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PPP – What Happens if an Employee Declines an Offer to Come Back to Work?

On May 3, 2020, the US Treasury released further guidance surrounding the implications of rehiring previously laid off employees for purposes of maximizing loan forgiveness under the Paycheck Protection Program. The Treasury’s updated FAQ document can be interpreted to address the following questions:

Q: What if I offer to rehire an employee but they don’t want to come back or want to come back at reduced hours?

A: Treasury has indicated that if an employer can prove that, in good faith, they provided a written offer to rehire and the employee rejected that offer,  the employer will not be subject to a reduction in loan forgiveness related to that specific employee.   The employer must obtain written documentation that the employee rejected the offer.

Q: Employees have rejected my offer to return to work because it is more beneficial for them to collect unemployment – what should I do?

A: Employees should be made aware that if they receive an offer to be rehired and do not accept that offer, their unemployment compensation eligibility could be forfeited.

The Treasury has stated that it will issue future interim final guidance on rehiring laid-off employees. Given the continuously evolving nature of the Treasury’s guidance, TBC stresses that employers must maintain detailed, written records regarding offers to rehire or restore hours, as well as any rejections of such offers.

Teal, Becker & Chiaramonte Certified Public Accountants