Tuesday, May 5, 2020

Updated PPP Loan FAQs from Treasury

I feel like the hot COVID-19 employment law topics have shifted over the past two months. Starting in mid-March, it was all about the Families First Coronavirus Response Act. I was getting hit with questions about emergency paid sick leave and emergency FMLA. Then, it shifted to unemployment compensation and the CARES Act. Now, the businesses that got PPP loans want to know how they can spend the money and still get the loan forgiven.

Not official use.
(Allow me to digress briefly - it also feels like the name of the virus has shifted from tying it to Wuhan initially, to coronavirus, and now it feels like we're settling in on COVID-19 - right?) 

Treasury has updated its Paycheck Protection Program Loans Frequently Asked Questions (FAQs). One update may be particularly helpful:

40. Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employ
ee, 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, 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.

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