July 23, 2020
We kept all employees on at the same hourly rate and they could work their normal 40-hour weeks, but some took a little unpaid time off and did not get the full 40 hours paid during a given week. Are we now not eligible for the EZ forgiveness application?
Posted by Armanino Financial Advisory Team
This is a good question for which we await additional guidance from the SBA. There has been no clarification around the words in the EZ form qualifications to date. A literal reading of the second qualification criterion would suggest that any unpaid time off — no matter how little the amount — would count as a reduction in the average paid hours of employees. The other challenge with properly interpreting this criterion is the use of the word “average” when the criterion is “no reduction in average paid hours between January 1, 2020 and the end of the Covered Period.” It is open to interpretation, and hopefully subsequent guidance, whether one is to calculate the average paid hours each week and study the trend, the average paid hours of the entire period and compare to some unnamed prior period, or what exactly.