Question: If we don't have 40 hours of work for some employees, do we just pay them 40 hours? We have 100 employees, and some of them will not have 40 hours of solid work for the next eight weeks. Is it ok to pay them 40 hours even if they don't work 40 hours?
Gary Elekes; EGIA faculty member and iMarket Solutions Founder:
It's a great question and the answer is yes, you're going to want to do that. If you didn't pay them 40 hours, you reduce their time, you furlough people, or you lay people off, that ratio will count against you for forgiveness.
You need to submit the money on your payroll as if it were 40 hours because that's where you were before COVID-19 hit. So, you'll get the money. But when you start using your payroll and let's say you're only paying 30 hours, which would be a 25% reduction, they will hit you with the 75% ratio of the forgiveness against that payroll loan.
The good news is the interest rate is low. You'll have the money, you’ll have the capital but it won't be forgiven. You've got to make a business decision there. I think it's in your best interest to keep everybody employed, keep them on the 40-hour platform, and figure out how to use that time wisely. Then you'll get that money forgiven.
If you need additional capital I think that's where you have to go to the other side - the disaster side of things. If you’re really truly not getting work, that's going to end up being a part of your requirement from a business point of view that you need to submit.
Weldon Long; EGIA faculty member and New York Times Bestselling Author:
I think it’s really important for our contractors to remember, the whole point of the legislation, the whole point of the stimulus package, is to keep people employed at full-time hours. That's why they're doing this.
If you guys stop and think about it, if we don't do this the economic decline could be so precipitous, so deep, and so fast that our heads would boggle. It would be another Great Depression.
Gary's exactly right, 20-25% unemployment and it could be really bad. The whole point of all of this is to keep your people employed at full-time hours. That's going to infuse money into the economy that people will spend to keep this going to keep the wheels of commerce turning.
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