Ordinarily, Puerto Rico law does not allow deductions from a non-exempt employee’s salary, except for specific purposes defined in Act No. 17 of April 17, 1931, as amended. Act No. 115 amends Article 5 of Act No. 17 to lengthen the list of authorized payroll deductions. Consequently, employers in Puerto Rico are now able to prospectively recoup, via salary deductions, any loan, salary advance, or the cost of any equipment, materials, or goods provided to their non-exempt employees to help them in situations where there has been an emergency declaration by the president of the United States, the Federal Emergency Management Agency (FEMA), or the governor of Puerto Rico.
Act No. 115 added section (q) to Article 5 of Act No. 17 to provide that a non-exempt employee and his or her employer may agree, in writing, that the employer will deduct a fixed amount from the employee’s salary, in each of the employee’s regular pay cycles, until the employee has fully repaid the employer, without interest, for any “loan, salary advance, or [the cost] of any equipment, materials, or goods provided by the employer, whose benefit, use, or enjoyment is directly related to situations in which a state of emergency has been officially declared”, as provided by Act No. 115.
The deduction may not be greater than 20 percent of the net amount of the non-exempt employee’s pay after all other legal deductions and/or employee-authorized withholdings have been made. Further, the written authorization must include a breakdown of the repayment and a provision on how the debt will be repaid in the event the employment relationship is terminated.
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