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How to Rehire Employees Laid Off Due to the Coronavirus Pandemic

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The coronavirus pandemic has forced many local businesses to implement widespread layoffs. If you’ve had to make this difficult decision, you’re not alone. Since March 1, more than 200,000 Hawaii workers have filed for unemployment—that’s almost one-third of our entire workforce.

The Paycheck Protection Program (PPP)—one component of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act—aims to provide much-needed relief to small businesses in the form of SBA loans with a goal of helping them retain and rehire their employees during this uncertain time.

“It is at this point all about keeping Americans employed,” said simplicityHR CEO and President Barron Guss about the billions in federal COVID-19 aid coming to Hawaii in a recent Pacific Business News article.

How much of your PPP loan could be forgivable?

PPP loans are forgivable if specific conditions are met and are even available to businesses who have already laid off their workers. According to the U.S. Treasury, there are eligibility requirements to be considered for loan forgiveness, one of which requires businesses to restore their full-time employment and salary levels by June 30, 2020.

If you decrease your overall full-time employee count, and/or if you lower wages by more than 25 percent, the loan forgiveness amount may decrease. For the latest, check the Paycheck Protection Program Loans Frequently Asked Questions from the U.S. Treasury.

Employer considerations for rehiring employees laid off due to the coronavirus pandemic

While there is no requirement under the PPP to rehire the same employees you laid off, bringing those workers back on is a good place to start. They’re already fully vetted, know your company, and can jump back in quickly.

As you evaluate who to hire back on your team, here are some additional considerations to weigh.

1. Have rehire guidelines in place

Before you bring back former employees, ensure your managers know the rehire guidelines. For example, will employees be allowed to “bridge” their employment for benefit purposes? If so, what time frame does this apply to? Also, do rehires need to go through another pre-employment drug test or background check?

2. Get the necessary paperwork in order

For the most part, a rehired employee should be given much of the same employment paperwork as a new hire. For compliance reasons, they may need to fill out a new Form I-9 and Form W-4. And for confirmation reasons, they should be given the opportunity to make changes to their benefit elections and direct deposit information.

3. Figure out what their work will look like

Even as the Hawaii economy slowly reopens, business will be anything but usual—at least for some time. Employers need to figure out what this means for their employees. Positions may have changed, work schedules could be different, and employees may need to telecommute.

4. Evaluate their pay and benefits package

The economic fallout of COVID-19 may mean you can’t pay employees what you once used to. At least 75% of PPP loan funds must be used for payroll costs, which can include certain benefits. However, keep in mind that if you decrease salaries and wages by more than 25% for any employee, PPP loan forgiveness may be reduced.

5. Prepare for rejection and resentment

Laying off employees was probably the last thing you wanted to do during a pandemic. However, there is a chance that former employees may hold resentment from their original departure, depending on how it was handled, or have already found other employment. There is also the possibility that some may decline work because they are receiving sufficient funds from unemployment. Declining work could disqualify employees from receiving unemployment benefits, so talk to your HR representative.

simplicityHR by ALTRES can help

New legislation can be confusing and overwhelming, which is why we’ve tried to simplify it all with our COVID-19 Employer Resources. Chances are you’re under a lot of pressure, so consult with your HR representative or lawyer to ensure you’re in compliance.

For clients of simplicityHR by ALTRES, HR Symphony has a new Quick Rehire module, so you can easily get your people back to work.

Have a question for one of our HR experts? To learn more about this issue or to schedule a free consultation on the advantages of human resources outsourcing, contact simplicityHR.

Disclaimer: This material is provided for informational purposes only. It is not intended to constitute legal advice, and readers should consult with their advisor or counsel before taking any actions based on the information contained within this material.

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