On Sunday, the SBA and Treasury Department posted a few more frequently asked questions/answers on the Paycheck Protection Program (PPP).
Question 40 is noteworthy. It provides that a borrower’s PPP loan forgiveness amount won’t be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer.
This guidance addresses the concern that forgiveness would be reduced despite a borrower’s efforts to rehire. Under the CARES Act, forgiveness is generally reduced where a borrower has a lower number of employees over the 8 weeks after receiving PPP funds than during a comparable pre‑coronavirus period, but not if layoffs occurred between February 15 and April 26, 2020, and employees are rehired by June 30, 2020.
A common concern was that some employees wouldn’t accept rehire offers because they could make more in unemployment benefits than in wages. The new guidance warns employees that if they reject re‑employment offers, they may forfeit eligibility for continued unemployment compensation.
Put rehire offers in writing. Although a specific form hasn’t been provided, a borrower must make a “good faith, written offer to rehire.” An employee’s rejection must also be documented. We are still waiting for the interim final rule on PPP loan forgiveness. Yesterday’s guidance confirms that it is forthcoming.
For legal advice specific to the operation of your Minnesota business, please contact us at Dunlap Seeger.