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Could an Employee's refusal to return from lay-off or furlough torpedo loan forgiveness?

The short answer is no. Many companies were forced to lay off employees before these PPP loans were available to cover payroll. If the employer makes a good faith offer of return to employment *in writing* and the employee refuses, the borrower's forgiveness right won't be affected. In fact, it is the employee who has rejected the offer of re-employment who should be wary of the consequences, including potential ineligibility for benefits.

The question then arises, how is the employers’ PPP loan forgiveness amount impacted by employees who refuse to return to work? The Small Business Administration (SBA) recently provided guidance on this issue in its updated FAQs on the PPP. The short answer to the question is that a borrower’s PPP loan forgiveness will not be reduced if the borrower laid off an employee, and makes a written offer of re-employment to the employee which the employee refuses and which refusal is documented by the borrower


employment law, ppp loans, sba ppp program, cares act