PPP guidance on loan forgiveness and laid-off employees who refuse to be rehired

The SBA added Guidance in its FAQs document (Question #40) indicating that the SBA and Treasury intend to issue an interim final rule that businesses who receive Paycheck Protection Program (PPP) loans can exclude laid-off employees from their loan forgiveness reduction calculations for an employee who turns down a written offer to be rehired (for the same salary/wages and same number of hours). The rule specifies that a borrower may exclude an employee from its loan forgiveness calculations if the borrower made a good-faith, written offer of rehire and also documented the employee’s rejection of that offer. The interim final rules (see page 14), released May 22, 2020, includes a requirement for borrowers to notify the state unemployment office of an employee’s rejected offer within 30 days of that rejection. 

Employers are finding some employees have been turning down offers to be rehired for the same jobs for a variety of reasons, one of them being that they are receiving more money in unemployment benefits than what they were being paid previously.  This guidance warns that employees who reject offers of re-employment may find themselves ineligible to continue receiving unemployment benefits.