COVID-19 resources

How to Rehire Employees

Sydney Hoffman, Payroll Product Specialist
Square

This article is limited in scope and is intended for educational purposes only. Nothing in this article is legal or tax advice. Laws vary by jurisdiction, and this article does not attempt to address all jurisdictions. For example, states, counties, or cities often have requirements that differ from federal law. For guidance or advice specific to your business, with a qualified tax and/or legal professional.

There are different reasons why you might need to rehire a former employee. Whatever the reason, it’s important to be prepared.

To help you navigate the process, we’ll go over the paperwork and documentation you may need, and potential options you may have if an employee decides not to accept your offer and return to work.

Send an offer letter

To initiate the rehiring process, you’ll need to extend an offer letter inviting your former staff member back as an active employee of your business.

Your letter should include the following items, according to the California Employers Association:

  • Employment offer
  • Return to work date
  • Terms of employment (role, responsibilities, hours, etc.)
  • What has changed (if applicable)

You should also schedule a time to sit down with your former employee and discuss the details outlined in the offer letter. This gives your employee a chance to ask you questions, so they can make the best decision for their situation.

Onboard your former employee

A signed offer letter in hand means your employee has officially accepted the position. Now you need to onboard them.

To start, file a new hire report to your state directory within 20 days of rehiring your employee (additional requirements may apply, depending on your circumstances). If you use Square Payroll to run payroll, new hire reports are automatically filed on your behalf when you add an employee back on payroll.

Next, you’ll need to reactivate your employee or add them to your payroll again to ensure that they will get paid.

You’ll also need an updated W-4 form from your employee. Even though you may still have their old Form W-4 on file, a new one is needed for your records. You’ll also use the information they provide on their new W-4 to add them back to your payroll platform.

What to do if your offer has been declined

Because of COVID-19, you may be rehiring an employee to qualify for Paycheck Protection Program (PPP) loan forgiveness. If that is the case, you’ll need to collect further documentation if your former employee declines your offer.

Special COVID-19 considerations

Due to COVID-19, many small businesses have been forced to close and subsequently lay off or furlough their employees. Now that stay-at-home orders have been lifted in some areas and businesses are slowly reopening, you may be planning to rehire these employees, particularly if you would like to qualify for PPP loan forgiveness.

If an employee declines your offer to come back to work, you may still be able to qualify for PPP forgiveness as long as you extended a good faith written offer to the employee you wanted to rehire. A written offer can be a physical document that you mail or send electronically.

You’ll also want to make sure that your employees’ personal needs are met during this time and that they feel safe coming back to work. Under the Families First Coronavirus Response Act (FFCRA), you may be able to get reimbursed for providing the required two weeks of paid sick leave your team might need due to COVID-19. Learn more about whether you and your employees qualify.

These steps can help you foster a smooth rehiring process for yourself and the team you’re bringing back on board.

Sydney works on the Square Payroll product specialist team, where she helps sellers set up their business for success when paying their employees and staying compliant with payroll taxes.