Federal Court Order Halts Collection Activity on Unemployment Robo-Fraud Cases

A Federal Court Order issued January 11 will halt income tax garnishments and other collection activity for unemployment “robo-fraud” victims until there is an individualized staff review and the fraud finding is confirmed. The Order, entered by stipulation on January 11, 2017, is a huge victory for our clients and for all those affected by faulty robo-fraud determinations from October 2013 to August 2015. Blanchard & Walker has been proud to represent our clients and partners the United Auto Workers Union and Detroit’s Sugar Law Center for Economic and Social Justice.  We stand with our clients in this fight for justice and basic due process rights of unemployed Michiganders.

Under the Order, the State has 45 days to comply, providing time to notify the state and federal treasury departments and individual employers who have received wage garnishments. The state has promised to review the 30,000 or more remaining fraud determinations issued during the robo-fraud years – a process which could take six months or more. With limited exceptions, those impacted by the determinations will be able to file their 2016 income tax returns after February 25, 2015 without fear that refunds will be seized by the State. The Order does not stop collection activity for fraud findings that have already been reviewed and confirmed or those findings that were affirmed after an administrative hearing.

The fight is not over, and the case will continue, unless and until we can get assurances that this type of mechanized attack on beneficiaries of emergency economic assistance has been stopped.   Whether it is run by computer or by human review, every Michigan worker has a right to meaningful review and basic due process before having their property seized, or their wages or tax returns garnished.

For more information on the UIA robo-fraud litigation and other employment rights developments in Michigan, follow Blanchard & Walker’s page on facebook.com /michiganemploymentlawyers.