The Michigan Unemployment Insurance Agency (UIA) is seeking to recover $2.7 billion from workers who it says were overpaid in unemployment insurance (UI) benefits. A court order had blocked the state from collecting the overpayments since December 2022. But the order has lifted, and collections started again on Sept. 29. These collections could leave thousands of Michiganders with a mountain of debt through no fault of their own.
Free legal assistance is available through the UIA’s Advocacy Program and there is information about how to obtain legal help with an overpayment on the Michigan Legal Help website. Additionally, Michigan Legal help and Unemployment advocates have worked together to create a form to help people understand and apply for various waivers.
So what is going on and how did we get here?
Background:
During the COVID pandemic, Michigan’s Unemployment Insurance Agency (UIA) was flooded with claims. To address the public health demands of the pandemic, the State of Michigan expanded eligibility for unemployment claims. At the same time, new Federal unemployment programs such as Pandemic Unemployment Assistance (PUA) were implemented to cover workers who were traditionally left out of the unemployment system.
These new programs were rolled out for the first time in the middle of the pandemic response. As they were deployed, sometimes states made mistakes. In Michigan, the UIA began distributing pandemic unemployment benefits using expanded criteria that did not comply with federal guidelines.
As a result of this error by the state, the UIA requested that 648,000 claimants who received benefits under these expanded qualifications fill out additional paperwork to confirm their eligibility. Through no fault of their own, many did not meet the new eligibility requirements and were asked to return the unemployment benefits they had received. This affected just under 20% of all Michigan unemployment claims from March 2020 to July 2021. Of that group, around 350,000 individuals would eventually receive a waiver, meaning they would not have to repay their overpayment.
The state advanced the collections process on many individuals who had been overpaid benefits but were not issued waivers by the agency. However, many of these individuals had ongoing appeals.
Engaging in collections during the appeals process is not generally allowed. Despite this, the state’s unemployment software could not tell the difference between these overpayment cases that had been fully adjudicated and those that had ongoing appeals. This led to a lawsuit against the Unemployment Agency (Saunders v. UIA).
In 2022, the Saunders v. UIA case resulted in a preliminary injunction being placed upon the UIA. Under the rules of the injunction, all unemployment overpayment collection was paused while the case continued to be heard. Ultimately, Saunders would be settled with a final order approving the class action settlement on May 13, 2025. With the case settled, the injunction on collections was lifted.
Current Events:
On September 12, the UIA sent out letters to everyone who the agency says has an overpayment balance and informed recipients that collections on overpayments would resume again on September 29. These overpayments have, in theory, spanned from 2021 until now.
There are several issues with these collections. When the UIA was forced to pause collections in 2022, overpayment notices disappeared from workers’ online UIA accounts. Legal advocates who represent unemployed workers have reported that this lulled many into a false sense of security. The disappearing notice was confusing to many workers, who thought that it meant their overpayment had gone away.
Because the overpayments are potentially from many years ago, they are generally past the appeal window. This means options are limited for individuals who potentially were overpaid benefits during the pandemic. However, those who never received the notice that they were overpaid are still eligible to submit an appeal and should seek additional information. Free legal assistance is available through the UIA’s Advocacy Program and there is information about how to obtain legal help with an overpayment on the Michigan Legal Help website.
Additionally, the letter informing workers of their alleged overpayments says that they have three options to seek a waiver of their overpayment. Waivers are available for: financial hardship, UIA error, or incorrect wage information. Those who qualify under one of those three circumstances do not have to pay back their overpayment.
Despite all three waiver options coming from the same law, the form created by the UIA to submit a waiver only covers financial hardship. The Agency has no form for requesting a waiver on the basis of UIA error or incorrect wage information. In official guidance, the UIA has informed its staff that requests for overpayment due to incorrect wages or UIA error cannot be reviewed until the new software system launches in the summer of 2026.
To make matters worse, the overpayment collection letters went out to over 350,000 people and it is not clear what criteria are being used to determine who received an overpayment and how much they were overpaid. In some cases, people have received letters saying they owe the UIA money even though their overpayment case was already appealed and decided in their favor years ago.
Impact and What is Happening Now:
By law, individuals have the right to apply for UI overpayment waivers for reasons including financial hardship, agency error and incorrect wage information. Until a proper form is created for the latter two waivers, Michigan Legal Help and unemployment advocates have worked together to create a form people can use to apply for each type of waiver and instructions on how to do so. This is far from ideal, but it’s the best we have until an official pathway is created.
Why is this happening at all? Jason Palmer, Director of the Unemployment Insurance Agency, says, “We are legally obligated under the Michigan Employment Security Act to seek repayment and we must fulfill our responsibility to ensure taxpayer money is returned to the Unemployment Insurance Trust Fund, so workers can count on money being available if they need it in the future.”
Bottom line is: If these overpayments continue as they are and people don’t file waivers and cannot make the payment, they could see money taken from their tax refunds, garnishment of their wages or even their bank accounts. This could potentially leave thousands of Michiganders who followed all of the rules with a massive debt to pay off through no fault of their own, with the UIA taking billions of dollars from Michigan families. Particularly as Michigan feels the pain of tariffs on our manufacturing sector and indicators warn of a coming recession, our unemployment system needs to be preparing to support working families, not draining them dry.
Jay Cutler joined the League in March 2026 as the Kids Count Senior Data Analyst, where he collects, analyzes, and prepares data for Kids Count in Michigan.
Danielle Taylor-Basemore joined the League as the Development Data and Stewardship Coordinator in June 2025. She brings with her five years of nonprofit experience with a special focus on community engagement, data visualization and strategic programming. Prior to joining the League, Danielle served as the Business District, Safety, and Digital Manager at Jefferson East, Inc.
Scott Preston is a Senior Policy Analyst with the Michigan League for Public Policy, where he leads the organization’s immigration and criminal justice reform portfolios. In the three years prior to joining the League, Scott facilitated the Southeast Michigan Refugee Collaborative and managed a small business economic development program at Global Detroit. His work included launching Michigan’s first Refugee Film Festival and building on a trusted connector model that linked marginalized communities with crucial resources. Scott’s work at the League is informed by his background in journalism and research. He spent four years covering the Syrian refugee crisis in the Middle East for publications such as The Economist, and later worked with unaccompanied refugee minors through Samaritas. Scott holds a master’s degree in international migration and public policy from the London School of Economics and Political Science.
Kate Powers joined the League as the Chief Development Officer in February 2025. Prior to joining the League, Kate held leadership positions at many Michigan nonprofit organizations, most recently serving as the COO and Chief Development Officer of Ele’s Place. Kate has spent the bulk of her career in fundraising, with a short stint in the state Legislature as a legislative aide to members in both chambers. Kate is a graduate of Michigan State University’s James Madison College with a Bachelor of Arts in Social Relations and has a certificate in fundraising management from the Lilly Family School of Philanthropy at Indiana University. Additionally, Kate served on the East Lansing Public Schools Board of Education and is a past President of the Junior League of Lansing. In her free time, she enjoys traveling with her husband and her son and saving outfit of the day and home decor ideas on Pinterest. 
Nicholas Hess joined the League as the Fiscal Policy Analyst in September of 2024. In this role, Nicholas focuses on tax policy, government revenue, and their impact on working families and racial equity, including the effects of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Nicholas values the role that judicious fiscal policy can play in the improvement of people’s lives and the economy, alleviating inequities along the way.
Audrey Matusz joined the League as the Visual Communications Specialist in September 2024. She supports the team with implementing social media strategies and brainstorming creative ways to talk about public policy. She brings with her nearly a decade of experience in producing digital products for evidence-based social justice initiatives. 
Jacob Kaplan 
Donald Stuckey 
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Mikell Frey is a communications professional with a passion for using the art of storytelling to positively impact lives. She strongly believes that positive social change can be inspired by the sharing of data-driven information coupled with the unique perspectives of people from all walks of life across Michigan, especially those who have faced extraordinary barriers. 
Yona Isaacs (she/hers) is an Early Childhood Data Analyst for the Kids Count project. After earning her Bachelor of Science in Biopsychology, Cognition, and Neuroscience at the University of Michigan, she began her career as a research coordinator in pediatric psychiatry using data to understand the impacts of brain activity and genetics on children’s behavior and mental health symptoms. This work prompted an interest in exploring social determinants of health and the role of policy in promoting equitable opportunities for all children, families, and communities. She returned to the University of Michigan to complete her Masters in Social Work focused on Social Policy and Evaluation, during which she interned with the ACLU of Michigan’s policy and legislative team and assisted local nonprofit organizations in creating data and evaluation metrics. She currently serves as a coordinator for the Michigan Center for Youth Justice on a project aiming to increase placement options and enhance cultural competency within the juvenile justice system for LGBTQIA+ youth. Yona is eager to put her data skills to work at the League in support of data-driven policies that advocate for equitable access to healthcare, education, economic security, and opportunity for 0-5 year old children. In her free time, she enjoys tackling DIY house projects and trying new outdoor activities with her dog.
Rachel Richards rejoined the League in December 2020 as the Fiscal Policy Director working on state budget and tax policies. Prior to returning to the League, she served as the Director of Legislative Affairs for the Michigan Department of Treasury, the tax policy analyst and Legislative Director for the Michigan League for Public Policy, and a policy analyst and the Appropriations Coordinator for the Democratic Caucus of the Michigan House of Representatives. She brings with her over a decade of experience in policies focused on economic opportunity, including workforce issues, tax, and state budget.
Simon Marshall-Shah joined the Michigan League for Public Policy as a State Policy Fellow in August 2019. His work focuses on state policy as it relates to the budget, immigration, health care and other League policy priorities. Before joining the League, he worked in Washington, D.C. at the Association for Community Affiliated Plans (ACAP), providing federal policy and advocacy support to nonprofit, Medicaid health plans (Safety Net Health Plans) related to the ACA Marketplaces as well as Quality & Operations.
Renell Weathers, Michigan League for Public Policy (MLPP) Community Engagement Consultant. As community engagement consultant, Renell works with organizations throughout the state in connecting the impact of budget and tax policies to their communities. She is motivated by the belief that all children and adults deserve the opportunity to achieve their dreams regardless of race, ethnicity, religion or economic class.
Emily Jorgensen joined the Michigan League for Public Policy in July 2019. She deeply cares about the well-being of individuals and families and has a great love for Michigan. She is grateful that her position at the League enables her to combine these passions and work to help promote policies that will lead to better opportunities and security for all Michiganders.
Megan Farnsworth joined the League’s staff in December 2022 as Executive Assistant. Megan is driven by work that is personally fulfilling, and feels honored to help support the work of an organization that pushes for more robust programming and opportunities for the residents of our state. She’s excited and motivated to gain overarching knowledge of the policies and agendas that the League supports.
