Five Steps To Protect PPP Loan Forgiveness When Workers Refuse To Return To Work

The CARES Act created a situation where many employees are making more money to stay at home than they were making when employed. For some employers it has been a challenge to get these workers to come back. Many are worried their loan forgiveness will be reduced proportionally.

Employers will need to meet certain conditions to avoid having their loan forgiveness reduced, according to the SBA. Here are the 5 steps that businesses must take:

1. Clearly present an offer letter in writing to the laid-off worker.
2. Offer the same salary, wages and number of hours the employee had prior to the layoff.
3. Receive a rejection of the offer in writing.
4. Document the offer and the rejection, even if the rejection is not in writing, make a note of it in the file.
5. Notify the state unemployment office within 30 days of the date the offer is refused. This last step will disqualify the employee from continuing to claim unemployment benefits.

The documentation is key. Be sure to specify the terms and conditions of the prior employment in the offer letter instead of just stating "the same terms and conditions of employment." The offer can be sent via e-mail or written letter, but the rejection must be documented even if it is received by phone call or text. Employers are required to maintain detailed records on the rehiring-rejection process, and all documentation should be kept handy in your PPP Loan Forgiveness file.

Reach out to us: Loan forgiveness is an important consideration for those small business owners who received a PPP loan. The forgiveness requirement that the employer's headcount match their pre-crisis headcount is very difficult to meet for those who have had to suspend business activity. As the 2nd wave of Coronavirus has hit it is still difficult for many business owners to maintain or return to their pre-crisis workforce staffing level. Let our Coronavirus response team help you with your loan forgiveness calculations, and answer your questions, email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .