November 30, 2020

Volume X, Number 335

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November 30, 2020

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PPP Update: What to Do When Employees Refuse to Return to Work

As has been widely reported, some employees are refusing to be re-hired because they make more money from unemployment.  Technically, refusing to accept work should disqualify these individuals from unemployment benefits.  Nevertheless, this has not stopped many employees from refusing re-hire offers.  This presents a problem for employers who have received their PPP money and are worried this will affect the forgiveness of their PPP loan.

On May 3rd, the Treasury Department issued guidance suggesting that so long as a good-faith, written offer to re-hire has been made by the employer and rejected by the employee, the rejected employee will be excluded from the forgiveness reduction calculation.  In other words, this scenario will not reduce PPP loan forgiveness.  Interestingly, the FAQ does not say anything about the employer being required to seek a replacement for the employee who has refused to be re-hired.   The full question and answer from the FAQ is listed below:

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 offer?

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.

© 2020 Giordano, Halleran & Ciesla, P.C. All Rights Reserved National Law Review, Volume X, Number 128
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Ari G. Burd, Shareholder, Giordano Law Firm, Labor & Employment, Cannabis Law, Health Care
Shareholder

Ari devotes his time to assisting and defending employers with regard to traditional employment issues. He frequently counsels employers for compliance with New Jersey laws and has extensive transactional and litigation experience.

Ari has litigated employment matters throughout the state, having made appearances in almost every Superior Court in New Jersey, as well as before both Federal District Courts in New Jersey and the Federal and State Courts in New York.  These actions have involved a diverse range of claims such as wrongful discharge, discrimination, harassment,...

732-741-3900
Jeri L. Abrams, Giordano Halleran, Employment Documentation Lawyer, Workplace Litigation Attorney,Labor & Employment
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Jeri focuses primarily on employment law, with an emphasis on drafting and negotiating complex employment-related documentation, such as executive employment, consulting, restrictive covenant, commission, bonus, retention, change-in-control and severance agreements. Jeri counsels employers on a broad range of employment matters, including hiring, disciplining and terminating employees, family and medical leaves, disability leaves and accommodations, anti-discrimination and anti-retaliation laws, wage and hour compliance, and reductions in workforce. She works closely...

732-741-3900
Jay S. Becker, Giordano Law Firm, Labor & Employment, Cannabis Law, Corporate Labor Relations Employment Law and Litigation
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Jay, chair of the Labor and Employment Practice Area, devotes his practice to labor relations and employment law and litigation on behalf of management. His experience includes conducting trials, hearings, arbitration and mediation sessions; responding to state and federal administrative agency charges; collective bargaining; drafting employment-related corporate documents such as restrictive covenants, employee handbooks, employment agreements, various stock and compensation plans, and separation/severance agreements. He counsels employers on all employee relations issues including, but...

732-741-3900
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