The Small Business Administration (SBA) and U.S. Treasury have developed new rulings about rehiring of employees that may help small businesses who have been approved for loans through the SBA’s Paycheck Protection Program (PPP), but are struggling to rehire furloughed or laid off employees.
Launched last month, the PPP provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent and utilities, and have the potential to be fully forgiven when at least 75% of the amount is used for payroll and employee headcounts are maintained or restored.
A recurring question has surfaced from many approved recipients of the PPP loans. What should employers do if their staff are unwilling or unable to return to work because they are currently receiving the unemployment stimulus?
The SBA and Treasury intend to issue an interim final rule that will exclude laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the loan forgiveness reduction calculation. It is expected that the rule will specify that in order to qualify for this exception the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers for re-employment may forfeit eligibility for continued unemployment compensation.
For more information on this ruling and a newly released FAQs by the SBA, click here. We strongly suggest that our borrowers review all of the items on the FAQs regularly as they are updated often.