PPP: What to Do if Your Rehire Offer is Rejected
COVID-19 restrictions are beginning to lift, allowing many practices to reopen. But what should you do if, during your effort to staff up, your rehire offer is rejected?
Some former employees might have difficulty in finding childcare. Others could be experiencing underlying health issues and concerned about safety. Still others may be making more on the federally beefed-up unemployment benefits than they would working full-time.
Whatever the reason for a former employee rejecting your rehire offer, you will not be penalized now under the Paycheck Protection Program (PPP) , as long as you document the rehire offer and rejection, report the offer to the state unemployment office, and show proof that you're unable to find a similarly skilled employee to fill the position.
Removal of the penalty for rejected rehire offers is just one of the loosened requirements under the Paycheck Protection Program Flexibility Act (PPPFA), an amendment to the PPP passed in early June.
Designed to help businesses weather COVID-19 by offering forgivable loans if businesses maintained headcounts, the PPP originally gave employers only until June 30 to rehire employees laid off or reinstate employees furloughed between Feb. 15 and April 26. Under the PPPFA, employers now have until Dec. 31 to rehire employees.
The PPP originally required businesses to spend 75 percent of loan proceeds on payroll, in order for the loan to be forgiven. The PPPFA reduced the payroll spending requirement to 60 percent. The PPPFA also gives PPP borrowers six months to spend loan proceeds if they are seeking forgiveness.
Since many practices and other businesses are opening with reduced hours or patient volumes, it could prove difficult to meet the PPP requirement to maintain pre-COVID headcounts in order to qualify for loan forgiveness. Removing salaries for employees who declined rehire offers from the forgivable portion of the loan only added to the challenge.
The federal Small Business Administration, which is administering the PPP, recently offered additional guidance on the rehiring issue. According to the SBA, a borrower’s loan forgiveness amount will not be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer.
The SBA and the Treasury plan to issue a final rule excluding laid-off employees who have declined rehire offers from loan forgiveness reduction amounts. Businesses must have offered to rehire employees for the same salary/wages and number of hours. In addition, employers must make the offer in writing (by letter or email) and document the employee's rejection of the offer. Employers must also demonstrate that they are unable to find a similarly skilled employee by Dec. 31.
Employees who reject rehire offers may have to forfeit continued unemployment benefits, since employers are required to notify their state unemployment department within 30 days of the employee rejecting the job offer.
For more details on the program, visit https://www.sba.gov/.
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