July 23, 2020
If my 24-week period ends in August and we furloughed employees for three months but will rehire most of them after the end of our Covered Period, will the Safe Harbor still apply?
Posted by Armanino Financial Advisory Team
To begin with, a 24-week period ending in August would mean that you got funded no later than March 17, 2020, but since the program didn’t open for applications until April 3, 2020, your 24 weeks don’t end in August. That said, the Safe Harbor from the FTE Reduction Factor holds that you may qualify only if one of the following is present:
- The business was able to document that it was unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19. (Note: interpretive guidance on these rules is discussed elsewhere in these FAQs.)
- You reduced your FTE levels between February 15, 2020 and April 26, 2020 as compared to the level you employed at February 15, 2020, and you restored to the February 15 level by the earlier of the date you apply for forgiveness or December 31, 2020.
Two important items to note in the second test: you do not qualify for Safe Harbor if you reduced your FTEs after April 26, 2020 but held them constant between February 15 and April 26, and the dates are not dependent on your Covered Period but rather the date you apply for forgiveness if during 2020.