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PR Senate Bill 693

Updated: Feb 3

On November 10, 2017, senator Miguel A. Romero Lugo introduced Senate Bill 693 to add a new subsection to section 5 of Act No. 17 of April 17, 1931, as amended. This bill has been approved by the Puerto Rico Senate and House of Representatives.

As a general rule, an employer cannot retain or deduct any amount from their employees’ salaries. Nonetheless, section 5 of the above referenced Act No. 17 provides a list of exceptions to this general rule. This proposed bill intends to add to Section 5 a subsection (q) in order to allow employers to retain or deduct from their employees ‘salaries, in a prospective manner, when they give such employees a payroll advance, a loan, or provide them any equipments, materials or goods when a state of emergency has been declared by the President of the United States of America, the Federal Emergency Management Agency (“FEMA”) or by the Governor of Puerto Rico. The state of emergency has to be applicable to the whole island or to the municipality in which the employee resides or works.

To be able to retain or deduct any amount from the employee’s payroll, the employer has to have a written authorization from the employee that contains a breakdown of the way he or she will pay the totality of the amount owed, and a stipulation on how the employee will pay such amount in the event that the employment relationship ceases. The amount that the employer can retain or deduct cannot exceed 20% of the net amount received by the employee in its regular payroll period, after making all of the voluntary or required legal withholdings. When the withholdings are done to repay the employer for any equipments, materials or goods provided, the total amount that the employee will have to repay cannot be greater than the amount the employer paid to obtain such equipments, materials or goods.

If you have any questions about Senate Bill 693 or the impact it may cause to your company, feel free to contact us at your convenience at (787) 765-5656.