Can The Company Lend it's Employees Money (DR Labor Laws)

[badpiece33]

You guys need to learn Dominican Spanish.

To Lend or Borrow = Gift,Present Plain and simple And when you ask for them to pay they look at you with that puppy dog look of confusion. They turn their head sideways and are like you want what?????

 

[MrMike]

Well (sigh), I have been informed by my boss (aka my wife of 30 years) that we shan't loan funds any longer to employees. Apparently we were less successful than I thought at it and our accountant had been hiding the news until recently. Ah Crap!

I always lend money to my Dominican Employees and have generally been successful at it. Here is how my legal counsel advised me to set it up though:

1) Don't call it a loan - call it a payroll advance. You are not lending money but rather paying wages in advance. It is illegal to garnish wages to cover debt but there is no law against paying employees in advance.

2) Don't charge interest - that is illegal

3) Don't lend more than a months salary and never more than the employee would be entitled to if they would suddenly quit (accrued vacation time plus Christmas bonus)

4) Never give a second loan until the first is paid in full

Another couple things I discovered on my own:

Don't count on your accountant, assistant, office lady or any Dominican to handle the repayment, they will never have the guts to get your money back for you. You will have to handle it yourself by personally paying the reduced wage to the person who owes you the money.

Asking for a loan from the employer, contrary to what someone has said, is not a last resort. It is a first resort. Employees are accustomed to being paid by you and it is natural that you are the first person they will think of when they need money. They also know that you are not likely to charge them interest, certainly not as much as a bank or loanshark, and finally they are aware that your means for forcible collection are limited.

There are moneylenders on every corner in the DR, so if you choose not to lend money it's not like they can't borrow unless they've already burned their bridges with everyone else.

Finally keep in mind that it is very important when you deny a loan or financial assistance to a Dominican that you observer proper etiquette. For example:

"No I don't want to lend you money" or "no I don't trust you to pay it back" or any variation of either are extremely insulting and will generate ill will and most likely get your employee scheming about how to make you pay him anyway.

The proper negative response to a request for financial assistance is: "I'm sorry, I wish I could help you but things are really tight right now and I am at wit's end because cash flow is all tied up with (insert excuse and real or made up financial concern)" Be as convincing as you can to show respect, they will most likely not believe you but will be required by etiquette to pretend they do, and more importantly they will not be offended at your refusal.

 

[RD-Guy]

The best policy when it comes to loaning money, is don't do it!
If you do (with collateral) and I am not talking about titles or any documents that can be faked or forged.

Save yourself the headache and add "no loans under any circumstances" to your existing company policy rule book..

You do have written company poilcies that your employees signed off ?

And don't keep them on after 3 months if you don't have too.

I have been here a long time and it still amazes how many companies come here to start up business and don't know the rules.

 

[Fabio J. Guzman]

Our firm has a longstanding policy of giving loans to its employees at preferential interest rates. Most of the borrowers are Dominicans. All have paid on time. Contracts are signed stipulating a payment schedule, usually including sizable payments in April (when legal bonuses are paid out) and Christmas (Xmas bonus).

 

[Castellamonte]

Ah, yes, Fabio, but you are a lawyer so creating potentially defensible documents such as this is 'free' for you. The rank and file out here likely haven't the time or management oversight needed to create, monitor and enforce such an agreement without substantial additional expense.

Traditionally we loaned to our employees for everything from doctor bills to a new moto to buying a house using the same methods and documents. We've discovered that this is unreliable because you cannot force an employee to repay from their paycheck or liquidation. You would need to pursue a civil complaint, which is why you need documentation, but the cost of doing that often exceeds the value of the loan.

Today when we decide to loan it will be for major items only where we can afford to retain a lawyer (I've used Guzman for 10 years now) to create the documents and, if needed, pursue the matter to recover funds lost in a bad loan. Otherwise, I prefer to just give the money to the employee and hope they give it back some day!