The Treasury Department has issued an interim final rule stating that borrowers using the Paycheck Protection Program who rehire employees and/or restore salary or wage levels by June 30 will still be eligible for loan forgiveness. The move was made to incentivize business owners to rehire employees as quickly as possible after obtaining a PPP loan, according to an update posted by Williams Mullen law firm Tuesday.
Yet many businesses looking to reinstate employee headcounts to ensure PPP loan forgiveness have been running into issues with employees not wanting to return to work or accept job offers, in light of the extra $600-per-week payment currently being offered to complement state unemployment benefits during the pandemic.
The new interim rule also addresses this issue, stating that borrowers must inform the applicable state unemployment insurance office of an employee’s rejected offer of re-employment in order to qualify for PPP loan forgiveness. Employers should contact their state’s unemployment compensation commission for forms and guidance on how to submit these claims, and ensure they have documented the communication for their own records, associates at Williams Mullen suggest.
“Only time will tell how strictly [these] disclosure requirements will be enforced,” the firm noted in its guidance. “In the meantime, it is important for borrowers to carefully review available guidance prior to completing their PPP loan forgiveness applications.”