The Governor of Puerto Rico recently signed into law Act No. 115, extending the list of authorized payroll deductions under Act 17-1931 (“Act 17”). As a general rule, deductions from non-exempt employees’ wages in Puerto Rico are prohibited unless specifically authorized by Article 5 of Act 17.
Act No. 115 was enacted following Hurricane María to provide employees with an additional source of income in the event of emergency situations. To that end, Act No. 115 added section (q) to Article 5 of Act 17 to provide that, upon the employee's written authorization, an employer may prospectively deduct or withhold a fixed amount of money from the employee’s wages in the employee’s regular pay cycle to fully repay (without interest) the sum corresponding to a loan, salary advance, or any equipment, material, or goods the employer provided that is directly related to an emergency situation (as defined in the Act). Notably, the employee’s written authorization must include a breakdown of how the employee will pay the total amount owed as well as a statement as to how the amount owed will be paid off in the event the employment relationship ends. Act No. 115 further provides that the deduction or withholding may not exceed 20% of the net amount payable to the employee in his/her regular pay period after applying all legal and/or voluntary withholdings. In the case of the repayment of equipment, material, or goods, the amount may not exceed the actual cost incurred by the employer.
The Act took effect immediately upon the Governor’s signature on June 20, 2018.