Some small business owners are finding themselves in yet another predicament as they try find new ways to keep their businesses open and comply with Paycheck Protection Program (PPP) loan forgiveness – workers are taking unemployment over returning to work. In some cases, employers are offering to match or even exceed the unemployment amounts to entice employees to come back to work to no avail.
With some employees opting to stay on unemployment, the U.S. Small Business Administration (SBA), has issued new guidance stating that “businesses that received (PPP) loans can exclude laid-off employees from loan forgiveness reduction calculations if the employees turn down a written offer to be rehired.” The offer must be for the same wages and same number of hours.
This is good news for employers worried about whether their PPP forgiveness amount would be reduced if employees who were offered their jobs back declined those offers. However, it could cause concern for employees opting not to return to work. The SBA had previously warned that “employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.” The SBA has not yet provided specifics on how that process might work.
One of the reasons some employees have been turning down offers to be rehired is that they are making more money in unemployment benefits than they do at their jobs. This is particularly true in the restaurant and hospitality industries. The CARES Act temporarily provides an additional $600 per week on top of state benefits to people who have been approved by their state for unemployment insurance. The additional $600 per week is available for all weeks of unemployment between April 5 and July 31, 2020.
Learn more about the Paycheck Protection Program or visit our COVID-19 Resource Center for more news, tools and insights you need to know in these uncertain times.
