Editor’s note: Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly. Please refer to the latest guidance from SBA and Treasury to confirm current program rules and how they apply to your particular situation.
In March, the United States experienced a record-breaking number of unemployment claims—over 10 million in total. If you had to make the difficult decision to let employees go due to the coronavirus, you’re not alone.
For many business owners, the Paycheck Protection Program (PPP) may provide some relief. The PPP is designed to help small businesses and others retain and rehire their employees and maintain business operations. PPP loans may even be forgivable, in whole or in part, if borrowers meet certain requirements.
Business owners may be eligible for PPP loans if they’ve already laid off their workers due to the coronavirus. These business owners must rehire employees and restore their pay as of February 15, 2020, before December 31, 2020, or before the date they submit their loan forgiveness application, whichever comes first. The rehiring process can be a bit intimidating. Fortunately, you get to skip the hardest part: finding qualified workers. Here are four steps to help you get employees back on the payroll.
1. Consult an employment expert
Consult human resources personnel or an employment law expert to ensure you’re compliant with hiring laws in your state or industry. An expert may help you create a formal rehire policy for your business.
Depending on how you laid off an employee, they may need to fill out new employment paperwork, such as a W-4 and I-9. Your employment expert can help you reach out to employees, offer re-employment, and complete paperwork.
2. Speak to your employees
As you reach out to employees, notify them of your situation. In response, they may have some questions. There are some topics you might want to prepare for, including their salaries, health benefits, and paid leave.
There’s a good chance your business isn’t operating normally right now. Employees will likely have questions about their schedules and work expectations. You may not have all the answers, but give them as much information as you can.
3. Comply with FLSA regulations
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping requirements, and other employment standards. COVID-19 has changed how many businesses operate, but it hasn’t changed the need to ensure businesses are complying with relevant labor laws.
Failing to comply with FLSA regulations could land business owners in some hot water. As you navigate the rehiring process, don’t forget FLSA compliance. Employees are still entitled to any applicable overtime pay, paid and unpaid breaks, and full payment for all time worked.
- Prepare to apply for loan forgiveness
Borrowers may have PPP loans forgiven, in whole or in part, if they meet certain requirements. Lenders are responsible for approving and denying loan forgiveness. Borrowers are responsible for providing documentation that verifies how they spent their loan.
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Given the large demand for additional authorized Paycheck Protection Program funds, not every qualified Paycheck Protection Program applicant will receive a loan. Loan and forgiveness calculations and eligibility may vary. Refer to SBA.gov for information about your particular situation.
The funding described is made available to businesses located in the United States of America and are not available in other locations.
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