Workers shouldn’t pay for UIA’s latest mistakes

A version of this column originally appeared in Michigan Advance.

In the early days of the pandemic, confusion was widespread. Workers and families were forced to adapt to new risks and respond to changing guidance. Meanwhile, the government had to spring into action to protect people and mitigate damage caused by the emerging health crisis. Hindsight is 20/20, and these days it’s easy to see all the things we could have done differently. This is especially true when it comes to how unemployment benefits were administered during the pandemic. 

Now, Michigan’s Unemployment Insurance Agency (UIA) has started collecting nearly $2.7 billion it overpaid to 350,000 claimants during the confusion of the pandemic after a court order pausing collections due to agency errors expired in September.

When workers lost their jobs during the pandemic, they were told to apply for unemployment. Millions of affected Michiganders flooded the state’s unemployment insurance (UI) system. They were met with confusing forms, shifting rules and a flawed online benefit system. Due to changing rules surrounding pandemic assistance, it was unclear as to who qualified and workers received incorrect or misleading instructions from the government. Workers were scared and confused, and they needed income to care for themselves and their families. Following the advice of state leaders, they applied for benefits, believing that they would only receive a payment if they were eligible. But that isn’t what happened. 

Michigan’s UIA distributed pandemic-era unemployment benefits using expanded criteria that did not comply with new federal guidelines. Other eligibility issues that should have been flagged earlier fell through the cracks because of the massive flood of claims. This allowed benefits to be paid to claimants who were not eligible, even if they had acted in good faith when they responded to the questions asked by the agency. Workers did their best to respond to the confusing questions asked of them, sometimes collecting for weeks or months before the UIA finally declared them ineligible. The UIA would go on to waive large sums of overpayments that were a result of its own errors. However, hundreds of thousands more remain, and many now find themselves facing huge bills from the UIA that they cannot afford. 

During the pandemic, workers across the country were forced to file for unemployment when the economy shut down. Now, nearly five years later, the state is looking to claw that money back from thousands of Michiganders already battling rising costs and struggling to care for their families and loved ones during the holiday season. 

Those workers deserve better.

Fortunately, lawmakers are taking steps to stop it. On Dec. 9, the Michigan Senate passed Senate Bill 700 with unanimous, bipartisan approval. The bill limits the UIA from collecting improperly paid benefits three or more years after a worker stops receiving benefits. The bill also requires the UIA to notify a claimant when they become eligible for a time-based waiver and allows workers to apply for the waiver and seek an appeal. If passed, the new law would be effective on all claims made on or after Feb. 1, 2020. 

Effectively, SB 700 would resolve nearly all pandemic-era overpayments. It would allow workers who applied for unemployment benefits in good faith during one of the darkest periods in our history to finally have peace of mind. And it is an important step toward restoring trust in Michigan’s scandal-ridden unemployment agency. 

What the bill doesn’t do is let those who defrauded the system off the hook. The time limits presented in SB 700 explicitly exclude cases where the overpayment was the result of a claimant committing fraud. 

It is critical that SB 700 passes through the Michigan House as quickly as possible. The UIA’s position is that they have a fiduciary obligation to collect overpayments, despite provisions in our law that prevent collections that are against “equity and good conscience.” Should they continue their pursuit of pandemic-era overpayments, thousands of Michiganders could face debts potentially totaling in the tens of thousands of dollars. If they cannot pay, these workers could ultimately see money taken from their tax refunds, or garnishment of their wages or even their bank accounts.

The UIA’s efforts to collect on old overpayments will be disastrous for working Michiganders and will have little impact on the most egregious fraudsters in international criminal organizations. The UIA has made mistakes in the past in its pursuit of Great Recession overpayments and fraud, and there were many issues with the implementation of pandemic-era unemployment assistance. 

Now we have to ask ourselves why the workers — who only did as they were told — are the ones asked to pay when the state makes a mistake? 

Let’s not make another mistake by putting a $2.7 billion burden on Michigan workers and their families. Passing SB 700 sets a time limit on overpayments, provides relief to Michigan workers directly impacted by the pandemic and helps to start to close this dark chapter in our history.