A recent ruling by the Court of Appeals of Puerto Rico has dismissed an appeal from On The Wheels, LLC, regarding the eligibility of former employee Juan C. Sosa Ferreira for unemployment benefits. This decision, issued on May 13, 2026, clarifies the legal standing of employers in disputes over unemployment compensation claims in Puerto Rico.
The case stems from a dispute between On The Wheels, LLC, operating as TaÃno Motors, and the Negociado de Seguridad de Empleo (NSE), the agency responsible for managing unemployment benefits in Puerto Rico. The ruling is significant as it addresses the limits of employer involvement in unemployment benefit appeals, potentially affecting how businesses approach such cases in the future.
Background
On The Wheels, LLC, a car dealership, had employed Juan C. Sosa Ferreira as a Sales Manager from August 2024 until his dismissal in October 2025. Following his termination, Sosa Ferreira applied for unemployment benefits, claiming he was eligible as his dismissal was not due to misconduct. An arbitrator from the Division of Employment Insurance ruled in favor of Sosa Ferreira on January 7, 2025, stating that his failure to meet sales targets did not constitute misconduct.
Displeased with the decision, On The Wheels appealed to the NSE, arguing that Sosa Ferreira's poor performance warranted disqualification from receiving benefits. The NSE upheld the arbitrator's decision, leading On The Wheels to file a judicial review of the NSE's ruling on April 9, 2026. They claimed that the NSE erred in its determination of Sosa Ferreira's eligibility for benefits.
The Ruling
The Court of Appeals, led by Judge Prats Palerm, ruled against On The Wheels, stating that the company lacked jurisdiction to appeal the NSE's decision. The court emphasized, "the patrono no tiene legitimación para instar el presente recurso de revisión judicial," meaning the employer did not have the standing to pursue the judicial review. The court's decision highlighted that the employer's involvement in the administrative process was merely as a witness and not as a party with legal standing.
The judges noted that the employer's participation did not equate to being adversely affected by the outcome of the unemployment benefits decision. The court stated, "el patrono no está expuesto a pérdida económica alguna ante una determinación de dicho Negociado," clarifying that unemployment benefits are funded from a reserve and not directly from the employer's resources.
Impact
This ruling sets a precedent regarding the role of employers in unemployment benefit disputes in Puerto Rico. It clarifies that while employers can be notified and may participate in hearings, they do not have the right to appeal decisions made by the NSE regarding the eligibility of former employees for benefits. This decision could discourage employers from attempting to challenge such rulings, knowing they may lack standing in future cases.
Moreover, the court's emphasis on the need for legitimate standing in judicial reviews may encourage clearer guidelines for both employees and employers regarding their rights and responsibilities in unemployment benefit cases. As a result, this ruling reinforces the protections available to employees seeking unemployment benefits while limiting the avenues available to employers to contest these benefits.
What's Next
On The Wheels has limited options for further action following this ruling as the court dismissed their appeal for lack of jurisdiction. There are no indications of a related case pending that could affect this ruling, but the decision may prompt employers to reassess their strategies when dealing with unemployment claims in the future.