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PPP Loan Forgiveness and Employees Refusing to Return to Work

Categories: Employment, Article

Paycheck Protection Program - employees make too much to return to work

More employers are hearing “But, I can make more money on unemployment,” from formerly laid off employees when extending offers to return to the workplace. These words are surprising employers as they were expecting that employees would be pleased to return to work. And they are especially concerning for employers who received loan proceeds pursuant to the Paycheck Protection Program (“PPP”).

From the PPP’s inception, employers were concerned with maintaining pre-pandemic employee headcounts. With some states expanding unemployment benefits coupled with the extra federal unemployment pay, many lower-wage workers began receiving more money to stay home than they did when working. As a result, some laid off workers began refusing offers to return to work. Given the PPP’s strict loan forgiveness requirements, employers were left worrying whether such rejections would adversely impact their ability to seek loan forgiveness. The SBA allayed employers’ concerns by providing guidance that employers would not be penalized for laid-off workers who rejected returning to work. In order to avoid any potential reduction in loan forgiveness employees experiencing such rejections should:

  1. Provide the laid off worker with a written offer to return to work.
  2. Such job offers must provide the laid-off worker the same job title, responsibilities, pay, benefits, and number of hours the employee had prior to the layoff.
  3. Receive a rejection to the offer.
  4. Document both the offer and the rejection. Unlike the offer, there is no requirement the rejection be in writing.
  5. Notify the state unemployment office of the rejection within 30 days.

Following this process will help employers receive maximum loan forgiveness. While keeping such detailed documentation on job offers may not be customary for some employers, it is well worth it.


About the Author: Alejandro Pérez is an employment law attorney and partner at Jaburg Wilk. Fully bilingual, Alejandro assists employers in all facets of employment law, including issues arising under the Americans with Disability Act. Alejandro is committed to providing clients with clarity and guidance as to their obligations in connection with the coronavirus pandemic.