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SBA Explains Impact On PPP Loan Forgiveness Of Employee’s Refusal To Return To Work

May, 10, 2020

Earlier this week, the SBA answered the question: will a borrower’s PPP loan forgiveness be reduced if a laid off employee declines an offer of reinstatement?  The answer is No!
The SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation.  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.”  Employers must also advise “employees who reject offers of re-employment [that they] may forfeit eligibility for continued unemployment compensation.”
If this is an issue for your business, please contact Brody and Associates for further information and analysis.