Paycheck Protection Program (PPP) Loans Can Be Forgiven Even if Employees Refuse to Return to Work

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By: Kislay Banka

Paycheck Protection Program (PPP) loans can be forgiven even if your laid-off employee(s) refuse to return to work at the same hours and pay, according to an announcement by the US Treasury Department. Companies in this position will not be penalized with a reduced loan forgiveness amount.


Employers will not need to include these workers when calculating their reduced loan forgiveness amount. If the business lays off other workers but does not invite them back, the company must reduce the expenses eligible for PPP loan forgiveness based on the reduced hours or pay.


To qualify, employers must make a good faith effort to rehire the employee in writing at the same pay rate and for the same number of hours. Businesses must document the employee’s rejection of the offer. Employees who reject re-employment offers may lose their eligibility for unemployment insurance.