In brief
A regulation of the Small Business Administration requires that businesses count temporary employees from staffing agencies when seeking to qualify for a loan under the Payment Protection Plan, the U.S. District Court for the Eastern District of Virginia has ruled in an issue of first impression.
The plaintiff alleged in a qui tam lawsuit that its former employer fraudulently omitted temporary workers to qualify for a PPP loan under the 500-employee path provided by the federal Coronavirus AID, Relief and Economic Security, or CARES, Act. The defendant claimed that statutory ambiguities should be resolved in its favor.
However, Judge David J. Novak held that an SBA regulation applies to the PPP loan program’s 500-employee path because “the statutory and regulatory framework clearly establish that, unless ‘otherwise provided’ for in the CARES Act, § 121.106(a) governs PPP eligibility.”
“Even assuming arguendo that the CARES Act’s definition of ‘employee’ superseded § 121.106(a) for purposes of the 500-employee path, the Court finds that temporary workers would still require counting for purposes of PPP eligibility,” Novak wrote.
The opinion is Bloomfield v. Engineered Structures Inc. (VLW 025-3-443).
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