taxes in line with both U.S. federal and Puerto Rican regulations, helping companies avoid delays and penalties.
- Employee benefit management: From statutory leave entitlements to optional benefits like health insurance, the EOR ensures benefits are set up, administered, and kept compliant with local law.
- Christmas and statutory bonus calculations: EORs manage the mandatory 13th-month bonus and any additional payments required under Puerto Rican law, including eligibility tracking and payout processing.
- Compliance with reporting obligations: Required employment records, tax documents, and HR reports are prepared and submitted on time, helping your business stay audit-ready.
- Managing employee documentation and submissions: The EOR prepares, files, and stores all essential employee documents, such as contracts, payroll forms, and tax IDs, minimising admin load and reducing the risk of errors.
By offloading these tasks to an EOR, internal teams can focus on higher-value work like innovation, process improvement, and strategic planning.
Compliance and risk in a heavily regulated market
Operating in a highly regulated industry means hiring the right people is only part of the equation. Organisations must also ensure every worker meets industry-specific requirements, from licensure to safety protocols, or risk regulatory penalties and operational delays.
Meeting industry-specific hiring requirements
As mentioned earlier, Puerto Rico aligns with U.S. federal regulations such as FDA and GMP, which makes it a compliant base for highly regulated operations.
In addition, manufacturing roles often require:
- ISO certification: International quality and safety standards common in pharmaceutical and industrial manufacturing, especially for export-facing operations
- Workplace safety compliance under PR OSHA: Puerto Rico enforces occupational safety standards through PR OSHA, its own OSHA-approved State Plan. While based on the U.S. Occupational Safety and Health Administration (OSHA) standards, PR OSHA applies locally to most private and public workplaces, with some exceptions (e.g., maritime, military, shipbuilding) still under direct federal OSHA oversight.
An EOR helps ensure compliance across both sectors by:
- Verifying certifications and licences before onboarding: This process includes checking validity and ensuring alignment with regulatory and job-specific requirements.
- Coordinating mandatory safety and compliance training: From GMP protocols to OSHA-mandated courses, the EOR ensures training is completed, documented, and up to standard.
- Tracking renewals and recertifications: EORs manage timelines for training refreshers, licence renewals, and other recurring requirements.
- Managing compliance documentation: The EOR collects, stores, and makes audit-ready licences, certificates, health clearances, and safety records.
This support helps companies stay prepared for inspections, meet industry regulations, and reduce the risk of operational disruptions, without overloading internal teams.
Final thoughts: Building a scalable, resilient workforce in Puerto Rico
Puerto Rico is a strategic launchpad for pharmaceutical and manufacturing companies under pressure to scale quickly and compliantly. Its combination of U.S. governance, local incentives, and skilled talent makes it ideal for expansion, especially when supported by the right partner.
Recap and action steps
Workforce scaling in Puerto Rico doesn’t have to be slow, risky, or administratively heavy. With the right EOR partner, companies can:
- Hire without establishing a legal entity
- Reduce time-to-hire
- Ensure dual compliance with U.S. and Puerto Rican laws
- Meet sector-specific regulatory requirements
- Free up HR capacity to focus on growth
Working with an experienced provider like us at CXC helps ensure your workforce expansion aligns with your business goals, compliance needs, and operational timelines. We bring over three decades of experience assisting global companies to scale in Puerto Rico and beyond.
Talk to our team today to assess your readiness and scale your workforce in Puerto Rico—smarter, faster, and with full compliance.
