PPP: What happens if your company’s re-employment offer is rejected?

If you have received PPP (Payment Protection Program) money, you definitely want to take advantage of the SBA’s forgiveness clause. You may know that to get full forgiveness you are required to return to the same number of full-time employees (FTEs) you had on payroll before the pandemic—either the same employees or different ones. According to the SBA and Treasury Department, businesses have until June 30th to do that.

What happens if you want to reach the same FTE count, but some of your employees reject the offer and you are unable to find a suitable replacement before June 30th?

That’s okay ­– it won’t reduce your loan forgiveness amount IF you meet the following conditions:

  1. Make a good faith, written offer to rehire the worker or restore hours.
  • You must do so during the covered period (eight weeks beginning on the first day of PPP loan disbursement) or the alternative payroll covered period (first date of the pay period following loan disbursement).
  • It is critical that this offer is in writing (emails or physical offers on paper).
  1. Offer to rehire workers for the same salary/wages and number of hours as they had before any reductions.  
  1. Provide written documentation of the worker’s rejection.
  • The worker’s rejection can be in the form of an email or a written document, but the ideal response would include the worker’s signature to confirm that they rejected the offer.  
  1. Inform the state unemployment insurance office of the employee’s rejection of the offer within 30 days.
  • States have different protocols for reporting rejections of re-hire offers, but if possible, secure proof of your notice to the state unemployment office.
  • Also note that the employees who reject offers of re-employment may no longer be eligible for continued unemployment benefits.

All in all, make sure you have good bookkeeping practices–especially if you are a small business owner who communicates with employees mostly through informal texts. Now is the time to change your protocol. Ensure that you keep formal written records of all rehire offers and rejections. Those records will be required when you apply for PPP loan forgiveness. If you can’t get back to your pre-pandemic FTE count or can’t sufficiently prove that you did, your PPP loan will not be fully forgivable. The application worksheet then helps you calculate how much you would have to pay back.

For more tips on PPP forgiveness, check out:

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