Laid Off Employees Who Refuse Offers of Rehire

Laid Off Employees Who Refuse Offers of Rehire

If your business has received a loan through the federal government’s Paycheck Protection Program (PPP), the loan may be forgiven if you meet certain conditions. Specifically, your loan will be converted to a grant and forgiven if your business retains all employees for a period of eight weeks after receiving funds and maintains their salary levels during this time.

If you laid off any employees between February 15 and April 26 of this year, you can still receive loan forgiveness if you rehire them before June 30, 2020. However, some employees who have been offered their jobs back are refusing to take them — sometimes because they’re making more money collecting unemployment than they would working at their old jobs.

This has presented a dilemma for businesses trying to rehire employees in order to qualify for loan forgiveness. Fortunately, the SBA recently resolved this dilemma by stating that PPP loan recipients can exclude these employees from loan forgiveness reduction calculations if they turned down a written offer to be rehired at the same salary or wages and number of hours previously worked, and the employee's rejection of reinstatement should be documented by the borrower. However, these employees that refuse to come back may no longer be eligible for unemployment.

Read more about this important new guidance here.