Unemployment Penalties

Not necessarily. If you laid them off, they are perfectly within their rights to file unemployment. Most states also now recognize “partial unemployment,” i.e. a reduction in work hours below full time even without total separation. If you paid your employees less than full time while waiting for PPP, even though you fully intended to make them whole after you got PPP, then they are within their rights.

One of them went down to 4 days a week and we cut our hours from 8-5 to 9-4, Monday-Friday.

This is a legitimate reason for her to claim partial unemployment for the reduced period. You reduced her to four 6 hour days from five 8 hour days; that’s a 40% reduction. Did she claim she was fully unemployed or partially unemployed?

I had to complete the form by saying she was employed, working 4 days a week and that she can now work 5 days a week.

You did the right thing. She’s still eligible to collect the 40% unemployment from the period of reduced hours, but going forward from the time you offered her full hours and she declined, she cannot collect any. You should document clearly that you offered her full time work and she declined to come back, citing lack of child care (i.e. a not-your-problem problem, unlike “it’s not a safe working environment” or “my boss never clearly offered me my FTE back” which would fall back on you.)

The other employee volunteered to stay home with her 5 children. It was easier for her because of the school work…She filed unemployment without telling also.

She can’t decline to work “because it’s easier” and then file unemployment. One of the prongs to collect unemployment benefits is “ready and willing to work.”

As far as how this potentially affects your PPP forgiveness, you’d need to work through the loan forgiveness worksheet. You’ll note that this document states that people who formally decline to return to work are not supposed to not count against you:

Indicate the FTE of (1) any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours. In all of these cases, include these FTEs on this line only if the position was not filled by a new employee. Any FTE reductions in these cases do not reduce the Borrower’s loan forgiveness.

It’s worth contesting these if you’re in a state that will count unemployment against your UI rating in the future (see above posts in this thread.)