We have received a number of questions recently from organizations asking how to handle employees who do not want to return to work after the shut-down has ended. For example, does the employee have a medical reason for not returning to work; is the employee caring for a family member with COVID-19; does the employee lack childcare due to the closure of schools and/or daycare; or is the employee afraid of returning to work because of age or an underlying condition making them more vulnerable to corona virus complications? As you can see, these types of questions are very fact specific and heavily dependent on state and federal law, some of which has changed in the past 2 months due to the corona virus pandemic. Each of these questions might have a different answer and the consequences to your organization could vary. As a result, we recommend that you direct these types of questions to a lawyer with knowledge and experience in employment law.
PPP UPDATE: A PPP loan may only be used for payroll, utilities, mortgage interest and rent. To be eligible for forgiveness, costs for those permitted uses must be incurred and payments made within the 8 week period following loan disbursement. Payroll costs must account for 75% of the loan proceeds. So these loans are not good for organizations that have laid off or furloughed employees unless they are all brought back almost immediately upon receipt of the loan money. Nor are the loans good for groups with high expenses not related to payroll as those costs are limited to 25% of the loan. Forgiveness is based on gross payroll (less only the employer share of FICA).
The link below is to information on PPP on the SBA website. Below also is additional guidance on PPP loans from the GCB.
May 6, 2020
New Guidance on Paycheck Protections Program (PPP) Loans: If your organization is a recipient of a federal PPP loan, the funds disbursed to your organization from that loan should not be deposited into your gambling account. Deposit the money into a non-gambling account. Your lender will provide guidance on how to track the funds and may even suggest setting up a separate general (non-gambling) bank account just for this purpose. The amounts expended from PPP funds will not be reported on the monthly lawful gambling reports (GCBreports) at this time. For example, payments for qualifying gambling wages will be made directly from PPP funds to the employee. We anticipate that the most PPP loans will ultimately be forgiven and the organization will not be required to repay the funds they’ve expended.
What if our PPP loan isn’t forgiven?
Organizations are responsible for consulting with their lender to maintain compliance with PPP requirements. If your organization’s PPP loan is not forgiven due to non-compliance with the guidelines, and you can document that PPP funds were used for qualifying gambling-related expenditures, you may apply to the Gambling Control Board for permission to use gambling funds to repay the federal government for the PPP loan expenditures that met a definition of allowable expense. In the month in which you were informed that your loan won’t be forgiven, you’d report the expenditures as allowable expenses and add the loan amount to form LG100F, line 15.
What if we’ve received our PPP loan and already paid qualifying expenses out of our gambling account?
If your organization has already made qualifying payments from your gambling account that were later reimbursed by the federal government to your general account, your organization must reimburse its gambling account for the amount expended. Report the reimbursement as a negative expense in the month that the reimbursement deposit is made. Future qualifying expense paid with PPP funds will then be paid directly out of the non-gambling account to the employee or vendor.
What if we’ve already reimbursed our gambling account for qualifying PPP expenses? Do we need to do anything else?
No. If you still have PPP funds left in your general account at this time, begin paying qualifying gambling-related expenses from that general account until the loan amount has been expended.