Employer of record in Puerto Rico: costs and rules in 2026
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The confirmed portion of a Puerto Rico employee's cost is federal FICA at 7.65% of pay, $3,060 a year on a $40,000 salary, with Social Security at 6.2% (on wages up to the 2026 base of $184,500, per the Social Security Administration) the larger part. An EOR then bills its own fee, which in October 2026 ranged from $199 (Payoneer Workforce Management (formerly Skuad)) to $699 (Oyster) a month. The island rule mainland companies get wrong is probation: after a federal court declared Act 41-2022 void on March 3, 2023, the Puerto Rico Department of Labor (DTRH) applies the Act 80 period as amended by Act 4-2017, which is 9 months, or 12 months for some roles, not the 3 months that some templates still show.
An employer of record in Puerto Rico is a company already registered as an employer on the island that puts your hire on its payroll, pays federal payroll taxes plus the Puerto Rico programs, and leaves the work itself to you.
- Employer cost on a sample salary
- 7.65% FICA onlyon top of gross pay
- Currency
- USD
On this page
Federal payroll rules, island add-ons
Puerto Rico is a US territory, so federal FICA reaches island payroll as it does in Ohio or Texas. The difference is what sits on top and which income tax applies.
- FICA applies in full. Social Security is 6.2% for employer and employee each on wages up to $184,500 in 2026 (up from $176,100 in 2025), and Medicare is 1.45% each with no cap.
- FUTA is not priced here. The IRS publishes Puerto Rico guidance on federal unemployment tax (Topic no. 903 and a FUTA page for US possessions, found in a search on October 17, 2026), but we have not read its rate or credit rules for the island, so ask the EOR to show the line. Our payroll taxes guide covers the federal side.
- Puerto Rico income tax replaces federal income tax withholding for most residents, so your US payroll setup does not carry over as is.
- A lower federal exempt-salary test. Under 29 CFR 541.600 the FLSA white-collar salary level is $455 a week in Puerto Rico, against $684 on the mainland. See exempt versus non-exempt rules.
Not yet included anywhere on this page, because we have not confirmed them from Puerto Rico agency pages: the local unemployment insurance rate and wage base, SINOT disability insurance, chauffeurs insurance for drivers, CFSE workers compensation, the Christmas bonus, the local minimum wage, Act 80 dismissal pay (mesada) and leave accrual. Ask your EOR to price each one and check them with the DTRH, Hacienda and the CFSE.
Employment costs and rules in Puerto Rico
| Item | Puerto Rico |
|---|---|
| Employer social contributions | 7.65% FICA (US territory) plus local unemployment, disability, workers comp and FUTA; local items not confirmed today |
| What the employer pays | Social Security (OASDI) 6.2% up to USD 184,500 (2026 wage base); Medicare (HI) 1.45% uncapped; local items not priced |
| Caps and ceilings | 2026 OASDI wage base USD 184,500 (2025: USD 176,100) |
| Employee contributions | 7.65% FICA (6.2% + 1.45%); local disability and income tax withholding not confirmed today |
| Probation | 9 months, or 12 months for some roles, under Act 80 as amended by Act 4-2017, after the federal court declared Act 41-2022 (3 months + 3-month extension) void ab initio on Mar 3 2023 (DTRH Opinion 2023-01, Mar 10 2023; the opinion notes the ruling was not final). Which roles get 12 months not confirmed today |
| Sample salary used | USD 40,000 |
| Employer cost on that salary | 7.65% FICA only |
Checked October 16, 2026. Source type: official. Sources are listed at the end of this page.
What an EOR charges to employ someone in Puerto Rico
| Provider | EOR fee per employee per month | Deposit | Entity model (provider claim) |
|---|---|---|---|
| Payoneer Workforce Management | from $199 | None listed | Claims owned entities across APAC, MEA, Europe and the Americas |
| Pebl | $399 | Not listed | About 90% of employees on Pebl-owned entities |
| Playroll | from $399 | One month's salary per employee, refundable | No clear owned-entity claim |
| Rivermate | $319 to $639 | Not stated | Claims 38 owned entities |
| Multiplier | $459 (annual) or $499 (monthly) | Sized from costs, fees and notice period (method published, no fixed amount) | Claims owned entities in 160+ countries |
| Rippling EOR | Quote only (third-party reference: $499) | Not listed | Claims Rippling entities; no partner mention |
| Deel | $599 | Not stated by Deel | Claims owned entities in 130+ countries |
| Remote | from $599 | Waived for startups; otherwise not stated | Claims 100% owned entities in 90+ countries |
| Atlas | from $599 | Not published | Claims owned entities in 160+ countries |
| Papaya Global | from $650 | Refundable deposit, amount not stated | Uses in-country partners |
| Oyster | $699 | At least one month of total service cost, refundable (per its terms) | Owned entities and partners |
| Globalization Partners (G-P) | Quote only | Not stated | Information page claims 100+ wholly owned entities |
Source: each provider’s pricing page, checked October 16, 2026. Fees are the provider’s charge on top of salary and the employer contributions above. Some providers adjust prices by country.
The $40,000 Puerto Rico hire, confirmed lines only
Pay is in US dollars, so nothing needs converting.
| Line | Rate | Per year |
|---|---|---|
| Gross salary | $40,000 | |
| Social Security (OASDI), up to $184,500 | 6.2% | $2,480 |
| Medicare (HI), no cap | 1.45% | $580 |
| Salary plus FICA (confirmed portion) | 7.65% | $43,060 |
| EOR fee at $599 a month | $7,188 | |
| Confirmed portion with the EOR fee | $50,248 | |
| FUTA, local unemployment, SINOT disability, CFSE workers comp, Christmas bonus | not yet priced |
Source: Social Security Administration, contribution and benefit base for 2026. Fee line uses the $599 Deel and Remote list price (Oct 16, 2026).
Social Security takes 6.2% of $40,000, or $2,480, and Medicare 1.45%, or $580: $3,060 of FICA in all. A $40,000 salary is far below the $184,500 base, so Social Security applies to every dollar. Add $7,188 in fees ($599 x 12) and the confirmed portion reaches $50,248. At $199 a month (Payoneer WFM) it is $45,448; at $399 (Pebl, Playroll), $47,848; at $699 (Oyster), $51,448.
$50,248 is not the total employer cost. The island programs listed in the warning above still have to be added. For mainland comparisons, the US employee cost calculator shows how FUTA and state unemployment add up in each state.
EOR, PEO or registering yourself
Because Puerto Rico is part of the United States, you do not form a foreign subsidiary the way you would in Mexico. The choice is between registering as an employer with Puerto Rico's agencies yourself, a US PEO if the one you pick covers the island, or an EOR. A PEO co-employs rather than employing outright, and its fee is quoted per employee; see PEO versus EOR and the PEO rankings, and confirm Puerto Rico coverage before you sign. Our entity versus EOR guide covers the do-it-yourself route.
Contractors in Puerto Rico
A Puerto Rico contractor is classified under federal tests and local law at the same time, and an island worker who is really an employee brings back FICA and the local programs. If the role is project work, contractor management software handles invoices; a contractor of record adds a classification check.
Which provider for Puerto Rico
Multiplier (79) and Oyster (64) are the highest scorers under how we rate EOR providers. Confirm Puerto Rico is on the provider's country list and whether it prices the island as a US state or as an international country. Remote's default terms run 12 months and auto-renew and Pebl can lock each worker into a 12-month term, so check the exit terms too.
For the field, use our EOR leaderboard; for contract detail, the Deel, Remote and Oyster write-ups. The nearest comparison abroad is the Dominican Republic.
Frequently asked questions
How much does an employer of record cost in Puerto Rico?
Do Puerto Rico employers pay Social Security and Medicare?
How long is probation in Puerto Rico?
Do I need an EOR to hire in Puerto Rico?
What is the exempt salary threshold in Puerto Rico?
Sources (10)
- IRS: Topic no. 903, U.S. employment tax in Puerto Rico (found in search Oct 17, 2026 (page not read))
- Payoneer Workforce Management (formerly Skuad): Skuad pricing (checked Oct 16, 2026)
- eCFR: 29 CFR 541.600, amount of salary required (checked Oct 2026)
- Pebl: Pebl EOR pricing (checked Oct 16, 2026)
- Playroll: Playroll pricing (checked Oct 16, 2026)
- Multiplier: Multiplier pricing (checked Oct 16, 2026)
- Deel: Deel pricing (checked Oct 16, 2026)
- Remote: Remote pricing (checked Oct 16, 2026)
- Oyster: Oyster pricing (checked Oct 16, 2026)
- ssa.gov/oact/cola/cbb.html (checked October 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.