Allevity Blog

What If My Employees Don't Want To Return to Work?

May 14, 2020

More COVID-19 Related Questions

As California moves closer to opening its doors for business again, our clients continue to provide us with provocative and challenging questions, from “My employee refuses to return to work. What do I do?” to “Is COVID-19 a workers’ compensation claim or not?”

As always, our team strives to answer your questions clearly and concisely.

 

I laid off an employee, then offered to rehire him, but he declined my offer. Will my lender reduce my PPP loan forgiveness amount because I can’t report his wages?

No. The Small Business Administration (SBA) and Treasury intend to issue guidance on this topic soon. We expect to see a rule excluding the wages and salaries of these employees from loan forgiveness reduction calculations. 

The one caveat is that you must offer to rehire the employee for the same salary or wages and the same number of hours as before the layoff. 

To qualify for this exception, you must make a good faith, written offer of rehire, and must document the employee’s rejection of that offer. 

Both you and your employees should be aware that employees who reject offers of re-employment may give up eligibility for unemployment benefits.

 

If my employees refuse to return to work—whether because unemployment insurance (UI) benefits are so good or because they’re afraid of contracting COVID-19—does that affect their eligibility for UI benefits? Can I contest those claims?

Possibly. You can assess the situation and contest the claim if you feel it’s right. 

Do they have “Good Cause?”   Workers who quit or refuse suitable employment offers without good cause are ineligible or disqualified from receiving UI benefits.

“Good cause” is key here, and it must be real, substantial, and compelling. It must cause a reasonable person who wants to remain employed to leave work under the same circumstances. The Employment Development Department (EDD) determines good cause case-by-case, and determinations are dependent on individual circumstances. 

Voluntary quits or general concerns aren’t good cause   We don’t know for certain how the EDD will analyze these claims. We do know general concern over one’s health or safety is not sufficient good cause for leaving or refusing to return to work. 

For the EDD to find good cause, the work must cause undue risk of injury or illness to the individual. Without doctor’s advice, applicable medical conditions, or a history of risk factors regarding COVID-19, a determination of good cause isn’t likely. The EDD will possibly disqualify employees who refuse to return to work from receiving benefits. 

Bottom Line   Circumstances vary widely. Review the EDD’s Benefit Determination Guide for guidance, and always respond speedily to EDD requests for information. To not do so can waive your right to appeal eligibility determinations. Your prompt response is crucial if you believe the claimant is ineligible.

Read more about the process, including the CARES Act, on the EDD’s website, or in its employer’s guide.

 

One of my employees contracted COVID-19! Is this a workers’ compensation claim?

If the employee works remotely and has had no contact with the on-site facility, then no.

In California, if the employee worked on-site within 14 days of contracting the virus, then YES! You must file it as a workers’ compensation claim. 

  • The diagnosis must be confirmed by further testing within 30 days of the date of the original diagnosis.
  • The worker must exhaust Families First Coronavirus Relief Act (FFCRA) paid sick leave before disability benefits are payable.
  • See the Governor of California’s presumptive order here.
  • If you are an Allevity client with Workers’ Compensation services, call us and we’ll walk you through the process.
  • For all other employers, we recommend you consult a labor law attorney for guidance.

Note: Other states may handle this differently.

 

One of my employees contracted COVID-19! She is going to take FFCRA paid sick leave. What do I need to do to receive the tax credit for this?

If you’re an Allevity client, just let us know. We’ll provide a form to document the leave and return your credit to you.

For all other employers, withhold federal employment taxes equal to the amount of leave paid, rather than depositing them with the IRS; report the withholding on your quarterly federal tax return; and properly document her leave.

Proper documentation includes a statement from your employee that includes:

  • Name;
  • Requested leave dates;
  • Qualifying reason for leave; and 
  • A statement that the employee is unable to work or telework for the above reason. That statement may or may not require back-up documentation from the employee, the rules for which are not yet final.

Additionally, you must maintain:

  • Documentation showing how you determined sick leave wages paid to the employee, including records of work, remote work, and qualified sick and family leave.
  • Documentation showing how you determined health plan expenses you allocated to wages.
  • Copies of Form 7200, Advance of Employer Credits Due To COVID-19 and Form 941, Employer’s Quarterly Federal Tax Return that you sent to the IRS. (Or, if you use a third-party payer, copies of the information provided to that payer about your entitlement to the credit.)

For detailed instructions on claiming your tax credits, review the IRS guidance here, and be sure to consult with your legal counsel.

 

Still Have More Questions?

Shoot an email to marketing@allevity.com. We'll continue to answer the most common questions in our updates. If you need specific guidance, don't hesitate to reach out to your Allevity HR Representative.

Allevity is dedicated to being a resource for you during this unprecedented time. We're here for you. We’re getting through this together.

Stay safe!

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