The Cares Act has created some atypical incentives for employers and employees. For example, the unemployment provisions in the Cares Act have allowed some individuals to make more money on unemployment than they did while they were working. This has led to some unusual situations as employers attempt to recall their workers.
If an employer borrowed PPP loan funds, then they must retain as many of their workers as they can in order to receive maximum loan forgiveness. Moreover, the PPP loan program requires that an employer hire back as many of its laid off employees as it can to avoid a reduction in their forgiveness.
In new guidance issued on May 3rd, 2020, the SBA announced that an interim rule will address this situation. The SBA said in a Q&A that employers who make a good faith offers to rehire laid off workers will not receive a forgiveness reduction if their employees refuse the offer. Employers can avoid this forgiveness reduction only if the employer keeps a record of a good faith written offer to rehire, as well as documentation of the employee’s rejection.
Please be aware that the articles we provide are non-comprehensive due to the extensive and complicated nature of the newly drafted legislation. As a result of the rapid pace at which this bill took form, government entities continue to make made changes to this program and there are still many unanswered questions. One cannot express the importance of having a legal professional perform a fact-specific analysis of a business’s situation in light of this evolving program. Please feel free to contact Kemp Klein to learn more.
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