The New PPP Rule Change Regarding Employee Headcount That Every Employer Needs to Know.
Earlier this week the SBA made a change to the PPP loan forgiveness rules. You may be asking yourself: How is that news? They’ve been changing the rules almost every day! Well, this rule HELPS small businesses get loans forgiven if their employees do not want to come back to work.
The original PPP loan forgiveness rules penalized employers who have a reduction in work force or do not hire back employees they recently laid off. If a small business reduced its number of employees then its loan forgiveness could also be reduced. The question we heard a lot from business owners was: Well, what if my employee does not want to come back to work? With the federal unemployment assistance enhancing state unemployment, some employees are making more money from unemployment than they did while employed!
The SBA recently provided this guidance to borrowers:
Question: Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the
Answer: No! The 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:
1. The employer must make a good faith, written offer of rehire, and
2. The employee’s rejection of that offer must be documented by the employer.
Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
Do you have other questions about PPP loan forgiveness? Call us at (561) 361-8700 today!