July 23, 2020
We have a commission-only employee (no hourly wage or salary) who earned considerably less during the eight-week Covered Period than during the first quarter of 2020. Am I correct in presuming this will count as a salary reduction when calculating loan forgiveness?
Posted by Armanino Financial Advisory Team
No, that is not a correct presumption. If the employee’s commission rate stayed unchanged, but the outcome was lower because they failed to meet the first quarter performance levels on which the commission is based, it would not qualify as a Salary/Wage Reduction. Conversely, had the employee performed at an equivalent level but you lowered the commission plan so that the payout was less, that would trigger the Reduction Factor (if the rate dropped by more than 25%).