Federal Government Issues Guidance on UI, SBA Loans and Offers to Return to Work
The Department of Labor (DOL), the Small Business Administration (SBA), and the Department of the Treasury (Treasury) issued guidance materials for employers and employees to help them better understand how financial assistance resources created in response to the coronavirus public health emergency will be impacted by employee rejection of reemployment opportunities offered by the employer.
In the DOL’s Frequently Asked Questions (FAQ) on COVID-19-related unemployment insurance (UI), the DOL clarified that individuals who reject reemployment opportunities out of concern for contracting the disease, or who are hoping to receive or remain on unemployment benefits, will no longer be eligible for traditional UI compensation or for Pandemic Unemployment Assistance (PUA). The PUA program was created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act that provides expanded UI coverage to traditionally ineligible individuals.
As explained in the FAQ, UI compensation generally does not cover individuals who leave employment voluntarily. Additionally, individuals who are receiving traditional UI compensation “must act upon any referral to suitable employment and must accept any offer of suitable employment.” A request by an employer that an employee return to work qualifies as an offer of suitable employment and therefore must be accepted. Furthermore, employees who may have been eligible for PUA while their place of work was closed for coronavirus-related reasons would no longer be eligible for PUA once the business reopened. PUA eligibility does not extend to individuals who voluntarily quit their work, whether to access unemployment benefits or out of a general fear of contracting COVID-19.
That said, under certain circumstances individuals may continue to be eligible for PUA. This includes instances in which individuals have a specific, credible health concern that requires them to quit their job. The DOL clarified that an individual may be eligible for PUA if a qualified medical professional previously diagnosed the individual with COVID-19, and the illness caused health complications that made the individual objectively unable to perform the essential functions of the position with or without reasonable accommodations. Additionally, an individual with a compromised immune system, and who has been advised by a healthcare provider to self-quarantine, will be eligible for PUA if that individual meets all other eligibility requirements.
On May 5, the SBA, in consultation with the Treasury, issued an FAQ document on the Paycheck Protection Program (PPP). The PPP was designed to provide financial assistance to small businesses (those with 500 or fewer employees) to help them keep workers on their payroll during the coronavirus-related economic downturn. Borrowers under the program are eligible for loan forgiveness if they maintain their payroll for eight weeks and if the loan is used for payroll, rent, mortgage interest, or utilities.
In its FAQ, the agency clarified that if a borrower lays off an employee and offers to rehire the same employee, but the offer is then declined by the employee, the borrower’s loan forgiveness amount will not be reduced. In order to take advantage of this exception, however, “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.” The agencies will issue an interim final rule explicitly excluding such employees from the CARES Act’s loan forgiveness reduction calculation.
The SBA clarified that it will routinely update the FAQ as needed.