SBA PPP FAQ – What if an employee rejects offers of re-employment?

SBA PPP FAQ – What if an employee rejects offers of re-employment?

One of the struggles many employers are facing surround employees who are refusing to return to work.  The SBA has addressed this issue in their most recent FAQ dated May 4, 2020:

Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of
the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower
laid off an employee, offered to rehire the same employee, but the employee declined the
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under
Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis
exemptions from the Act’s limits on loan forgiveness, 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. The interim final rule will specify that, 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 of re-employment may
forfeit eligibility for continued unemployment compensation.

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