Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On November 10, 2017, Puerto Rico's Secretary of the Department of Labor and Human Resources (“Secretary”) issued Opinion No. 2017-002 (“Opinion”) addressing allowable deductions from non-exempt employees’ pay following hurricanes Irma and María. Many employers have been helping their employees by advancing them funds for emergency needs and have sought advice as to whether payroll deductions allowing employees to slowly repay such advances is a viable option. According to the new Opinion, the answer is most likely "no."
The Opinion clarifies that payroll deductions for non-exempt employees are limited to those listed in Act No. 17 of April, 17, 1931, as amended (“Act 17”). Act 17 regulates the payment of wages, prohibits employers from imposing limits on the way employees spend their wages, and establishes a detailed list of the permissible wage deductions in Puerto Rico. The Secretary emphasized in his Opinion that he cannot add exceptions not listed in Act 17 to the prohibition of deductions from wages, even in emergency situations. As a result, when an employer purchases goods or services—such as a generator—for a non-exempt employee, it cannot recoup the cost through deductions from that employee’s wages. This practice is prohibited even if the non-exempt employee has authorized it in writing. Any agreement between an employer and a non-exempt employee that allows a payroll deduction for the reimbursement of goods or services acquired by the employer would violate Act 17. Violations of any of the provisions of Act 17 constitute a misdemeanor which, albeit seldom imposed, may result in imprisonment of up to six months, a fine not exceeding $5,000, or house arrest or community service of up to six months.
Notably, the provisions of Act 17 do not apply to exempt employees. Therefore, it is permissible for exempt employees to voluntarily consent to payroll deductions, as long as the agreement does not violate any other statute and is not against public policy or order. Any deductions from payroll for the reimbursement of goods or services acquired by the employer will be governed by what is strictly agreed upon between the parties.