Rehiring employees

As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.

The coronavirus has caused a massive slowdown (and, in some cases, a full-on halt) across nearly every industry and sector in the United States economy. And, in response to that slowdown, many small businesses have been forced to lay off a significant portion of their staff.

But thanks to the recently launched Paycheck Protection Program, SMBs now have an additional resource for both maintaining headcount and rehiring laid-off or furloughed employees in the form of a PPP loan (which, if used for payroll, is eligible for loan forgiveness).

Obviously, you want to rehire your employees and get your team back up and running. But knowing when to bring your team back on board is essential for ensuring your rehiring program is a success.

So when is the right time for rehiring? How do you know when to take the necessary steps in hiring employees and bringing your team back on board? And what measures and benchmarks do you need to have in place to ensure the rehiring process is the right move—both for your organization and for your team?

Understanding the Paycheck Protection Program and how it relates to rehiring employees

The Paycheck Protection Program is an emergency lending initiative administered by the U.S. Small Business Administration (SBA). A key element of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program was designed to help small businesses (defined as businesses with 500 or fewer employees) keep their workers employed and their operations moving forward in the midst of the coronavirus pandemic. The Paycheck Protection Program will oversee approximately $350 billion dollars in financial assistance to small businesses in the form of SBA-guaranteed loans.

But how does the Paycheck Protection Loan relate to rehiring?

As a way to incentivize businesses to maintain their headcount and avoid layoffs, the SBA will forgive portions of loans used for approved expenses, including payroll, rent, mortgage interest, or utility payments, during the eight-week period following loan origination. Under the current Paycheck Protection Program guidelines, up to to 100% of the loan amount is forgivable.

So, in other words, you can use a PPP loan to rehire your employees and cover payroll costs—and as long as you allocate the funds appropriately, you won’t be on the hook for repaying the loan.

The caveat? In order to qualify for loan forgiveness, small business owners have until June 30 to rehire former employees and get their headcount to pre-crisis levels. So, if you want to leverage the Paycheck Protection Program for rehiring, it’s important to figure out the right time to rehire former employees to your business.

But how, exactly, do you do that?

Questions to ask yourself before rehiring employees

Before you rehire former employees (full-time or part-time), it’s important to determine that it’s in the best interest of your business, your current employees, and your customers. Let’s take a look at some key questions you should ask yourself before moving forward with the hiring process and rehiring former employees:

How much work do we have available?

It doesn’t make sense to rehire former employees if there’s no work for them to do. Before you move forward with rehiring, it’s important to take stock of your current operations, what work needs to be done, and how that translates to rehiring your team members.

What are your current employees working on? Are there projects in the pipeline that require a higher headcount? Identifying how much work you have to assign out—and what that work actually is—will help you get a clearer picture of who and when to rehire.

This could also be a good time to put a team in place to tackle planned projects you weren’t able to finish when things were busy. For example, let’s say you own a marketing agency. While you might not have a lot of client work for your copywriters at the moment, you could put them to work developing your internal communications plan or social media copy guidelines.

What are our rehiring revenue benchmarks?

Rehiring former employees need to make financial sense for your business. So, before you move forward with the rehiring process, now is the time to dig into your financials and put some benchmarks in place.

Look at your revenue. What kind of revenue were you driving before the pandemic slowed down business? What kind of revenue are you currently driving? What revenue are you projected for the coming months—and when do you anticipate your revenue returning to somewhat normal levels?

Obviously, a lot of this is guesswork; at this point, no one knows when the economy will fully reopen and the US will get back to business as usual. But projections can help you make an informed decision on who to rehire and when.

The benchmarks you set are going to depend on your business and goals. It could be a formula (for example, ‘x’ projected revenue justifies ‘y’ weekly wages in rehiring) or it could be tied to business activity (for example, for every ‘x’ customers, we’ll rehire ‘y’ former employees). But having benchmarks in place will help you make strategic decisions on when to rehire—instead of decisions driven by emotion and the desire to rehire your team as quickly as possible.

How can we get creative to rehire more employees in a shorter time frame?

As mentioned, the deadline for rehiring employees and qualifying for loan forgiveness under the Paycheck Protection Program is June 30, 2020. So, if you want your loan to be forgiven, you’re going to want to rehire as many employees as possible—and as soon as possible.
But the reason you laid off your team in the first place is that you didn’t have the capacity to keep them on in their established roles and job descriptions. So, if you’re going to rehire them (and rehire them quickly), it may require getting creative.

Think outside of the box for ways you can rehire more former employees and get your headcount back up to pre-crisis levels. For example, you might split hours between co-workers and have everyone work fewer hours per week. You might adjust salaries (particularly salaries for executives or higher-paid employees) so you have more payroll to distribute. Or you could look into lowering operational costs in order to have more funds to allocate to paying your employees.

The point is, creative solutions may be required if you want to rehire more employees in a shorter time frame—so be prepared to think outside of the box and make changes and adjustments to your hiring strategy as necessary.

Ways to ensure the rehiring process goes as smoothly as possible—for you and your team

Determining the right time to rehire your team members is important—but so is taking the right steps to ensure that the rehiring process goes as smoothly as possible.

Here are a few things to keep in mind when rehiring your team:

  • Have an onboarding process in place. If your employee has only been laid off or furloughed for a few weeks, they won’t need the same onboarding process as a new hire or brand new employee. But they will need an onboarding process. Make sure your recruiter or HR and talent acquisition team sits down with rehired employees to walk them through the current state of your business and any changes to their role, hours, or day-to-day operations.
  • Get your paperwork in place. You should have all the essential tax documents in place for any recently laid off or furloughed employees, but make sure to create, gather, and distribute any additional paperwork that might be necessary during the rehiring process (for example, copies of new job descriptions or updated direct deposit forms).
  • Support your team. This is a challenging time for businesses and workers alike. Make sure to offer support to your rehired employees and help them best navigate the transition.

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