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Employees who turn down old jobs under PPP can lose unemployment aid: Mnuchin

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  • Mnuchin said workers who don’t go back to work stand to lose their unemployment benefits under the Paycheck Protection Program, which helps businesses cover employee salaries.
  • “If you offer back a worker and they don’t take that job, you will be required to notify the local unemployment insurance agency because that person will no longer be eligible for unemployment,” he said.
  • Many employees are still fearful about returning to poorly paid jobs with few protections and getting infected with the coronavirus.
  • Visit Business Insider’s homepage for more stories.

Treasury Secretary Steven Mnuchin said on Tuesday that workers who refuse to go back to work could lose their unemployment benefits under the small business aid program.

During a Senate Banking Committee hearing, Republican Sen. David Perdue expressed concern that the $600 boost in weekly unemployment checks was “disincentivizing” work, particularly with small businesses gaining access to loans under the $670 billion Paycheck Protection Program.

Mnuchin responded he was “aware of the technical problem,” and said people who don’t head back to work stand to lose their benefits.

“If you offer back a worker and they don’t take that job,” Mnuchin said, “you will be required to notify the local unemployment insurance agency because that person will no longer be eligible for unemployment.”

Under PPP, banks are in charge of distributing government-financed loans to businesses employing fewer than 500 workers. A loan is forgiven if at least 75% of it is used on employee salaries, and the rest can go toward fixed expenses like rent.

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But the design of PPP collided with the generous unemployment benefits authorized under the CARES Act in March. As more businesses begin to reopen, many employees are fearful about returning to low-paid jobs with scarce protections and getting infected with the coronavirus. Those workers are choosing to tap into unemployment aid instead.

Some Republican states like Iowa and Oklahoma, though, have already warned employees they could be stripped of unemployment aid if they turn down a job, according to The Washington Post.

Around half of all workers are earning better pay from unemployment than they did at their old positions, The Wall Street Journal first reported.

The Labor Department in April issued public guidance on the relationship between PPP and unemployment.

“Barring unusual circumstances, a request that a furloughed employee return to his or her job very likely constitutes an offer of suitable employment that the employee must accept,” the guidance read.

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