With many Tennessee businesses preparing to open, a number of business owners are experiencing an unexpected response from their furloughed employees: their furloughed employees do not want to return to work and wish to continue receiving unemployment benefits. Under the CARES Act, employees receiving unemployment are receiving an extra $600 a week in addition to their unemployment benefits. For some furloughed employees, they are making more money on unemployment, and they would prefer to stay on unemployment through the end of July when the $600 weekly bonus ends.
However, this scenario creates a huge problem for businesses trying to reopen. First, many businesses will cease to exist if they wait until the end of July to reopen. Equally important is the fact that many business-owners are facing the reality that they need to open their businesses now in order for their businesses to survive. A second concern is that for businesses that received PPP Loans under the CARES Act, the business has a set eight-week period where the business must use 75% of the PPP Loan towards payroll costs in order for the loan to be forgivable. For the PPP Loan to be forgivable, the business must quickly rehire its employees and maintain its previous wage levels. Unfortunately, a furloughed employee’s desire to remain on unemployment is in direct contrast with the business owner’s need to rehire employees in order to survive and to meet the requirements of a PPP Loan creates a major conflict for business owners trying to reopen.
Helpfully, the Tennessee Department of Labor and Workforce Development (“Department of Labor”) has provided guidance on this issue. According to the Department of Labor’s website, once a furloughed employee’s employer reopens and the furloughed employee is offered their job back, that employee is no longer eligible for unemployment. Therefore, furloughed employees do not have the option to continue to receive unemployment at that point. Also, an employee’s fear of catching COVID-19 is not considered a valid reason for not returning to work and staying on unemployment. Therefore, if a furloughed employee refuses to return to work once the business reopens and continues to receive unemployment benefits, it will be considered unemployment fraud and the business owner should report it to the Tennessee Department of Labor.
For business owners in need of guidance regarding the reopening process, please do not hesitate to contact one of the attorneys at our firm and we would be happy to help guide you through the reopening process.
Post Authored by Gaylord Gardner