What If Employees On Unemployment Don’t Want To Return To Work?

Vinson & Elkins LLP

Vinson & Elkins LLP

After over a month of furloughing, you are ready to call your furloughed employees back to work, only to be surprised by employees who tell you, “I won’t come back right now, unemployment is too good.” In ordinary times that would be an unusual response, but thanks to the $600 federal supplement that many employees are now receiving (and may receive through July 31, 2020) as a result of the CARES Act, there are many employees who are temporarily receiving unemployment benefits that are comparable to and, in some cases, greater than their usual wages.

The Department of Labor has provided guidance to state workforce agencies on how workers’ refusals to work should be handled by state unemployment agencies: If a worker refuses to return to work because they want to continue to collect state and federal unemployment benefits, then they are no longer eligible for the supplemental federal benefits. Eligibility for state benefits is determined by state law, but it is unlikely that workers would be entitled to state benefits in that scenario either.1

In order to be eligible for supplemental unemployment benefits as the result of the CARES Act, workers must be unable to work as a direct result of defined, COVID-19 related reasons—for example, the worker or a member of the worker’s household has been diagnosed with COVID-19, or the worker is unable to reach the place of employment because of a COVID-19 quarantine. Neither a desire to continue collecting benefits nor a general fear of virus exposure constitute a qualifying reason.

So when an employee refuses to return to work, employers should ask the worker why they are refusing. If the reason is not one of the justifications provided for in the CARES Act, then the employer may consider reporting to the relevant state workforce agency that the worker has been given the opportunity to return to work and has refused the offer. In fact, some state workforce agencies require employers to report these occurrences of refusal.

On the other hand, even if an employee’s stated reason might disqualify them from federal unemployment benefits, employers should keep in mind that employees may still have compelling reasons to refuse to return to work. In these cases, it may be better to allow the employee to remain furloughed. As noted in our May 5, 2020 post, employers would be wise to prepare for these and other possibilities in their return-to-work plans before the issues arise.

Finally, some employers are rehiring employees because they obtained a potentially forgivable PPP loan under the CARES Act where the amount of loan forgiveness could be reduced if there has been a reduction in full-time equivalent employees. For these employers, there is an incentive to reinstate employees who are unable to work because their workplace remains closed and they do not have a job that can be done through teleworking. Fortunately, employees who refuse an employer’s offer to return to work will not be included in any reduction of that employer’s PPP loan forgiveness amount, so long as the offer of rehire was made in good faith and the rejection is documented.

1 There are exceptions. Many state workforce agencies are creating unemployment carveouts for individuals who refuse to return to work while retaining state unemployment benefits. In Texas, for example, workers may refuse to return to work if: they (or a household member) are 65 years old or older, they (or a household member) have been diagnosed with COVID-19 and have not recovered, they are quarantined due to a close contact, or they have a child to care for while the child’s school or daycare remains closed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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