The CARES Act has been an interesting experience for accountants and business owners alike. The rollout of the contents of the bill have been a disaster, and the program operates much like a rube goldberg machine.
One of the largest sticking points we have seen is with the federal disaster unemployment benefits; which gives that extra 600 bucks, plus their state UI benefits, and makes staying on unemployment not so bad. There’s bread to bake, netflix to binge, and yard work to be done!
Meanwhile, the Paycheck Protection Program wants employers to bring back employees ASAP. Now, many employees, specifically those that are part time, or are making a lower wage, don’t want to come back, because they are making more on unemployment (and in some cases FAR more). This creates an interesting dilemma for the employer.
At the end of the day, the single question we receive more than any other is: “What if my employee doesn’t want to come back?”
Well, here’s what the US Treasury has to say about that little issue:
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 offer?
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness. 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, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation. Source: US Treasury
UPDATE: The SBA has added to the list of the exceptions for FTE Reductions.
Any positions for which the Borrower made a written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period:
Were fired for cause
Voluntarily resigned
Voluntarily requested and received a reduction of their hours
Source: Small Business Administration
So, it's pretty clear that the idea here is employees need to get back to work. The trick now is getting them back. Here’s a couple of ideas:
GET THE SAMPLE LETTER
Sign up with your email address and get the document and receive news and updates related to COVID-19 Bookkeeping.
Make it safe: People are concerned for their safety, and rightly so. With that said, what have you done to make it safer for them? Putting together a list of changes you’ve made to keep everyone safe and healthy will put minds at ease.
Hazard Pay: If you’re in a situation where you can throw a couple extra bucks at employees, it will show them that you know and understand that they are potentially putting their health at risk, and that you appreciate the fact that they are doing so.
Communication: Keep them in the loop, and communicate about what is going on with work, and ask them about their lives. A little communication goes a long way.
Send them an email to return: Once it's time to take employees off of furlough, send them an email with a date and time to return to work. Put a read receipt on it. DON’T CALL THEM. If they say they’re not returning to work via a call, they’re going to ghost you after that, and silence is not a great defence with the Department of Unemployment.
Send them a certified letter to return: No response? “Sign here for this certified letter” always gets people’s attention. Once they have signed for it, they acknowledge receipt, and therefore know they were supposed to show up. If they don’t, well, that’s voluntary leave.
Here’s a sample letter you can use that will help you with the language. At the end of the day, it doesn’t feel great to force people back to work, but you got their PPP money, and you need to do what is in the best interest of your business.