In our last blog we discussed the process for reporting to the VEC an employee’s refusal of an offer to return to work. We have been receiving inquiries from some companies that have received a Paycheck Protection Program (PPP) loan about the effect rehire refusals will have on the loan forgiveness. As a condition of loan forgiveness, an employer must call back to work those employees who were laid off.
The SBA, which administers the PPP program, has now given guidance on that subject. According to the SBA, a rehire refusal will not jeopardize loan forgiveness if the employer does the following:
- Present an offer in writing to the laid-off worker;
- Offer the same salary, wages and number of hours the employee had prior to the layoff;
- Receive a rejection of the offer;
- If the rejection is not in writing, document it and keep it in the employer's PPP loan forgiveness file.
- Notify the state unemployment office within 30 days of the date the offer is refused. The VEC has established a link on its website for employers to report work refusals and new or rehires: https://www.vec.virginia.gov/html/employer-issue-report.html .
The dilemma employers face is that some lower-wage employees are receiving more money from the stimulus-enhanced unemployment benefits than they were while employed. In those cases, it would be a financial sacrifice for the worker to return to work as long as the unemployment benefits are available. If the employer makes a rehire offer and the employee refuses, the employer must report the refusal to the unemployment office and the employee will likely then be disqualified for unemployment. This can pose a difficult choice for an employer.
Feel free to contact us if you have questions about this matter.